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U.S. sells oil reserves as Biden tackles pump prices ahead of elections

Commodities Oct 19, 2022 09:10PM ET
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© Reuters. FILE PHOTO: U.S. President Joe Biden calls for a federal gas tax holiday as he speaks about gas prices during remarks in the Eisenhower Executive Office Building's South Court Auditorium at the White House in Washington, U.S., June 22, 2022. REUTERS/Kevin
 
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By Nandita Bose, Jarrett Renshaw and Steve Holland

WASHINGTON (Reuters) - U.S. President Joe Biden announced a plan on Wednesday to sell off the rest of his release from the nation's emergency oil reserve by year's end and begin refilling the stockpile as he tries to dampen high gasoline prices ahead of midterm elections on Nov. 8.

Biden is seeking to add enough supply to prevent near-term oil price spikes that could punish Americans, and assure U.S. drillers that the government will enter the market as a buyer if prices plunge too low.

He said 15 million barrels of oil will be offered from the Strategic Petroleum Reserve (SPR) - part of a record 180 million-barrel release that began in May, and added the United States is ready to tap reserves again early next year to rein in prices.

“We’re calling it a ready and release plan,” Biden said at a White House event. “This allows us to move quickly to prevent oil price spikes and respond to international events.”

Biden's use of the federal government's reserve to manage oil price spikes and attempts to increase U.S. production underscore how the Ukraine crisis and inflation have changed the policies of a president who came into office vowing to cut U.S. dependence on the fossil fuel industry.

The White House had an added sense of urgency after the Saudi Arabia-led Organization of the Petroleum Exporting Countries rankled Biden by siding with Russia and agreeing to a production cut, prompting the president to declare that the U.S.-Saudi relationship needs a revaluation.

"With my announcement today, we're going to continue to stabilize markets and decrease the prices at a time when the actions of other countries have caused such volatility," Biden said.

Biden blamed Russian President Vladimir Putin’s invasion of Ukraine for higher crude and gasoline prices, while noting prices had fallen 30% from their peak earlier this year.

He also repeated a plea to U.S. energy companies, gasoline retailers and refiners, asking them to stop using record-breaking profits to buy back stock, and to invest in production instead.

Prices “are not falling fast enough,” he said.

“Families are hurting,” and gasoline prices are squeezing their budgets, he added.

The president, facing criticism from Republicans who charge he is tapping the SPR for political reasons and not because there is an emergency, also said he would refill the nation's stockpiles in the upcoming years.

He said his aim would be to replenish stocks when U.S. crude is around $70 a barrel, a level he said would still allow companies to profit while being a good deal for taxpayers. The U.S. benchmark was around $85 on Wednesday. [O/R]

The SPR, which is now at its lowest levels since 1984, is more than half full with more than 400 million barrels of oil, Biden said, “more than enough for any emergency drawdown.”

The administration's plan was to end the sale of the 180 million barrels in November. However, purchases by companies, including Marathon Petroleum Corp (NYSE:MPC), Exxon Mobil Corp (NYSE:XOM) and Valero Energy Corp (NYSE:VLO), were slower than expected over the summer and some 15 million barrels remained unsold.

Those will be put up for bidding for delivery in December, a senior administration official said.

GRAPHIC: The gap between retail and wholesale gasoline prices https://graphics.reuters.com/USA-BIDEN/GASPRICES/lbvgnbmyqpq/chart.png

PUSHING ENERGY COMPANIES TO DO MORE

U.S. presidents have little control over petroleum prices, but the country's massive gasoline consumption - the highest in the world - means high prices at the pump can be political poison. Retail gasoline prices have fallen from a high in June, but remain above historical averages, and are a major contributor to inflation.

The gap between wholesale and retail prices has grown, too, spurring White House warnings against price-gouging.

Biden said oil companies should feel more confident about investing in production with the new SPR repurchase pledge, and stop pushing stock buybacks.

"So my message to all companies is this: You're sitting on record profits and we're giving you more certainty. So you can act now to increase oil production," he said.

Companies "should not be using your profits to buy back stock or for dividends. Not now, not while a war is raging," he said, asking them to bring down prices they charge at the pump.

In recent weeks, the oil industry has grown increasingly concerned the administration might take the drastic step of banning or limiting exports of gasoline or diesel to help build back sagging U.S. inventories. They have called on the administration to take the option off the table, a move officials are unwilling to do.

"We are keeping all tools on the table, you know, anything that could potentially help ensure stable domestic supply," the official said.

U.S. sells oil reserves as Biden tackles pump prices ahead of elections
 

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Comments (34)
Andrew Ulferts
Andrew Ulferts Oct 20, 2022 9:57AM ET
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I LOVE how First Last and Brad Albright, and Maxi Pad Maximus get ratio’d so badly in every comments section. Now is not the time in history to take the side of the communists. We the People are ********ed, and increasingly united.
First Last
First Last Oct 20, 2022 9:57AM ET
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How is the US gov't having a bigger or smaller SPR communist or anti-communist?  Too many people are brainwashed deplorables, and when they are united by their cult leaders, they become a mindless mob.
Brad Albright
Brad Albright Oct 20, 2022 9:57AM ET
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LOL. It is true that the preponderance of commenters here are American-haters and gullible know-nothing kooks. If you think having them click a thumbs down button is a measure of the veracity or quality of a comment, you are as deluded as they are. The way I see it, the more thumbs downs, the better. It means I'm getting to them. Now please, click away so I'll know I've gotten to you too.
Scot House
Scot House Oct 20, 2022 9:57AM ET
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Andrew, I think all three of those guya are moderators here and lovers. Its befitting.
Scot House
Scot House Oct 20, 2022 9:57AM ET
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Brad Albright only kook here is you Fawk face.
Michael Mcdonough
Michael Mcdonough Oct 20, 2022 6:29AM ET
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Prices going the other way..Wrong Way Joe
Pankaj Ahuja
Pankaj Ahuja Oct 20, 2022 3:52AM ET
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Joe Biden has gone crazy will make America suffer for long with his stupid decisions
Maximus Maximus
Maximus Maximus Oct 20, 2022 3:39AM ET
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when the enemies of the US, the right-whiners and russian trolls go off the rails with their hissy fits, you know biden has made the right decision again.
Andrew Ulferts
Andrew Ulferts Oct 20, 2022 3:39AM ET
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How so? Did oil prices drop? Wrong again Maxi Pad
Brad Albright
Brad Albright Oct 20, 2022 3:39AM ET
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Andrew Ulferts Yes, they've dropped significantly since the drawn down was implemented. Don't let your partisan preferences blind you to reality. You are too smart for that.
Oswald Chong
Oswald Chong Oct 19, 2022 11:54PM ET
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Entitlement at its best.
Oswald Chong
Oswald Chong Oct 19, 2022 11:54PM ET
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Americans having entitled mentality.
Antonio Velardo
Antonio Velardo Oct 19, 2022 11:44PM ET
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He is the worst I have seen in many years.
Phil Ht
Phil Ht Oct 19, 2022 11:12PM ET
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Cut production spend reserves. Liberal economics
Brad Albright
Brad Albright Oct 19, 2022 11:12PM ET
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Production has gone up since Biden took office. Get your facts straight.
Scot House
Scot House Oct 19, 2022 11:12PM ET
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Brad Albright might want to fact check yourself. How about you get the spam off this site instead if sawking off diaper pants.
Scot House
Scot House Oct 19, 2022 10:14PM ET
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It wont help him at all. What a joke. 24 cant get here soon enough.
ZS Beck
ZS Beck Oct 19, 2022 9:50PM ET
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How about another stimulus check? You can buy votes with that. Come on Biden it worked last time. Thanks again for the inflation you caused with your unlimited money pumping
Brad Albright
Brad Albright Oct 19, 2022 9:50PM ET
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How did President Biden buy votes with a stimulus check before he was elected? Man, there are some real geniuses among the America haters here.
 
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