President Joe Biden reached for the US strategic oil reserves Tuesday in an attempt to flatten fuel price rises pummeling Americans at Thanksgiving — and hoping to reignite his own political fortunes.
The White House said the effort to tamp down the oil market by using emergency reserves was for the first time being done in conjunction with other countries, following weeks of negotiations.
“This release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom,” the White House said in a statement.
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As the world emerges from the Covid-19 pandemic and subsequent lockdowns, oil production has not kept pace with rocketing demand, pushing prices up.
In the United States, the hike in gasoline prices is one of the main culprits in a wider surge of inflation.
And Biden’s announcement comes as Americans enter the holiday season, with millions traveling home or on vacation for this Thursday’s Thanksgiving.
Average fuel prices at filling stations are $3.41 a gallon, the highest level since 2014, according to latest figures from the AAA motorists’ association. This represents an increase of $1.29 over gasoline prices a year ago.
Biden and his wife Jill are also traveling to family or friends ahead of Thanksgiving, although in his case it will be on Air Force One later Tuesday for a short flight to the picturesque island of Nantucket.
But high fuel prices are not only making holiday travel expensive. High transport costs are also juicing costs throughout the economy, leading to soaring inflation for everything from second hand cars to the Thanksgiving turkeys.
While the economy is generally doing well, with employment rapidly rising, wages up and the stock market climbing ever higher, sticker shock at the pump and in the supermarket has soured the national mood. That in turn has badly weakened Biden.
In the latest average of polls from fivethirtyeight.com, Biden’s approval rating is just 42.8, with 52.2 percent disapproving.
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The US strategic reserves, held in underground depots in Texas and Louisiana, are the largest emergency supply of oil in the world.
A senior administration official said the releases would start in mid- to late December, and that further intervention was possible to steady the market, “responding to a once-in-a-century pandemic.”
“As the president has said, consumers are facing pain at the pump right now,” the official said.
“The president stands ready to take additional action if needed and is prepared to use his full authorities, working in coordination with the rest of the world, to maintain adequate supply as we exit the pandemic.”
Against a backdrop of rising output, oil prices have already dipped nearly 10 percent in the last few weeks. But officials echoed Biden’s repeatedly stated concerns that despite easing of crude values, prices of gasoline for drivers have only gone up.
“There is mounting evidence that declines in oil prices and the cost of other inputs into gasoline are not translating into lower prices at the pump,” said the senior official, who spoke on condition of anonymity.
The official said the government was looking into “anti-competitive practices” and will “examine whether illegal conduct is costing families at the pump.”
The approach is “two-pronged. First, making sure that, you know, the price of oil is coming down, reflecting the fact that we have to have supply matching demand, but also making sure that those savings are passed through to consumers,” he said.
“We expect the industry to be passing through the savings to consumers as quickly as possible.”