The Biden administration is weighing a plan to release roughly a million barrels of oil a day from U.S. reserves, for several months, to combat rising gasoline prices and supply shortages following Russia’s invasion of Ukraine, according to people familiar with the matter.
The total release may be as much as 180 million barrels, the people said, speaking on condition of anonymity ahead of an official move.
The plan is accompanied by a diplomatic push for the International Energy Agency to coordinate a global release by other countries. A final decision hasn’t been reached on the global release, but the White House may make an announcement on the U.S. release as soon as Thursday, one of the people said.
West Texas Intermediate futures dropped as much as 5.5% on Thursday on signs the U.S. was considering the release.
The White House said in a statement that President Joe Biden would speak Thursday about his efforts to reduce energy prices “and lower gas prices at the pump for American families,” which it blamed on Russian President Vladimir Putin.
The statement didn’t elaborate, and White House spokespeople didn’t immediately comment.
Biden is under pressure to slow the pace of inflation -- and reduce gasoline prices in particular -- with the approach of U.S. midterm elections in November. Despite the administration’s assurances last year that pump prices would fall in 2022, they have instead risen dramatically, with gasoline in California currently costing nearly $6 a gallon, according to the auto club AAA.
The national average is $4.24, according to the group.
Biden has already ordered two large releases of oil from U.S. reserves in the past six months -- 50 million barrels in November, and another 30 million barrels in March, after Russia’s invasion. The previous releases have had a muted effect on prices -- U.S. average pump prices rose after the administration began discussing its first release last fall.
The Biden administration has at the same time also struggled to coax OPEC nations to increase production enough to reduce U.S. gasoline prices.
Although oil in the stockpile has been sold or exchanged roughly two dozen times, including to mitigate supply disruptions, reduce the deficit and offset federal spending, it’s never been on this scale.
Biden discussed oil supplies and the potential for another round of releases from reserves during meetings with allies in Europe last week, according to National Security Adviser Jake Sullivan, who said the issue was a “major topic of conversation” at a meeting of the G-7.
In Europe, Biden also announced an agreement with the EU to provide the bloc with 15 billion more cubic meters of liquefied natural gas this year, to reduce the continent’s dependence on Russian supplies.
EU nations have been putting in place plans to phase out their dependence from Russian energy exports. Russia, the world’s second biggest crude oil exporter, provides the EU with more than 40% of its total gas consumption, and also accounts for 27% of oil imports and 46% of coal imports, according to EU figures.
Putin has recently demanded that countries pay for gas in rubles. G-7 nations have said they will not do that as it would be in breach of contracts. The threat has however raised concerns that the Kremlin could retaliate by cutting supplies, one of the people said.