White House announces historic release from strategic petroleum reserve

Since Russia began its military invasion of Ukraine in February, the oil market has seen increased volatility, with fuel prices swelling at rates not seen in nearly a decade.

In an effort to immediately increase the supply of oil and achieve energy independence that will reduce the demand for oil, the White House announced a two-part plan on March 31 in response to “Putin’s price hike,” said a White House news release.

As part of the plan, a historic release of 1 million additional barrels per day on average every day for the next six months will be used to provide a supply to serve as a bridge until domestic production ramps up.

“The Department of Energy will use the revenue from the release to restock the strategic petroleum reserve in future years,” the White House said. “This will provide a signal of future demand and help encourage domestic production today, and will ensure the continued readiness of the strategic petroleum reserve to respond to future emergencies.”

Increased oil production

Domestic production is expected to increase by 1 million barrels per day this year and by nearly 700,000 barrels per day in 2023, said the White House news release.

However, more can be done domestically.

According to the White House release, more than 12 million acres of nonproducing federal land with 9,000 unused but already approved permits for production. Companies producing from their leased acres and existing wells will not face higher fees, but companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a fee for each idled well and unused acre, said the White House release.

Energy independence

The United States is the largest oil producer in the world and a net energy exporter, said the White House news release.

To achieve energy independence, President Joe Biden will call on Congress to pass his plan to speed the transition to clean energy that is made in America. The plan will create millions of jobs while saving families money in the immediate future, according to the release.

In addition, President Biden will issue a directive authorizing the use of the Defense Protection Act to secure American production of critical materials to bolster a clean energy economy.

As recent as this week, the Department of Energy opened applications for more than $3 billion in new bipartisan infrastructure law funding, while the Biden administration advanced smart standards that will lower consumer costs, including a roadmap of 100 actions this year.

Market reaction

The price per barrel of Brent crude oil was down 4.65%, while West Texas Intermediate crude oil was down 3.6% following the White House announcement on Thursday morning, according to OilPrice.com. LL