Biden releases more oil from strategic reserve to help lower gas prices

Read the Full Transcript

• Judy Woodruff:

  As we reported, President Biden has authorized the release of more oil from the U.S. Strategic Reserve.

  Geoff Bennett digs deeper into what the administration is doing to reduce gas prices and the questions around its broader approach.

• Geoff Bennett:

  President Biden's announcement is aimed at easing the oil supply shortage and lowering gas prices, which have become a major concern for the White House just three weeks ahead of the November midterms.

  The release of 15 million barrels from the nation's stockpile, known as the Strategic Petroleum Reserve, is the final tranche of the 180 million that President Biden pledged this spring to release over six months.

  This is all unfolding as oil prices shot higher last week, after OPEC announced a cut in oil production by two million barrels a day.

  Brian Deese is White House director of the National Economic Council, and he joins us now.

  Welcome back to the "NewsHour."

• Brian Deese, Director, National Economic Council:

  Happy to be here.

• Geoff Bennett:

  So, the release of 15 million barrels from the nation's reserve, it is a small amount compared to how much oil is consumed daily in this country.

  What is the expectation for how effective this will be?

• Brian Deese:

  Well, it's important we put this move in perspective.

  As you said, when Putin invaded Ukraine, that created a global supply challenge. It took Russian barrels of oil off the market and meant that we needed to stabilize supply. And, in response to that, last spring, the president announced that he would authorize a historic amount, 180 million barrels, of releases from our Strategic Petroleum Reserve.

  We have been executing on that on a monthly basis and providing supply into the market. Today's announcement of 15 million barrels is the last tranche of that. And independent analysts that have looked at that announcement and that effort in the aggregate agree that it has had a significant impact on moderating energy prices.

  And, again, if you step back, prices ran up in the wake of Putin's invasion of Ukraine, but because of the actions that we have taken and other steps, we have seen prices come down by nearly 30 percent since midsummer.

  And what that means in practice is the price of a gallon of gas in this country is down by about $1.15 from those highs in the summer. So, the president is making good on the commitment to release 180 million barrels. But he also announced that we will, as a government, repurchase oil when oil — the price of oil falls to $70 a barrel, so that we can refill that national stockpile and also provide the industry and the market some certainty that there will be a buyer at those lower prices.

  And that's something that we have heard is important to providing an incentive to do more production today. That's another important step the president announced.

• Geoff Bennett:

  And we will talk more about that in a minute.

  But, first, what's the White House reaction to analysts who say that the Strategic Petroleum Reserve was created for unforeseen events, to be used in hurricane, cyberattacks if there are pipeline shutdowns, that they shouldn't be used in times of a political crisis?

  There are certainly voters who will see this happening just weeks before the midterm election, and see politics at play here with this decision, with this move.

• Brian Deese:

  Look, the use of the Strategic Petroleum Reserve in this context is fundamentally linked to Putin's invasion of Ukraine and the unprecedented crisis that that created.

  Again, the president's announcement of 180 million barrels of release was made last spring. This last installment is making good on that commitment, and to do so in a way that is a responsible use of this national asset; 180 million barrels has represented about a million barrels a day in additional supply onto the market, a little less over this period.

  But, in practice, the goal of that was to provide a bridge so that our U.S. domestic producers could increase production without American consumers and without the global economy paying the price and bearing the brunt of Putin's unexpected and unconscionable invasion of Ukraine.

  This is a responsible use of the asset. And, again, the repurchase plan is a responsible use as well.

• Geoff Bennett:

  There are analysts who say that tapping the reserves, it has a small effect on the prices that can be seen at the pump. But the consequences could be dire in the event of a national crisis.

  The president, as you mentioned, he's laid out a plan to restock the reserves. But that could take a while.

• Brian Deese:

  Respectfully, serious analysts who have looked at this say, number one, the Strategic Petroleum Reserve remains with over 400 million barrels in it, well enough to respond to additional contingencies and emergencies, and, two, that this action that the president has taken across the set of months in response to Putin's sanctions have had a significant impact on moderating increases in global oil prices.

  And, as I mentioned, one of the intended impacts is that the price of a gallon of gas is down by about $1.15. The price of a barrel of oil is down about 30 percent over this period. So, this is a — this was an effort to try to create a bridge over an intermediate period of time.

  We still have a strong, resilient Strategic Petroleum Reserve. And, as of today, we have a clear plan to provide the market certainty about how we will refill and replenish that asset across time.

• Geoff Bennett:

  When OPEC Plus announced that it would defy the White House and cut its oil production, was the White House surprised by that announcement or by the timing?

• Brian Deese:

  Well, we were disappointed. And the reason was, we thought that it wasn't — it wasn't justified, given the same dynamics that we're talking about right now.

  The dominant challenge in the global market right now is insufficient supply and certainty of supply, given Putin's invasion of Ukraine, and that that has taken oil off the market. The insufficient supply continues to be the dominant challenge in global oil markets. That's why the president continues to stay the course of the commitment he made earlier this year to release 180 million barrels.

  So we're disappointed. But I think, at the same time, if you look at what's happening in prices now, gas prices are coming down. They're coming down. They have come down over the course of the last week. They have come down over the course of the last three months. And the — there are lots of serious analysts who have looked at this and said that the president's use of the Strategic Petroleum Reserve in this context is one important factor in that trajectory.

• Geoff Bennett:

  Does the White House have less influence now with the Saudis, given that they rejected the White House request to delay their announcement of this oil production cut?

• Brian Deese:

  Look, I think we made our views very clear to OPEC. And we have relationships with these countries that span a broad set of issues.

  What the president is doing is using the assets and the tools that he has available, both the Strategic Petroleum Reserve and his diplomatic assets as well, to represent what is important for the American people and the American economy.

  And the steps that he has taken have all been focused on this issue. In the face of an unprecedented supply shock to the global economy, what can we do to stabilize supply and bring down prices? That's what we're seeing happen. We need to see more of that happen on behalf of the American people. And that's what today's announcements are about.

• Geoff Bennett:

  In terms of domestic oil production, President Biden has been consistent in calling on oil companies to lower the costs to consumers.

  The oil industry says that, hey, look, there are bigger market factors at play here. They want the president to open up more federal lands for drilling, approve more pipeline construction. The president has articulated a green energy policy that doesn't really account for any of that. Is there any room for compromise between the energy plan that President Biden has articulated and what these oil companies want to see?

• Brian Deese:

  Well, first, today, U.S. oil production is at 12 million barrels a day. That's at near record highs. And we are on path right now to hit record highs in terms of oil production in 2023.

  Second, one of the things that the industry has raised is the concern that, if prices fall, then they may not have sufficient certainty to invest in production today. That's why the president's announcement about refilling the Strategic Petroleum Reserve is not only a good approach for taxpayers, but it's also helpful in providing certainty to industry, because now the Strategic Petroleum Reserve will be a buyer of oil into the market when prices come down to about $70 a barrel.

  That means, for taxpayers, we have sold this — sold oil at a higher price and are buying for less price. We can actually refill more oil into the Strategic Petroleum Reserve as a result. But it also provides the industry some certainty that there will be a buyer at that price. That's something that a number of them have identified. It's an action the president announced today.

• Geoff Bennett:

  Brian Deese is director of the National Economic Council.

  Thanks, as always, for being with us.

• Brian Deese:

  Happy to.