Update: This summary has been updated with new developments throughout. President 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 since the Russian invasion of Ukraine, per the AP. The release of 180 million barrels of oil is enormous—nearly four times bigger than any previous drawdown, reports the Wall Street Journal, citing an analysis by ClearView Energy Partners.
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 Defense Production Act to encourage the mining of critical minerals for batteries in electric vehicles. The markets reacted quickly with crude oil prices dropping more than 3% 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.
The move comes with gas prices in the US near the record-high average of $4.33 per gallon reached earlier in March, per the Journal. The newspaper notes that US government reserves of oil are currently at about 568 million barrels, and the new drawdown will leave reserves at their lowest level in nearly 40 years. The release 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.
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