During a live address at the White House yesterday, U.S. President Joe Biden presented what he called three “critical” steps to ensure American energy security as Russia’s war with Ukraine rages on and OPEC+ prepares to cut production in November.
The first of Biden’s critical step would see the Department of Energy (DoE) release another 15 million barrels from the Strategic Petroleum Reserve (SPR), extending the release through the month of December in order to help bring oil prices down further, and give American families more “breathing room” at the pumps.
He said the SPR is now more than half full, and that these releases have played a significant role in lowering oil prices, but that gasoline prices have not come down proportionately.
The price of gasoline in the United States has fallen 30% from summer highs and has continued to drop every day in the past week, “they aren’t falling fast enough,” Biden said, and “families are hurting”.
The second critical step, he said, is to convince American oil producers to responsibly increase output. “We have not stopped or slowed oil production. We are on track for record oil production in 2023. The U.S. is the largest producer of petroleum products in the world,” Biden stated
Nonetheless, he posited that he recognized that American oil supermajors are concerned that investing in additional oil production today might leave them stuck with uncompetitive assets later.
To alleviate these concerns, the U.S. President pledged to buy back oil to refill the SPR at a price of $70 per barrel in the future.
The US president described the plans as one that will be profitable for both taxpayers and American oil companies in the years ahead, referring to $70 oil as “a good price for companies, and a good price for taxpayers” and “critical to our national security”.
Observers say selling oil from the SPR at around $90 per barrel, the average price since March, and then refilling it for around $70 per barrel will make money for taxpayers, lower the price of gasoline and help bolster production, while also accelerating US transition to clean energy.
The third and final step in Biden’s plan is to pass savings onto consumers. He bemoaned the tens of billions in profits for American oil companies in a single quarter, accusing them of using that windfall to buy back their own stock and pass money to shareholders instead of consumers.
“When the cost of oil comes down we should see prices at the pump come down too. Oil has fallen $4 a barrel in the past two weeks, $40 a barrel since mid-June. But gas prices haven’t fallen that much. If retailers and refiners were earning the average profit they made over the last seven years, Americans would be paying at least 60 cents less per gallon at the pump,” the president said.
The American president called on oil companies operating in the country to refrain from using profits for buybacks while a war is raging, and to invest in America for Americans instead, promising them they would still make significant profit and shareholders would still do “pretty well”.