The White House on Thursday announced that the U.S. will release 1 million barrels of oil per day from strategic reserves to help cut gas prices and fight inflation across the country.
A fact sheet released by the Biden administration showed that the president plans to tap the nation’s Strategic Petroleum Reserve for the next six months as domestic producers ramp up production. The document also noted that the move came after discussions with American partners.
“The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time,” the White House said in a release. “This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.”
A senior administration official told reporters Thursday morning that, in combination with similar reserve releases in other countries, the average daily oil release should exceed 1 million barrels.
Oil prices dropped on Thursday after reports Wednesday evening suggested such a move was imminent. President Joe Biden is set to offer remarks on efforts to quell energy prices later Thursday.
International benchmark Brent crude futures for May fell 4% to trade at $108.89 per barrel. U.S. crude futures slid 4.7% to $102.84. Earlier in the session the contract traded as low as $100.16.
The announcement comes as the White House look for ways to combat a spike in energy prices caused by Russia’s invasion of Ukraine. While oil prices are well off highs seen earlier this year, the geopolitical chaos has continued to elevate petroleum costs and stir fears about oil and natural gas availability.
The recent rise in crude prices has led to a jump in domestic gasoline prices, with the national average for a gallon of gas at $4.23, up from $2.87 one year ago.
The White House also used Thursday’s announcement to criticize the domestic energy industry for “sitting on” more than 12 million acres of federal land and 9,000 unused but already-approved permits for production.
“Today, President Biden is calling on Congress to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing,” the administration said.
A senior administration official later added that the White House has been meeting with industry leaders to encourage producers to use already-approved land to ramp up U.S. capacity with mixed feedback.
“We believe the industry needs to step up,” the official said. “It needs to do more, there needs to be investing in additional production.”
“There are companies out there that have said they are, that are doing the right thing,” the person added. But there are others “who’ve said that it doesn’t matter where the price point is, they’re not going to produce more. They’re instead focused on returning dividends and distributions to shareholders.”
— CNBC’s Pippa Stevens contributed reporting.
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