Biden draws deeper on oil reserve

US President Joe Biden on Thursday announced the largest release of oil from the nation's Strategic Petroleum Reserve－an average of 1 million gallons a day for the next 180 days－in a move to lower high prices at the pump.

"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," Biden said. "This is a moment of consequence and peril for the world, and pain at the pump for American families."

The average price of a gallon of regular gasoline in the United States was $4.23 on Thursday, according to the American Automobile Association. That is about the same as a week ago, but up 62 cents from a month earlier.

He said the move would act as a "wartime bridge" as the US and global oil production ramp back up after the COVID-19 pandemic.

The released oil amount would represent roughly 5 percent of US demand and 1 percent of global demand.

Rising prices

The move comes as the Ukraine-Russia conflict has accelerated the rise in oil and gasoline prices, and after inflation in the US reached a 40-year high in February.

Russian oil exports usually account for more than 1 of every 10 barrels that the world consumes. The US, the United Kingdom and Canada have stopped importing Russian oil. So far, that has resulted in a global supply deficit of around 3 million barrels a day.

The Biden administration in March announced a coordinated release of oil from the reserves in conjunction with other nations. The president also released around 50 million barrels in November, which the US said at the time was the largest release from the reserves ever.

Little impact

The two moves had little impact on the price of gasoline, diesel and other fuels made from crude oil, and oil prices have continued to rise with global limits on Russian energy exports.

Analysts said this latest planned release of additional oil from the reserves is unlikely to be enough to compensate for lost supplies from Russia.

"It will lower the oil price a little and encourage more demand," Scott Sheffield told the Financial Times. He is CEO of Pioneer Natural Resources, a major Texas oil company. "But it is still a Band-Aid on a significant shortfall of supply."

Biden is also putting pressure on US oil companies to pay extra if they choose not to use oil wells on land they lease from the government and to speed up the adoption of greener energy sources.

He said he will invoke the Defense Production Act to encourage the mining of critical minerals for batteries in electric vehicles, part of a broader push to shift toward cleaner energy sources and reduce the use of fossil fuels.

The US oil reserves are primarily used to increase oil supplies during wars, foreign threats to energy supplies or natural disasters.