Biden tapping oil reserve for 6 months to control gas prices

WASHINGTON (AP) —
US President Joe Biden is ordering the release of 1 million barrels of oil per day from the nation's strategic petroleum reserve for six months, the White House said Thursday, in a bid to control energy prices that have spiked as the U.S. and allies imposed steep sanctions on Russia over its invasion of Ukraine.

Biden was to formally announce the release in remarks on his administration's plans to combat rising gas prices.

The White House said Biden would also call on Congress to impose financial penalties on oil and gas companies that lease public lands but aren't producing.

He also intends to invoke the Defence Production Act to encourage the mining of critical minerals for batteries in electric vehicles.

The White House characterised the release of the petroleum as a bridge until output increases from domestic producers.

Administration officials estimate that average production will grow by 1 million barrels daily this year and an additional 700,000 barrels daily in 2023.

The move by Biden shows that oil remains a key vulnerability for the U.S. at home and abroad.

Higher prices have hurt Biden's approval domestically, while also adding billions of oil-export dollars to the Russian war chest as it wages war on Ukraine.

The release of reserves in the U.S. would create pressures that could reduce oil prices, though Biden has already twice ordered releases from the strategic reserves without causing a meaningful shift in oil markets.

Part of Biden's concern is that high prices have not — so far — coaxed a meaningful jump in oil production.

The planned release is a way to increase supplies.

The markets reacted quickly with crude oil prices dropping more than three per cent on Thursday morning to roughly $104 a barrel.

Still, oil is up from roughly $60 a year ago, with supplies failing to keep up with demand as the world economy has begun to rebound from the coronavirus pandemic.

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