Biden will tap oil reserve, hoping to push
gasoline prices down.
The administration said the president would announce a
plan to release reserves of crude daily for six months.
President Biden said the United States would release
up to 180 million barrels of oil from a strategic reserve to lessen the impact
of Russia’s invasion of Ukraine on consumer gasoline costs.
Clifford
Krauss Michael D. Shear
By Clifford
Krauss and Michael D. Shear
Clifford
Krauss, an energy correspondent, reported this article from Houston. Michael D.
Shear covers the White House.
March 31,
2022
Under
growing pressure to bring down high energy prices, President Biden announced on
Thursday that the United States would release up to 180 million barrels of oil
from a strategic reserve to counteract the economic impact of Russia’s invasion
of Ukraine.
With
midterm elections just months away, gasoline prices have risen nearly $1.50 a
gallon over the last year, undercutting consumer confidence. And the cost of
diesel, the fuel used by most farmers and shippers, has climbed even faster,
threatening to push up already high inflation on all manner of goods and
services.
“I know how
much it hurts,” Mr. Biden said Thursday as he announced the plan. “As you’ve
heard me say before, I grew up in a family like many of you where the price of
a gallon gasoline went up, it was a discussion at the kitchen table.”
Mr. Biden
has few tools to control commodity prices that are set on global markets, so he
is turning to the Strategic Petroleum Reserve, ordering the largest release
since that emergency stockpile was established in the early 1970s. But the move
will most likely have a modest impact because it cannot make up for all the
oil, diesel and other fuels that Russia used to sell to the world but is no
longer able to.
“Our prices
are rising because of Putin’s action,” Mr. Biden added, referring to President
Vladimir V. Putin of Russia. “There isn’t enough supply. And the bottom line is
if we want lower gas prices, we need to have more oil supply right now.”
Mr. Biden’s
plan, to release one million barrels of oil a day for 180 days, would represent
roughly 5 percent of American demand and 1 percent of global demand. To put
that in context, Russian oil exports are down about three million barrels a
day. The U.S. benchmark oil price fell about 6 percent on Thursday.
The
administration’s announcement came as Russia conveyed mixed signals about its
aims for the war in Ukraine, now in its sixth week. Despite Kremlin claims that
it was withdrawing from the outskirts of Kyiv, the capital, fighting continued
in that area on Thursday, and Western officials said they saw little evidence
of a Russian pullback.
“Russia
maintains pressure on Kyiv and other cities, so we can expect additional
offensive actions, bringing even more suffering,” the NATO secretary general,
Jens Stoltenberg, said at a news conference.
Russian
officials also said they would allow a respite for greater humanitarian access
to the devastated southeast port of Mariupol, once home to 400,000 people,
which has come to symbolize Russia’s battlefield tactic of indiscriminate
destruction. Previous agreements for pauses in fighting around Mariupol have
repeatedly broken down.
Largely as
a result of the ceaseless war, energy experts expect oil prices to stay high
for a while without big interventions like the U.S. reserve release.
Reaction
from the oil industry to Mr. Biden’s announcement was muted. The reserve has
mostly been used to increase the supply of oil during wars, foreign threats to
energy supplies or natural disasters. Smaller reserve releases by the Biden
administration starting late last year have had little impact on the prices that
drivers and businesses pay for fuel.
“It will
lower the oil price a little and encourage more demand,” said Scott Sheffield,
chief executive of Pioneer Natural Resources, a major Texas oil company. “But
it is still a Band-Aid on a significant shortfall of supply.”
The
American Petroleum Institute, which represents oil and gas companies, said Mr.
Biden ought to encourage domestic oil production by reducing regulations. The
reserve “was put in place to reduce the impact of significant supply chain
disruptions,” said Mike Sommers, the group’s president, “and while today’s
release may provide some short-term relief, it is far from a long-term solution
to the economic pain Americans are feeling at the pump.”
After
sinking to historically low levels during the early months of the coronavirus
pandemic, oil prices have been climbing for the last year, reaching their
highest levels in nearly a decade.
Oil
exploration and production in the United States and elsewhere slid during the
pandemic, and still has not quite recovered. American companies, under pressure
from investors, have been cautious about spending too much money to drill new
wells, lest prices fall again. Instead, many have been paying out larger
dividends and buying back their stock.
While that
calculation might make sense for individual businesses, it has caused political
problems for Democrats who had hoped to reduce the use of fossil fuels to
address climate change. Now, under attack from Republicans for high prices, Mr.
Biden and Democrats are trying to get the oil industry to drill more.
Both sides
of the political divide are eyeing the November congressional election, when
inflation is expected to be a major issue.
Reacting to
news of the release from the reserve, a spokesman for Representative Kevin
McCarthy, the Republican leader in the House, accused the president of “attacks
on American energy production in order to fulfill his campaign promise to ‘get
rid of fossil fuels.’”
Mark
Bednar, the spokesman, added: “As a result, the American people are paying the
price, as gas is more than $4 per gallon, and we are more reliant on other
countries for energy.”
But Senator
Joe Manchin III, Democrat of West Virginia, welcomed the Biden announcement,
saying it would “provide much-needed relief while also allowing for the
simultaneous ramping up of domestic oil and gas production to backfill Russian
energy resources.”
Aides to
Mr. Biden are hoping to blunt Republican criticisms by taking actions to try to
lower prices. In a statement about the oil release Thursday morning, the White
House said that Mr. Biden was “committed to doing everything in his power to
help American families who are paying more out of pocket as a result.”
Rising
concerns. Russia’s invasion on Ukraine has had a ripple effect across the
globe, adding to the stock market’s woes. The conflict has already caused
dizzying spikes in energy prices and is causing Europe to raise its military
spending.
The cost of
energy. Oil prices already were the highest since 2014, and they have continued
to rise since the invasion. Russia is
the third-largest producer of oil, so more price increases are inevitable.
Gas
supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it
is likely to be walloped with higher heating bills. Natural gas reserves are
running low, and European leaders worry that Moscow could cut flows in response
to the region’s support of Ukraine.
Food
prices. Russia is the world’s largest supplier of wheat; together, it and
Ukraine account for nearly a quarter of total global exports. Countries like
Egypt, which relies heavily on Russian wheat imports, are already looking for
alternative suppliers.
Shortages
of essential metals. The price of palladium, used in automotive exhaust systems
and mobile phones, has been soaring amid fears that Russia, the world’s largest
exporter of the metal, could be cut off from global markets. The price of
nickel, another key Russian export, has also been rising.
Financial
turmoil. Global banks are bracing for the effects of sanctions intended to
restrict Russia’s access to foreign capital and limit its ability to process
payments in dollars, euros and other currencies crucial for trade. Banks are
also on alert for retaliatory cyberattacks by Russia.
They are
also trying to pin some of the blame for high prices on oil companies, which
the administration argues are not producing more energy to increase their
profits. The administration plans to call on Congress to require companies to
produce oil on more than 12 million acres of federal lands that are already permitted
for extraction or pay fines, a proposal that will probably face an uphill
climb.
Energy
experts said the reserve release would pack more punch if other countries, like
China, also sold oil from their stockpiles. The International Energy Agency, an
organization of more than 30 countries, will meet Friday and may recommend
further releases from national reserves.
Russian oil
exports normally represent more than one of every 10 barrels the world
consumes. The United States, Britain and Canada have stopped importing Russian
oil, and many oil companies and shippers in Europe have voluntarily stopped
buying Russia’s energy products. That has produced a deficit so far of about
three million barrels a day.
The average
price of regular gasoline in the United States is $4.23 a gallon, according to
AAA, the motor club. That’s about the same as it was a week ago but up 62 cents
a gallon in the last month.
Oil prices
had dropped this week after peace talks between Russia and Ukraine showed the
first signs of progress. Energy traders are also concerned that demand could
fall as China, the world’s largest oil importer, imposes lockdowns in Shanghai
and other places to deal with coronavirus outbreaks.
“The price
effect is likely to be short term,” David Goldwyn, who was a senior State
Department official in the Obama administration, said about Mr. Biden’s
announcement. “But part of the benefit of this release is that it will provide
a bridge to when new physical supply comes online in the second half of this
year from the U.S., Canada, Brazil and other countries.”
Some
environmentalists criticized the reserve release. “Putting more oil on the
market is not the solution to our problem but the perpetuation of our problem,”
said Mark Brownstein, a senior vice president at the Environmental Defense
Fund.
But Meghan
L. O’Sullivan, director of the Geopolitics of Energy Project at Harvard’s
Kennedy School, said releasing reserves to ease shortages would not imperil the
transition to clean energy. “What the last month has told us is that if there
is no energy security today, the appetite for taking hard steps on the path of
transition will evaporate,” she said.
The release
is not without risk. Goldman Sachs analysts wrote in a research note that a
large discharge could cause “congestion” on the Gulf Coast, keeping new oil
production from fields in West Texas out of pipelines and storage tanks.
Mr. Biden’s
move could also discourage Saudi Arabia and other producers from increasing
supply to reduce prices. OPEC Plus, a group led by Saudi Arabia that includes
Russia, on Thursday decided to maintain a policy of only modestly increasing
supply.
Bob
McNally, who was an energy adviser to President George W. Bush, said the
release was “not big enough to offset the potential loss of Russian oil exports
should the conflict and sanctions pressure continue to extend.”
The oil
market tends to go in cycles, so the release may allow the government to sell
high and, later, buy low, potentially earning billions of dollars for the
Treasury. The government will use the money it makes from oil sales to refill
the reserve, which in turn could help raise prices again.
While
pushing up those prices, Jason Bordoff, founding director of Columbia
University’s Center on Global Energy Policy and a former aide to President
Barack Obama, said an eventual refill could also “send a signal to shale
producers that may help encourage them to invest in more production, which may
help with today’s potential shortages.”
The U.S.
reserve contains nearly 600 million barrels, approximately a month of total
American consumption, and it can release up to 4.4 million barrels a day. The
stockpile was established after the 1973 energy crisis, when Saudi Arabia and
other Arab producers proclaimed an oil embargo.
Megan
Specia contributed reporting from Krakow, Poland, and Steven Erlanger from
Brussels.
Clifford
Krauss is national energy business correspondent based in Houston. He has spent
much of his career covering foreign affairs and is a graduate of Vassar
College, the University of Chicago and Columbia University. @ckrausss
Michael D.
Shear is a veteran White House correspondent and two-time Pulitzer Prize winner
who was a member of team that won the Public Service Medal for Covid coverage
in 2020. He is the co-author of “Border Wars: Inside Trump's Assault on
Immigration.” @shearm
Sem comentários:
Enviar um comentário