President Joe Biden is considering a release from the US Strategic Petroleum Reserve (SPR) and diplomatic pressure to bring down domestic gasoline prices, but anticipates higher prices are likely to stick around into next year.
US retail regular gasoline averaged $3.32/USG in the week ending 18 October, the highest price in seven years and 54pc more than a year ago, according to the US Energy Information Administration. Biden said his "guess" was gasoline prices would begin to decline next year but said his ability to influence prices on his own was limited.
"I do not see anything that is going to happen in the meantime that is going to significantly reduce gas prices," Biden said on a televised town hall last night.
Biden said the long-term way to reduce gasoline prices would be investing in renewable energy, improving fuel-economy and switching to electric vehicles. But in the near-term, he said a release of crude from the SPR was one option on the table.
"I could go in the petroleum reserve and take out and probably reduce the price of gas maybe 18¢/USG or so," he said. "It is still going to be above three bucks."
Biden under existing law could approve an emergency drawdown of up to 60mn bl from the SPR if he finds there is an economically-threatening disruption to oil supplies. The US last used that authority in 2011 by releasing 30mn bl in response to supply cuts in Libya. The White House and the US Energy Department, which manages the reserve, did not respond to a request for further details.
The primary reason gasoline prices have increased this year is Opec's decision to withhold crude supply, Biden said. Opec+ is unwinding production cuts it made last year by increasing monthly output by 400,000 b/d, but it has so far rebuffed calls from the White House to increase production faster as a way to support the economic recovery. Biden was non-committal on how he might engage with Opec members going forward.
"There are a lot of Middle Eastern folks who want to talk to me. I am not sure I am going to talk to them," he said, adding that bringing down prices "depends a little bit on Saudi Arabia and a few other things that are in the offing."
Republicans have blamed the run-up in gasoline prices on Biden's energy policies, such as pausing federal oil leasing and canceling the Keystone XL pipeline, although energy analysts say those actions have no direct link to near-term production. They say tax increases that Democrats are considering in their $3.5 trillion budget package would cause energy prices to go higher.
"Because of Joe Biden's radical anti-energy agenda, people in every corner of this country are paying higher prices for energy," US Senate Energy and Natural Resources ranking member John Barrasso (R-Wyoming) said this week. "We are paying more at the pump."
