A release of crude oil from the U.S. emergency reserve is one option the Department of Energy is considering in a bid to tame prices at the gas pump. Another is a ban on oil exports, Energy Secretary Jennifer Granholm said, as quoted by the Financial Times.
Granholm called the emergency reserve release and the export ban tools, saying “all tools are on the table” as the administration tries to bring gasoline prices under control.
U.S. prices at the pump are at seven-year highs thanks to a strong rebound in demand coinciding with higher international oil prices, according to the AAA, which earlier this month reported that the U.S. average stood at $3.20 per gallon, which was $1.02 more than the average this time last year.
“Global economic uncertainty and supply chain concerns caused by the lingering COVID-19 pandemic could be playing a role in keeping crude oil prices elevated,” AAA spokesperson Andrew Gross said in a statement earlier this week.
The Biden administration has, since its entry into office, signaled that it would wage war on the U.S. oil and gas industry as it seeks to implement an ambitious energy transition agenda leaning heavily on the electrification of transport. However, this agenda has clashed with the political realities of gas prices and ruling party popularity just a year before midterms.
It was this clash and the eventual prevailing of political realities that had the White House reach out to OPEC and ask it to boost production as a way of taming U.S. retail gasoline prices. OPEC, however, dug its heels in and refused to cooperate, forcing the Biden administration to consider alternative measures.
“SPR [releases] came on the table a nanosecond after Jake Sullivan was rebuffed in Riyadh and the administration realized shale producers wouldn’t be able to increase production quickly enough,” Bob McNally, president of Rapidan Energy Group, told the FT.
By Charles Kennedy for Oilprice.com
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