U.S. to release oil reserves as Biden tackles high pump prices

WASHINGTON, Oct 19 (Reuters) – US President Joe Biden on Wednesday announced a plan to sell 15 million barrels of emergency crude oil in the country and begin replenishing reserves while trying to keep high gasoline prices ahead of the Midterm elections on November 27 to dampen. 8th.

The move came two weeks after the Saudi-led Organization of Petroleum Exporting Countries angered Biden by siding with Russia and agreeing to a production cut, stoking fears of a new spike in US pump prices.

“With my announcement today, we will continue to stabilize markets and lower prices at a time when actions by other countries have caused such volatility,” Biden said at a White House event.

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Biden blamed Russian President Vladimir Putin’s invasion of Ukraine for higher crude oil and gasoline prices, while noting that prices were down 30% from their peak earlier this year.

He also reiterated an appeal to US energy companies, gasoline dealers and refiners, urging them to stop using record-breaking profits to buy back shares and invest in production instead.

Prices “are not falling fast enough,” he said.

“Families are suffering,” and gas prices are taking a toll on their budgets, he added.

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Biden’s plan aims to provide the market with enough oil to prevent price spikes that could hurt consumers and businesses, while reassuring the country’s drillers that the government will rush into the market as a buyer if prices do fall too low.

The president, who has been criticized by Republicans who accuse him of tapping the Strategic Petroleum Reserve (SPR) for political reasons rather than an emergency, also said he will replenish the nation’s stocks in the years to come.

Biden earlier this year announced a record release of 180 million barrels from the SPR to combat a potential supply crisis caused by sanctions on oil-rich Russia following its invasion of Ukraine in February.

The SPR, now at its lowest level since 1984, is more than half full with more than 400 million barrels of oil, Biden said, “more than enough for any emergency drain.”

He said his goal is to replenish inventories when U.S. crude is around $70 a barrel, a level that would still allow companies to profit while still being a good deal for taxpayers be. The US benchmark was around $85 on Wednesday.

U.S. President Joe Biden calls for a federal gas tax holiday as he addresses gas prices in the South Court Auditorium of the Eisenhower Executive Office Building at the White House June 22, 2022 in Washington, United States. REUTERS/Kevin Lamarque

Biden’s efforts to use federal powers to balance the US oil market underscores how much the war in Ukraine, rampant inflation and the OPEC cut have upended the plans of a president who took office and promised to… Oil industry is rolling back and the country is fast becoming a fossil-free future.

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“We must responsibly increase American oil production without delaying or postponing our transition to clean energy,” Biden said Wednesday.

GASOLINE PRICES HURT

US presidents have little control over oil prices, but the country’s massive gas consumption – the highest in the world – means high prices at the pump can be political poison. Retail gasoline prices have fallen from a June high but remain above historical averages and are a major contributor to inflation.

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The government’s plan was to end the sale of the previously announced 180 million barrels in November, which began in May. However, purchases of companies including Marathon Petroleum Corp (MPC.N), Exxon Mobil Corp (XOM.N) and Valero Energy Corp (VLO.N) have been slower than expected over the summer and about 15 million barrels remain unsold.

These will be tendered for delivery in December, a senior administration official said. Additional oil could also be made available if needed, Biden said on Wednesday.

ENERGY COMPANIES MAY DO MORE

Biden said oil companies should feel more confident about investing in production with the new SPR buyback promise.

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“So my message to all companies is: You are sitting on record profits and we are giving you more security. So you can act now to increase oil production,” he said.

Companies “should not use their profits to buy back stock or pay dividends. Not now, not while a war is raging,” he said, urging them to lower the prices they charge at the pump.

In recent weeks, the oil industry has grown increasingly concerned that the government could take the drastic step of banning or restricting the export of gasoline or diesel to help rebuild falling US inventories. They have urged the administration to take the option off the table, a move officials are unwilling to take.

“We’re keeping all the tools on the table, you know, anything that could possibly help ensure stable domestic supplies,” the official said.

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Reporting by Jarrett Renshaw and Steve Holland, additional reporting by Doina Chiacu and Andrea Shalal; Edited by Lincoln Feast, Heather Timmons, Lisa Shumaker and Marguerita Choy

Our standards: The Thomson Reuters Trust Principles.

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