Reports that President Biden plans to tap the nation’s Strategic Petroleum Reserve for the third time in six months in a move to curb soaring U.S. fuel costs have pushed oil prices down nearly $5 a barrel in overnight trading.
Mr. Biden is preparing to order the release of up to 1 million barrels of oil, according to two people familiar with the decision. An announcement is expected as early as Thursday, when the White House says the president will deliver remarks on his administration’s plans to combat rising gas prices. The two people spoke on the condition of anonymity to preview the decision.
U.S. oil on Thursday traded at $101.65 a barrel, while the global benchmark was at $107.39, according to Bloomberg. That’s up from roughly $60 a year ago.
The average price of gas in the U.S. is now $4.23 per gallon, down from a record high of $4.33 on March 11 but still up sharply from $2.87 a year ago, according to AAA.
The price of crude has been steadily rising since the start of last year. It hit $100 a barrel in March after Russia invaded Ukraine — the first time in 12 years it breached three digits. Prices at the pump have risen in lockstep, soaring past an average $4 a gallon throughout most of the U.S.
Yet soaring prices have not spurred U.S. suppliers to produce more oil. Many oil and gas executives say they are reluctant to boost production even at today’s elevated prices, according to a recent survey by the Federal Reserve Bank of Dallas.
Asked what level the price of West Texas Intermediate oil would need to hit to get publicly traded oil and gas companies back into growth mode, 29% of executives said their expansion plans weren’t dependent on price. Another 9% named a price above $120 a barrel.
Mr. Biden has seen his popularity sink as inflation reached a 40-year high in February and the cost of petroleum and gasoline climbed after Russia invaded Ukraine.
“Fuel prices are of paramount importance to the Biden administration and congressional democrats heading into the November elections,” Height Securities analyst Benjamin Salisbury said in a report. “Consumers/voters are disproportionately sensitive to fuel prices, but there are few tools for policymakers to meaningfully reduce prices in the short term. A six-month release would extend to the November elections.”
The price of crude is the biggest factor affecting gas prices. A $10 change in the price of a barrel of oil raises the price of a gallon of gas by 25 cents, the Federal Reserve Bank of St. Louis has estimated.
The Strategic Petroleum Reserve is a collection of 60 underground salt caverns along the coastlines of Louisiana and Texas where millions of gallons of crude oil are stored in barrels. Known as the largest supply of emergency crude oil in the world, the federally owned facilities are managed by the U.S. Department of Energy. The U.S. president can decide to tap the reserve, but only under a set list of parameters.
The Biden administration in November announced the release of 50 million barrels from the strategic reserve in coordination with other countries. And after the Russia-Ukraine war began, the U.S. and 30 other countries agreed to an additional release of 60 million barrels from reserves, with half of the total coming from the U.S.
The Associated Press contributed to this report.
Alain Sherter covers business and economic affairs for CBSNews.com.