Biden will tap oil reserves again to cut gas prices

US President Joe Biden on Thursday announced the largest-ever release of oil from the nation's Strategic Petroleum Reserve — an average of 1 million gallons a day for the next 180 days — in a move to lower high prices at the pump.

"There isn't enough supply. And the bottom line is if we want lower gas prices, we need to have more oil supply right now," Biden said. "This is a moment of consequence and peril for the world, and pain at the pump for American families."

The average price of a gallon of regular gasoline in the US was $4.23 on Thursday, according to the American Automobile Association (AAA). That is about the same as a week ago, but up 62 cents a gallon over last month.

Biden said it wasn't known how much gasoline prices could decline as a result of tapping the oil reserves, but he suggested it might be "anything from 10 cents to 35 cents a gallon".

He said the move would act as a "wartime bridge" as the US and global oil production ramp back up after the COVID-19 pandemic.

The released oil amount would represent roughly 5 percent of American demand and 1 percent of global demand.

The move comes as the Ukraine-Russia conflict has accelerated the rise in oil and gasoline prices, and as inflation in the US reached a 40-year high in February.

Russian oil exports usually account for more than 1 of every 10 barrels that the world consumes. The US, the UK and Canada have stopped importing Russian oil. So far, that has resulted in a global supply deficit of around 3 million barrels a day.

The Biden administration earlier in the month announced a coordinated release of oil from the reserves in conjunction with other nations. The president also released around 50 million barrels in November, which the US said at the time was the largest release from the reserves ever.

The two moves had little impact on the price of gasoline, diesel and other fuels made from crude oil, and oil prices have continued to rise with global limits on Russian energy exports.

Analysts said this latest planned release of additional oil from the reserves is unlikely to be enough to compensate for lost supplies from Russia.

"It will lower the oil price a little and encourage more demand," Scott Sheffield told the Times. He is CEO of Pioneer Natural Resources, a major Texas oil company. "But it is still a Band-Aid on a significant shortfall of supply."

"While stock releases will help to keep a lid on prices in the short term, we think it will take an increase in global production to spark a sustained fall in prices," Edward Gardner, commodities economist at Capital Economics, told the BBC.

Biden is also putting pressure on US oil companies to pay extra if they choose not to use oil wells on land they lease from the government and to speed up the adoption of greener energy sources.

He said he will invoke the Defense Production Act to encourage the mining of critical minerals for batteries in electric vehicles, part of a broader push to shift toward cleaner energy sources and reduce the use of fossil fuels.

The US oil reserves are primarily used to increase oil supplies during wars, foreign threats to energy supplies or natural disasters.

Officials said they were not focusing on "near-term short-term price action" in the oil market. Instead, they said their goal was to address the supply shortfall caused by the withdrawal of Russian oil from the market, adding that this would translate into relief for US consumers.

Following Biden's announcement, US benchmark West Texas Intermediate crude was about 4.7 percent lower on Thursday, at about $103 a barrel, while Brent crude, the international benchmark, was about 5 percent lower at about $108 a barrel.