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Under growing pressure to bring down high energy prices, President Biden announced on Thursday that the United States would release up to 180 million barrels of oil from a strategic reserve to counteract the economic impact of Russia’s invasion of Ukraine.
With midterm elections only a few months away, gasoline prices have risen nearly $1.50 a gallon over the last year, undercutting consumer confidence. And the cost of diesel, the fuel used by most farmers and shippers, has gone up even faster, threatening to push up already high inflation on all manner of goods and services.
“I know how much it hurts,” Mr. Biden said Thursday as he announced the release of oil. “As you’ve heard me say before, I grew up in a family like many of you where the price of a gallon gasoline went up, it was a discussion at the kitchen table.”
Mr. Biden has few tools to control commodity prices that are set on global markets, so he is turning to the Strategic Petroleum Reserve, ordering the largest release since that emergency stockpile was established in the early 1970s. But the move will likely have a modest impact because it cannot make up for all the oil, diesel and other fuels that Russia used to sell to the world but is no longer able to.
“Our prices are rising because of Putin’s action,” Mr. Biden added, referring to President Vladimir V. Putin of Russia. “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.”
Oil prices fell modestly starting late Wednesday before the White House confirmed the plan on Thursday morning. Mr. Biden plans to release one million barrels of oil a day for 180 days. That would represent roughly 5 percent of American demand and 1 percent of global demand. To put that in context, Russian oil exports are down about three million barrels a day.
Reaction from the oil industry and energy experts was muted. The reserve has mostly been used to increase the supply of oil during wars, foreign threats to energy supplies or natural disasters. Smaller releases by the Biden administration from the reserve starting late last year have had little impact on the prices that drivers and businesses pay for gasoline, diesel and other fuels that are made from crude oil.
“It will lower the oil price a little and encourage more demand,” said Scott Sheffield, chief executive of Pioneer Natural Resources, a major Texas oil company. “But it is still a Band-Aid on a significant shortfall of supply.”
Oil prices have been rising over the last year even before Russia’s invasion of Ukraine. After sinking to historically low levels during the early months of the coronavirus pandemic, oil prices recovered to levels not seen for nearly a decade by late last year as economic growth resumed.
Oil exploration and production in the United States and many other countries slid during the pandemic, and still has not quite recovered. American companies, under pressure from investors, have been cautious about spending too much money to drill new wells, lest prices go down again. Instead, many have been paying out larger dividends and buying back their stock.
While that calculation might make sense for individual businesses, it has caused political problems for Democrats who had hoped to reduce the use of oil and other fossil fuels to address climate change. Now, under attack from Republicans for high prices — in particular, the spike in gas prices at the pump — Mr. Biden and Democrats are having to change tack and are trying to get the oil industry to drill more.
Both sides of the political divide are eyeing the November congressional election when inflation is expected to be a major issue for many voters.
On Thursday, Representative Kevin Brady of Texas, the senior Republican on the House Ways and Means committee, issued a news release denouncing “Bidenflation” and condemning what he called “Democrats’ push for crippling tax hikes and more runaway spending.”
Reacting to news of the release from the reserve, a spokesman for Representative Kevin McCarthy, the Republican leader in the House, accused the president of “attacks on American energy production in order to fulfill his campaign promise to ‘get rid of fossil fuels.’”
Mark Bednar, Mr. McCarthy’s spokesman, added: “As a result, the American people are paying the price, as gas is more than $4 per gallon, and we are more reliant on other countries for energy.”
Aides to Mr. Biden are hoping to blunt those criticisms by showing the president taking decisive actions to try and lower prices. In a statement about the oil release Thursday morning, the White House said that Mr. Biden was “committed to doing everything in his power to help American families who are paying more out of pocket as a result.”
They are also trying to pin some of the blame for high prices on oil companies, which the administration argues are not doing enough to produce more energy to increase their profits. The administration plans to call on Congress to oblige companies to produce on more than 12 million acres of federal lands that are permitted for extraction or face fines, a proposal that will probably face an uphill climb.
Energy experts said the release of oil from the reserve would pack more punch if other countries, like China, also sold oil from their strategic stockpiles. The International Energy Agency, an organization of more than 30 countries, will meet Friday and may recommend further releases of oil from national reserves.
The price of Brent crude, the international benchmark, initially dropped nearly 6 percent after a report by Bloomberg News that Mr. Biden was considering the move, but it recovered to a more modest drop of 5 percent to about $108 a barrel around 12:30 p.m. Thursday. West Texas Intermediate crude, the U.S. benchmark, was down 3.7 percent to around $104 a barrel.
Russia oil exports normally represent more than one of every 10 barrels the world consumes. The United States, Britain and Canada have stopped importing Russian oil, and many oil companies and shippers in Europe and elsewhere have voluntarily stopped buying Russia’s energy products. That has produced a deficit so far of about three million barrels a day.
The average price of regular gasoline in the United States is $4.23 a gallon, according to AAA, the motor club. That’s about the same as it was a week ago but up 62 cents a gallon in the last month.
Oil prices had dropped this week after peace talks between Russia and Ukraine showed the first signs of meaningful progress, though Russian officials, including Mr. Putin, have sent mixed messages about their intentions. Energy traders are also concerned that global demand could fall as China, the world’s largest oil importer, imposes lockdowns in Shanghai and other places to deal with coronavirus outbreaks.
“The price effect is likely to be short-term,” David Goldwyn, who was a senior State Department official in the Obama administration, said about Mr. Biden’s announcement. “But part of the benefit of this release is that it will provide a bridge to when new physical supply comes online in the second half of this year from the U.S., Canada, Brazil and other countries.”
Some environmentalists criticized the reserve release. “Putting more oil on the market is not the solution to our problem but the perpetuation of our problem,” said Mark Brownstein, a senior vice president at the Environmental Defense Fund.
But Meghan L. O’Sullivan, director of the Geopolitics of Energy Project at Harvard’s Kennedy School, said releasing more oil to alleviate shortages would not imperil the transition to clean energy. “What the last month has told us is that if there is no energy security today, the appetite for taking hard steps on the path of transition will evaporate,” she said.
The release is not without risk. Goldman Sachs analysts wrote in a research note that a large discharge could cause “congestion” on the Gulf Coast, keeping new oil production from fields in West Texas out of pipelines and storage tanks.
Mr. Biden’s move could also discourage Saudi Arabia and other global producers from increasing supply to reduce prices. OPEC Plus, a group led by Saudi Arabia that includes Russia, on Thursday decided to maintain a policy of only modestly increasing production.
Bob McNally, who was an energy adviser to President George W. Bush, said the release was “not big enough to offset the potential loss of Russian oil exports should the conflict and sanctions pressure continue to extend.”
The oil market tends to go in cycles, so the release may be an opportunity for the government to sell high and, later, buy low, potentially earning billions of dollars for the Treasury. The government will use that money to buy oil to refill the reserve, which in turn could help raise prices again.
While pushing up those prices, Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy and a former aide to President Barack Obama, said an eventual refill could also “send a signal to shale producers that may help encourage them to invest in more production, which may help with today’s potential shortages.”
The U.S. reserve contains nearly 600 million barrels, approximately a month of total American consumption. The maximum amount of oil the reserve can release is 4.4 million barrels a day.
The reserve was established after the 1973 energy crisis, when Saudi Arabia and other Arab producers proclaimed an oil embargo. President George W. Bush enlarged the reserve’s capacity shortly after the Sept. 11 terrorist attacks.
Eleven million barrels were released from the reserve’s caverns following Hurricane Katrina in 2005, which shut down Gulf of Mexico production and refineries. Another 30 million barrels were released during the 2011 Arab Spring to relieve rising energy prices.
