(Washington) US President Joe Biden, faced with record inflation undermining his popularity, promised Thursday to “relieve households” who are always paying more at the pump, by drawing massively from the country’s reserves.
Updated yesterday at 3:16 p.m.
The Democrat also strongly attacked the oil companies, which he accused in a speech of “getting rich” at the expense of motorists and accumulating profits instead of investing in production.
Joe Biden has ordered to draw one million barrels a day from US strategic oil reserves for six months, an unprecedented move.
The prospect of this record spill of American black gold was already lowering prices on Thursday in London and New York.
The president estimated that as a result of his decision, the price of gasoline “could drop quite significantly,” from 10 to 35 cents per gallon.
The price at the pump in the United States, which has exceeded its 2008 peak, is now well above $4 per gallon (3.78 liters).
The White House, which the Republican opposition accuses of weighing down oil activity in the United States, also promises to “do everything (it) can” to encourage extraction.
Joe Biden was very critical of oil companies on Thursday for “sitting on their record profits” instead of investing and producing more.
“No American company should take advantage of a pandemic or the actions of Vladimir Putin to enrich itself at the expense of households,” he castigated.
In particular, the president would like Congress to impose fines on companies that have the necessary permits and land, but do not operate them.
Still with the idea of strengthening American energy independence, the president will invoke the “Defence Production Act”, a text inherited from the Cold War which allows him to take economic decisions by decree, to encourage the development of green energies.
salt caves
The 79-year-old Democratic president has been trying since the invasion of Ukraine to lay the blame for soaring inflation on Russian President Vladimir Putin, even though the rise in prices had started before.
But this rhetoric does not seem to convince Americans, as legislative elections approach in the fall which threaten to reduce Joe Biden to impotence for the rest of his mandate.
His confidence rating barely exceeds 40%, according to various polls, a very low level.
He may hope to bring it back up with this unprecedented mobilization of strategic reserves, created in 1975 to counteract the effects of oil shocks.
Buried in huge salt caverns up to 800 meters deep along the coast of the Gulf of Mexico, they can store up to 714 million barrels of black gold, but currently hold 568 million barrels.
The American administration has already been drawing on it since the fall: it announced in November that it wanted to release 50 million barrels, then another 30 million at the start of March.
Inflation
According to the latest inflation indicator to date in the United States, the PCE index published Thursday by the Department of Commerce, consumer prices continued to climb in March in the United States, rising by 6.4% over a year and 0.6% over one month.
With the approach of the mid-term legislative elections, the White House has made the fight against this runaway price, never seen since the 1980s, one of its priorities.
Tapping even more into strategic reserves can help, but “the market is currently flooded with news that moves prices up or down,” recalls John Kilduff.
The initiative of the Biden administration would have all the more impact if “other countries also step up to the plate”, underlines the specialist, regretting that the members of OPEC + “are not moving for the moment the small finger “.
The thirteen members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their ten allies led by Moscow (OPEC+), agreed on Thursday to a new opening of their black gold floodgates, but very modest : around 432,000 barrels per day for the month of May.
The international community had however multiplied the calls for them to pump more cheerfully.
On March 7, oil came close to its historic highs reached during the 2008 financial crisis, exceeding 130 dollars a barrel before falling back to between 100 and 110 dollars currently.