Biden orders release of 50M barrels of oil from strategic reserve in hopes of lowering gas prices

Gas prices
Posted at 7:34 AM, Nov 23, 2021
and last updated 2021-11-23 17:43:33-05

The White House announced Tuesday that President Joe Biden had directed the Department of Energy to release 50 million barrels of oil from the U.S.'s strategic reserve in the hopes of lowering gas prices.

"We shouldn't stand by idly and let prices drop on their own. Instead, we're taking action," Biden said in prepared remarks from the White House on Tuesday.

In a statement released Tuesday morning, the White House said that of the 50 million barrels that will be used up from the reserve, 32 million barrels would "eventually return" in an exchange that will take place in the years ahead. Eighteen million barrels will act as "an acceleration into the next several months of a sale of oil that Congress had previously authorized."

In the statement, the White House blamed current high gas prices on supply chain issues wrought by the COVID-19 pandemic.

"While our combined actions will not solve the problem of high gas prices overnight, it will make a difference," Biden said. "...I will do what needs to be done to reduce the price you pay at the pump."

The price of gas has been elevated across the country in the past year. According to AAA, the current national average for a gallon of gas is $3.40, up from a national average of $2.11 a year ago. AAA says Florida drivers are going to find the most expensive Thanksgiving gas prices in 8 years.

“Motorists in Tampa hitting the road will likely see prices fall in the days ahead," said Patrick De Haan, the Head of Petroleum Analysis at GasBuddy.

ABC Action News spoke to De Haan on what the Biden Administration's move means for people at the pump. On how soon you might see a change, in Tampa, he thinks gas stations that are refilling their tanks today are paying a far lower price, so he thinks you should start to notice it fairly quickly.

"Gas stations will start to reduce their price maybe a couple of cents by tomorrow, a couple of cents on Thanksgiving, and into the weekend, that should continue for the next one to two weeks, at the end of which, prices should be 15 to 25 cents a gallon lower," said De Haan.

Beyond that, he says there's a lot of uncertainty. De Haan says don't expect gas prices to get anywhere back down to their early pandemic level.

“This is going to be temporary, and I think what’s most important here, the President is looking to deliver meaningful, long-term relief to gas prices, and I definitely do not think that this release today is going to solve that problem," said De Haan.

Chris Jones, a faculty member in the Economics Department at the University of South Florida, says he wouldn't anticipate any substantial changes in gasoline prices over the Thanksgiving holiday or anytime really soon, and he thinks whatever changes there would be are going to be short-lived.

“At the end of the day, with US consumers and businesses demanding anywhere between 18 to 20 million barrels worth of refined and processed oil for fuel products, releasing 50 million barrels, which is basically about the equivalent of 7 and a half percent of the inventory that’s in our US Strategic Petroleum Reserve, isn’t going to make much of a dent overall in terms of prices at the pump," said Jones.

The move announced by the White House on Tuesday comes just days after Biden directed the FTC to investigate potential "illegal conduct" and anti-competitive behavior by gas and oil companies over keeping prices higher than they needed to be.

Biden has also pressured oil-rich countries around the world to pump more oil, but his efforts have not yet made headway.