Reports that President Biden plans to tap thoseFor the third time in six months, in an effort to stem soaring US fuel costs, oil prices pushed down nearly $5 a barrel in overnight trading.
Mr. Biden is preparing to order the release of up to 1 million barrels of oil, according to two people familiar with the decision. An announcement is expected as early as Thursday, when the White House says the president will make comments on his administration’s plans to combat rising gas prices. The two people spoke on condition of anonymity to preview the decision.
US oil was trading at $101.65 a barrel on Thursday, while the global benchmark was at $107.39, according to Bloomberg. That’s up from about $60 a year ago.
The average gas price in the US is now $4.23 a gallon, according to the AAA, down from a record high of $4.33 on March 11 but still up sharply from $2.87 a year ago.
The price of crude oil has risen steadily since the beginning of last year. In March after that, it hit $100 a barrel– it exceeded three digits for the first time in 12 years. Prices at the pump have risen in lockstep, topping an average of $4 a gallon across most of the US
However, rising prices have not prompted US suppliers to produce more oil. According to a recent Federal Reserve Bank of Dallas survey, many oil and gas managers say they are reluctant to ramp up production even at today’s high prices.
When asked what level the price of West Texas Intermediate oil would need to reach to attract public oil and gas companies29% of executives said their expansion plans were not dependent on price. Another 9% cited a price above $120 a barrel.
Mr. Biden has seen his popularity plummet as inflation hit a 40-year high in February and the cost of oil and gasoline soared after Russia invaded Ukraine.
“Fuel prices are of paramount importance to the Biden administration and congressional Democrats heading into the November election,” Benjamin Salisbury, an analyst at Height Securities, said in a report. “Consumers/voters are disproportionately sensitive to fuel prices, but there are few tools for policymakers to bring prices down in a meaningful way in the short-term. A six-month release would stretch into November’s election.”
Crude oil price is the biggest factor influencing gas prices. A $10 change in the price of a barrel of oil increases the price of a gallon of gas by 25 cents, the Federal Reserve Bank of St. Louis has estimated.
The Strategic Petroleum Reserve is a collection ofalong the Louisiana and Texas coasts where millions of gallons of crude oil are stored in barrels. The federally owned facilities, known as the world’s largest emergency supply of crude oil, are managed by the US Department of Energy. The US President may decide to tap the reserve, but only under a .
The Biden administration announced the release in Novemberfrom the strategic reserve in coordination with other countries. And after the war between Russia and Ukraine started, the US and 30 other countries agreed on it Barrels from reserves, half of which come from the US
The Associated Press contributed to this report.