The White House announced Tuesday that it will release 50 million barrels of oil from the Strategic Petroleum Reserve, as a way to try to flatten the curve of rising fuel prices.
The move may surprise Americans, who witnessed Energy Secretary Jennifer Granholm laugh off a question about skyrocketing cost of fuel during a televised news interview on Nov. 5.
“[In] Sturgis, Michigan, it is $2.89 a gallon. I guess that’s better than in California,” Bloomberg Host Tom Keene said to Granholm during the interview, noting that gas prices had reached all-time highs. “What is the Granholm plan to increase oil production in America?”
“That is hilarious,” Granholm responded, throwing back her head and cackling with laughter on the Nov. 6 show. “Would that I had the magic wand on this. Oil is a global market. It is controlled by a cartel. That cartel is called OPEC, and they made a decision yesterday that they were not going to increase beyond what they were already planning.”
When @TomKeene asks @SecGranholm the very pertinent question on whether America (and no OPEC+) needs to increase oil production. The response, amid laughing: “That’s hilarious” #OOTT pic.twitter.com/LToWUIxTb0
— Javier Blas (@JavierBlas) November 5, 2021
The cost in Sturgis, Michigan has since then risen to $3.19 a gallon. In Anchorage, drivers pay between $3.39 and $3.54 a gallon, while Californians are paying $4.70.
The Granholm laugh video, which went viral on social media, has cost the Biden White House enormously.
The president has a completely different message today. It’s now blaming the Covid-19 pandemic that it says forced an unprecedented global economic shutdown.
“As the world is re-opening from a near economic standstill, countries across the globe are grappling with the challenges that arise as consumer demand for goods outpaces supply,” the White House said in its statement, ignoring the fact that refining capacity is the real chokepoint in the supply-and-demand chain. A major refinery hasn’t been built in America in decades.
“But here in the United States, the economic recovery is stronger and faster than anywhere else in the world – according to the Organization for Economic Co-operation and Development, the US is the only one of the major economies to have returned to pre-pandemic gross domestic product levels – in large part due to President Biden’s American Rescue Plan, which funded and facilitated a nationwide vaccination program, provided resources to schools and small businesses to keep them open in the face of COVID waves and put money in the pockets of those hit hardest by the pandemic,” the White House said in a 95-word, run-on sentence.
In fact, 50 million barrels is barely a blip, compared to what is needed. The world goes through 100 million barrels a day.
Biden’s statement went on to explain how much more Americans have in disposable income this year — $100 a month — than last year, the president said, “even as COVID has continued to complicate the economic recovery around the world.”
And yet, the value of that dollar has shrunk due to Biden inflation. The consumer price index in Alaska, for example, is up 6.3 percent over last year.
Biden went on to say oil supply has not kept up with demand, but did not acknowledge his own actions in creating a supply problem by creating uncertainty for oil developers, producers, and financiers. On the first day of his administration, Biden attacked the energy sector by canceling the permits for the Keystone XL pipeline, and banned all oil leases on federal land.
In June, he drove a dagger through the leases in the Arctic National Wildlife Refuge, and because the Biden Administration refused to ask for a court review of Federal Judge Sharon Gleason’s decision, the White House forced a new supplemental environmental review for the Willow Project in the National Petroleum Reserve Alaska, which will delay or kill the project.
Earlier this month, Russia and member nations of the Organization of the Petroleum Exporting Countries (OPEC) announced they would not increase their oil production, even after Biden implored them to help Americans out.
Today, the president said he is working with countries across the world to address the lack of supply:
“And, as a result of President Biden’s leadership and our diplomatic efforts, this release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent.”
The Department of Energy will make available releases of 50 million barrels from the Strategic Petroleum Reserve in two ways:
- 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead. The exchange is a tool matched to today’s specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the Strategic Petroleum Reserve over time to meet future needs.
- 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized.
Oil analysts were unimpressed: “They are trying to put a bandaid on an arterial bleeding, it just doesn’t work. It’s the EPA, the permitting process, and restrictions on greenhouse gas emissions related to permitting of refining capacity that will cause prices to stay high for long time,” said one analyst, who predicted that the effect from the release from the Strategic Petroleum Reserve would be short-lived, since the chokepoint is really at the refineries.
The president went on to blame the oil industry itself for not lowering the prices at the pump.
“There is mounting evidence that declines in oil prices are not translating into lower prices at the pump. Last week, the President asked the Federal Trade Commission to examine what is going on in oil and gas markets and to consider “whether illegal conduct is costing families at the pump,” the White House said.
The messaging from the White House may appear incoherent, considering that just three weeks ago in Glasgow, Scotland, Biden told the Global Climate Summit that the world must drastically reduce the use of petroleum in order to save a warming planet.