Biden “looking at” tapping strategic oil reserve, Energy Secretary says

WASHINGTON (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.

“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. had been asking for as much as double that amount.

The most powerful tool at Biden’s disposal if he chooses to bring down prices is the SPR, a huge crude stockpile of more than 600 million barrels kept underground in Louisiana and Texas for major 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 currently, 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.”