Biden and Democrats face strong headwinds in the upcoming midterm elections, and Republicans have focused on inflation and rising costs as they try to convince voters that Biden’s economic policies are hurting their wallets. Polls regularly show that the economy and the cost of living are top priorities for voters by a wide margin.
Biden has largely tried to attribute these cost increases to Russia’s unprovoked invasion of Ukraine and the ensuing fuel shortages and supply disruptions. The president has repeatedly referred to the cost hikes as “Putin’s price hike” while he works on other measures to lower prices at the pump.
Among these, the release of batches of oil from the strategic reserve created to protect the United States from oil shortages that could affect its national security is noteworthy. The White House has released about 165 million barrels of oil from the reserve since announcing a spring drawdown of up to 180 million barrels, the largest amount of oil ever released from the reserve.
This month, OPEC Plus, a coalition of oil-producing nations led by Russia and Saudi Arabia, announced it will cut oil production by 2 million barrels a day, threatening further price hikes in countries already suffering from high costs have fight The move was particularly frustrating for the White House given Biden’s controversial visit to Saudi Arabia in July to strengthen ties.
Biden has also attacked energy companies that he says have not cut prices at the pump as oil prices have fallen. An administration official who spoke to reporters about the background ahead of Biden’s announcement said the actions by these companies would “add 60 cents to the average gallon of gasoline and have kept pump prices higher than they otherwise would be.”
Industry officials respond that the government is picking numbers off its balance sheet and ignoring the long haul early in the pandemic as companies were losing money. At one point, oil was trading at zero dollars a gallon. Oil executives are also warning that levying windfall taxes on the profits they are making now, as many Democrats have advocated, would discourage investment in infrastructure and drilling and exacerbate bottlenecks.
Critics, including many Republicans, have argued that Biden is misusing the reserve for his own political ends, rather than limiting its use to a genuine national crisis as intended. But the administration official, who spoke on condition of anonymity to discuss the move ahead of the official announcement, said the SPR had 400 million barrels left.
“That’s still a large amount of barrels,” the official said. “It’s a bridge. This is a longer bridge. This is an attempt to use this tool in an incredibly responsible manner.”
The reserve is currently at a 40-year low, but is far from empty. At full capacity, it can hold about 714 million barrels.
Despite this, the government has been heavily criticized for its moves, partly because gas prices have largely stabilised. The releases continued throughout the summer as prices at the pump fell for 99 straight days, falling below $4 a gallon and staying there.
Critics argued the government should have started replenishing the reserve at this point, rather than drawing further from it. But it was reluctant to take steps that would put upward pressure on gas prices.
After OPEC recently announced its production cuts, the government promised to stabilize prices. But before she did anything, prices were already stabilizing on their own. Gas prices fell this week amid fears of a looming recession.
The latest move comes amid a hard-fought mid-term campaign with Election Day just three weeks away.
Biden and his Democrats have struggled to persuade voters they are managing the economy as best they can, while Republicans have advanced, citing inflation — particularly gas prices — as well as immigration and crime to suggest that the country would descend into chaos under Biden.
The President has attempted to shift focus to abortion rights, the integrity of the election and the whirlwind investigation surrounding former President Donald Trump in hopes that a critical mass of voters will see these as serious enough issues to deal with overcome their economic fears.
On the economy, Biden has highlighted legislation passed by Democrats to combat prescription drug prices, as well as his move to forgive student loan debt.
But senior White House advisers have long believed their political fortunes in the Nov. 8 congressional election will depend heavily on the ebb and flow of gas prices.
Biden plans to announce several additional moves on Wednesday beyond the oil release.
He is expected to say the government will buy crude for the strategic reserve when prices are at or below around $70 a barrel to ensure the reserve is replenished and to provide more certainty about future oil demand.
Additionally, Biden will urge oil companies to pass on lower energy prices to consumers. The White House argues that energy refiners are currently making far more than their usual profit on every gallon of gasoline.
Energy Secretary Jennifer Granholm earlier alerted oil companies that the government is considering a temporary export ban on refined fuel like diesel, which will be particularly scarce in the US in the coming months. But the government has so far failed to implement such a ban.
White House Press Secretary Karine Jean-Pierre tried to emphasize in Tuesday’s briefing that although the recent series of falling gas prices has broken, the overall trend remains good, with prices down $1.15 from their peak.
“Each month, the typical family of two drivers saves about $120 at the pump compared to where we were in mid-June,” said Jean-Pierre. “Every day, Americans save about $420 million at the pump compared to mid-June.”
She also noted that gas prices have started falling again, falling five cents in the past week, with sharper falls in states like California, Wisconsin and Oregon.
But even as gasoline prices have stabilized in parts of the country, they remain quite high in some key battlegrounds, adding to the challenges Democrats face in the upcoming election.
In California, which has at least eight hotly contested seats in the legislature, gas prices remain above $6 a gallon despite the recent drop.
In Nevada, a state where Democrats are at risk of losing a Senate seat and polls show a close race for governor, the price of a gallon of gasoline is $5.23.
Even if gas prices don’t shoot up any further by Election Day, motorists could be in even more pain as winter sets in. Europe plans to implement its total ban on Russian oil in early December, a move government officials have long been pursuing with concerns that it will trigger a price shock around the world.
American and European leaders hope to mitigate the effects of this ban by imposing a price cap on Russian oil that would allow some of it to continue entering the world market. But there is no guarantee it would work.