(Bloomberg) — U.S. President Joe Biden “is looking at” a potential release from the Strategic Petroleum Reserve to bring down gasoline prices after OPEC+ rejected his request to increase crude production faster, said Energy Secretary Jennifer Granholm.
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“The Biden administration is very concerned about the price at the pump” and also for natural gas, propane and heating oil, Granholm said in a Bloomberg TV interview on Friday. “The SPR is certainly on the table as an option. The president will have more to say about that.”
The Organization of Petroleum Exporting Countries and its allies ignored the pleas of its customers and stuck to its plan for gradual monthly oil-output increases of 400,000 barrels a day. Major consumers say that’s not enough to sustain the post-Covid economic recovery, with the U.S. asking for as much as double that amount.
Markets were waiting to hear what Biden would say when he addressed the nation about jobs numbers Friday. Oil jumped after he failed to mention a potential SPR release, dashing expectations for quick supply relief.
By Friday afternoon, the White House still hadn’t announced any specific action to stem the oil-price rise.
“As you can imagine, we’re trying to, we’re going to use every tool in our tool belts to get to do what we can, assessing and monitoring the situation on the oil process very, very closely every day,” Karine Jean-Pierre, White House deputy press secretary, told reporters at a briefing.
Crude rose 2.57% to $81.38 at 4:16 p.m. in New York, setting up the prospect of an advance after three straight daily declines.
“The ball is back in Biden’s court; is he going to do the SPR release?” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. said in a Bloomberg Television interview. “Prices have come off at least $5. We don’t think at these prices they’re going to do it.”
One of the most powerful tools at Biden’s disposal to is the SPR, a huge crude stockpile of more than 600 million barrels kept underground in Louisiana and Texas for emergencies. It has enough crude to replace all the oil the U.S. imports from OPEC+ for more than a year.
Granholm rejected the argument, put forward by some U.S. oil drillers, that Biden’s restrictions on the industry are to blame for high prices.
“It is not the president’s doing that is causing the oil and gas companies right now to decide to slow down. They were slowed down because of Covid,” Granholm said. Oil and gas companies have thousands of leases on federal lands that they aren’t currently using, she said.
The U.S. is pumping about 11.5 million barrels of oil a day, down from above 13 million a day in early 2020. All of the production losses occurred in the initial stages of the Covid-19 pandemic, when crude collapsed. But output has recovered only modestly since then, despite a surge in prices to back above $80 a barrel.
“We’re seeing some movement of oil rigs getting back online,” Granholm said. “It is curious why they are not incentivized more at $80 a barrel.”
Granholm, who spoke from the COP26 climate conference in Glasgow, Scotland, denied any contradiction between pushing for greater oil supplies while seeking ways to reduce carbon emissions.
“Right now, we are not at the point where the build-out of clean energy is enough to supersede the need for fuels — fossil fuels,” Granholm said. “And so making sure that this winter that people don’t have to pay through the roof for gas, gasoline and natural gas is an important agenda item for the president.”
(Updates with White House briefer in sixth paragraph.)
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