On Wednesday, President Biden announced another release of oil from the Strategic Petroleum Reserve.
The White House released a huge amount of oil this spring, aiming to temper gas prices that had been driven up, in part, by Russia’s invasion of Ukraine and the U.S. ban on Russian oil. Though gas prices have fallen from their summer highs, they have risen in some parts of the country.
But some analysts say the real benefit of these oil reserves isn’t only monetary – it’s also psychological. Americans can feel like their government is doing something to drive down energy costs, and Biden gets to appear as if he’s taking concrete action to help Americans afford gas – just a few weeks before Election Day.
Here’s what the oil reserves are, how they can change gas prices and the political debate over them.
What are strategic oil reserves and how much oil reserves does the U.S. have?
The reserves are what they sound like: Hundreds of millions of barrels of oil tucked away – most of them in salt caverns in Texas and Louisiana – for when there’s a crisis that raises oil prices. The United States has approximately 400 million barrels in the reserve, a Biden administration official told The Washington Post’s Cleve R. Wootson Jr. and Evan Halper.
The idea came about in the 1970s after an energy crisis. The United States at the time depended on the Middle East to deliver an influx of oil, and some foreign leaders tried to demand U.S. support for regional conflicts in exchange. The United States didn’t want to be beholden to other nations in times of crisis, so it started the Strategic Petroleum Reserve.
When have they been used?
The idea is to only tap the reserves in a true crisis – a natural disaster or a war – not every time prices go up. “They are an insurance policy,” said Meg Jacobs, an energy expert and author of “Panic at the Pump.” The United States has dipped into its oil reserves various times during recent history, like during the Gulf War, or after Hurricane Katrina, when President George W. Bush released 11 million barrels of oil.
What is Biden proposing?
The president is announcing the release of 15 million barrels of oil.
For comparison, in March, Biden announced the release of 180 million barrels of oil, and in November, Biden released 50 million barrels of oil to try to lower gas prices.
How many barrels of oil does the U.S. use a day? Will drawing on the reserves make a difference?
On paper, the idea is that more oil on the market will mean lower prices. But the United States uses about 20 million barrels of oil a day. “It’s hard to have any kind of release make a serious dent because our consumption is so high,” Jacobs said.
Still, when combined with other tools, strategic oil reserves can lower gas prices, said Jay Hakes, an energy expert and author of two books about the oil reserve, including “Energy Crisis: Nixon, Ford, Carter, and Hard Choices in the 1970s.”
The government can encourage people to use less oil as a way to stick it to Russia, and that can help blunt prices, Hakes said. Biden is also encouraging other countries with strategic oil reserves to release barrels on the global market.
And the United States can encourage companies to ramp up oil production back home. That’s what Biden tried to do back in March. “Too many companies aren’t doing their part and are choosing to make extraordinary profits and without making additional investment to help with supply,” read a White House announcement on the release of the oil. Biden asked Congress to make oil companies pay a fee if they’re sitting on permits to drill on federal land and not actively drilling oil from existing wells there.
On Wednesday, Biden also called on Congress to pass a permitting bill to help energy production projects get approved more quickly.
But the main benefit is psychological, especially during a war that has united Americans against Russia. “The fact people know the reserves are there is a strength for the country,” Hakes said.
Jacobs said to think of these oil reserves as a weapon against Russia: “The strategic reserve is part of our arsenal, designed precisely for these kinds of situations.”
What are the downsides of using the oil reserve?
The first is that there is less oil to pull from in a future crisis. Building the reserves back up requires the government to purchase more oil, and that may take years.
“The reserve is currently at a 40-year low, but it is far from empty,” Wootson and Halper reported.
The second is the impact on the climate. Environmentalists want the United States to drill and consume less oil, not more. Biden tried to counter that criticism by saying he would invoke a law known as the Defense Production Act to have American companies produce materials for batteries used in electric vehicles. (Driving is the No. 1 reason Americans consume so much oil.)
The third downside is for Biden specifically. This might not significantly change oil prices in the short run, and it won’t change them in the long run. It’s also hard to know how high prices would be, without the additional oil – so if Americans still suffer from relatively high prices, they might not notice if the reserves are easing the hit to their wallets.
But Biden doesn’t have many other tools at his disposal to shift oil prices. Though he could emphasize conservation – Americans taking individual actions to use less oil in their daily lives – it was not a popular tactic when President Jimmy Carter tried it in the 1970s.
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