Following a major spike in oil prices in the United States caused by a ban on Russian oil imports, President Biden has now announced he will be releasing a huge historic oil reserve to reduce gas prices. The price of gas has been on the rise, averaging about $4.23 a gallon currently compared to $2.87 at the same time last year. However, after Biden banned Russian oil imports in retaliation for Russia’s invasion of Ukraine, the price rose significantly. Now the President’s plan to appeal these effects is to begin releasing reserved oil and to pressure oil companies to increase production.
Biden’s plan is to release 1 million barrels of oil each day for the next six months. The oil is coming from the Strategic Petroleum Reserve, which has been storing oil since 1977. Biden is expecting that the price of gas could be reduced “fairly significantly”, arguing that if Americans want to see lower prices at the pump, there needs to be an increase in the oil supply. However, Biden has ordered releases from the reserves twice in the past, neither of these instances resulting in making much of a difference in the oil market. Experts such as oil analyst for CFRA Research, Stewart Glickman, says this would be a short-term solution.
However, releasing the reserve is only one part of Biden’s plan. In keeping with efforts to move away from the dependence on fossil fuels, he will also be invoking the Defense Production Act to encourage the mining of materials for electric cars. Additionally, Biden has requested that Congress financially penalize those who are leasing public lands but not currently producing on them. However, Democrats and Republicans do not see eye to eye when it comes to blaming and solution for oil prices. Many Republicans blame Biden’s efforts to move away from fossil fuels as the reasoning, while Democrats continue to push for a shift towards renewable energy.
This inability for both sides to agree on the cause makes finding solutions that much harder. The United States uses about 20 million barrels of oil a day, and despite a smaller percentage of this oil depending on Russia, the sanctions have caused a visible spike. Biden’s opinion is that by replacing that missing oil, the prices will go down. However, many fear this will not solve the root causes of the rising gas prices.
