On Sunday, the Organization of the Petroleum Exporting Countries (OPEC), which comprises major oil-producing nations including Saudi Arabia and Russia, announced that it would cut oil production by more than 1.16 million barrels per day starting in May. This move will bring the production down to 3.66 million barrels per day, as reported by Reuters. The announcement has had a significant impact on oil prices, causing them to surge on Monday.
Over the past two years, President Joe Biden has used the Strategic Petroleum Reserve (SPR) to tamp down oil price increases. However, he has now depleted it to its lowest level since 1983, with the reserve holding only 371 million barrels today compared to 571 million barrels a year ago. This depletion leaves the administration with limited options to address the expected drop in production by OPEC.
Last year, President Biden had announced his intention to stop selling oil from the SPR and start refilling the tanks. His administration had put out requests for bids for oil from suppliers to restock the emergency reserve when the price dropped to $70 a barrel. However, the plans were eventually canceled, even after oil prices fell into the $60s per barrel range. The administration never awarded any bids to restock the SPR.
The Biden Administration has instead urged OPEC to open its spigots and keep oil prices low, despite supply problems on the world market caused by Russia’s war on Ukraine. The impact of OPEC’s decision can already be seen, as wholesale gasoline futures rose on Monday. The national average for gasoline at the pump has increased to over $3.50, with regular gas costing $3.79 a gallon in Anchorage at Holiday on Bragaw St.
Earlier this year, Rep. Mary Peltola skipped out on a vote that would force the administration to stop draining the SPR.
