Joe Biden takes action on high gas prices
President Joe Biden has confirmed that Washington will specifically draw on its strategic reserves to try to stabilize prices at the pump.
Joe Biden, after his speech in Washington on Wednesday, October 19, 2022.
AFP
President Joe Biden on Wednesday called on US companies to increase their oil production and confirmed that the US will continue to draw on its strategic reserves in an effort to stabilize prices at the pump.
This announcement, in a tense electoral context, comes two weeks after the decision, seen as an affront to Washington, by OPEC and its allies, including Russia, to lower their oil production quotas.
Fearing that this would translate into a rise in fuel prices just before the November 8 runoff, crucial for the end of his first term, Joe Biden insisted on the matter. “Families are suffering,” he said gravely in a White House speech, aware that high inflation is his Achilles heel, over-exploited by his Republican rivals.
Criticism of oil tankers
It is urgent “to increase American oil production in a reasonable way”, the president then pleaded. An increase in domestic production that must take place “without delaying our transition to clean energy”, however, he hoped. Joe Biden also reiterated his criticisms of some industrial players in the hydrocarbon sector.
“The refinery’s profits are double the usual. And distributors’ margins exceed the norm by more than 40%, “he tweeted in the wake of his press conference. But the strongest measure is Wednesday’s confirmation that the US will draw another 15 million barrels from its strategic reserves in the attempt. to ease oil prices.
This new extraction, which will be carried out in December, constitutes the last part of the program announced in the spring by the American head of state and which provided for the release of a total of 180 million barrels to cope with the surge in prices following the invasion from Ukraine. .
Top up the reserves
At the same time, the US president plans to put in place a mechanism to replenish long-term strategic reserves. The US government will begin to buy back crude when the price per barrel of West Texas Intermediate (WTI), the American reference variety, falls in a range of $ 67 to $ 72.
This measure, which should send a clear signal to the markets, also aims to encourage large national companies to relaunch their production. The administration plans to negotiate repurchase agreements at an agreed price in advance, through an auction process, which will limit the risks associated with price volatility, a government official explained.
Since the beginning of September 2021, the United States has extracted more than 212 million barrels of strategic reserves, which are at the lowest level since June 1984. Never has a president released such quantities since the creation of these reserves in 1975.
Although it has dropped 22% from its mid-June peak, the price of regular gasoline remains 16% above last year’s level at the same time. As for diesel, it has only moderately declined since June, due to very low inventories, and costs an average of 50% more than a year ago.
AFP
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