Biden will release 180 million barrels of oil, 31% of his strategic reserves

The US will release some 180 million barrels of oil from its reserves, close to a million a day, for six months starting in May. The move, announced Thursday by the White House, is a historic move that underscores the Biden Administration’s concern about rising gas prices and global supply shortages following the Russian invasion of Ukraine.

President Joe Biden will also invoke the powers of the Cold War to encourage the national production of key minerals for the manufacture of batteries for electric vehicles, as announced by the White House in a statement. Materials for batteries will join the list of items covered by the Defense Production Act of 1950.

The White House stressed that the release of the strategic oil reserve was “unprecedented.” “This record release will provide a historic amount of supplies that will serve as a bridge until the end of the year, when domestic production increases,” the statement added. The government criticized US energy companies for not ramping up production.

The Administration also plans to issue waivers to the Jones Act, which requires oil to be transported between US ports only by US-built, US-flagged, and US-operated vessels. That will ensure the flood of reserves is delivered in an orderly and timely manner, a senior official said.

As of March 25, the US strategic reserve had 568 million barrels accumulated, according to data from the Department of Energy. The 180 million represent almost a third of its total reserves.

The sharp increase in prices at US gas stations is weighing heavily on the electoral prospects of the Democratic Party ahead of the legislative elections in November. The president has struggled to control both gasoline prices and overall inflation, which is at a 40-year high due to the lethal combination of the war in Ukraine and the effects of the pandemic on supply chains. “The US is the world’s largest oil producer and a net exporter of energy,” says the White House. “Despite that, the actions of a dictator on the other side of the world can still hit the pocketbooks of American families.”

UK studies joining

The Administration will also press the International Energy Agency to coordinate the release of reserves from other countries that are expected to join the movement. For example, UK Enterprises Minister Kwasi Kwarteng is studying a proposal for his nation to join the effort, according to people familiar with the matter. The organization will meet in a few days to discuss the matter.

When IEA members agreed to release a total of 61.7 million barrels earlier in the month, the US contribution was 30 million barrels, while the British added 2.2 million barrels.

But the extraordinary supply will not be accompanied by increased production by OPEC+ members. The group announced this Thursday that it will limit itself to following its plan of gradual increases. OPEC+, which includes Russia, ratified an existing plan to increase supply in May by 432,000 barrels per day, according to a statement.