US President Joe Biden, faced with record inflation undermining his popularity, will tap into America’s huge oil reserves as never before to try to stem soaring prices at the pump.
He ordered the drawing of 1 million barrels a day from strategic oil reserves for six months, an initiative “unprecedented” in American history, the White House announced on Thursday.
The prospect of this record dumping of American black gold was already lowering prices on Thursday in London and New York by around 5%.
This initiative must, according to a press release from the American executive, serve to “make the transition until (American) production increases at the end of the year”.
The US administration will use the revenue from the sale of these reserves to replenish the stocks “in the years to come”.
The White House, which the Republican opposition accuses of weighing down oil activity in the United States, promises to “do everything (it) can” to encourage extraction on American territory.
Joe Biden, for example, is now asking Congress to impose fines on companies that have the necessary permits and land, but which 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.
The US Strategic Petroleum Reserves were created in 1975 to counter 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 continuously from these strategic reserves since the fall, when the rise in oil prices set in: it announced in November that it wanted to release 50 million barrels, then again 30 million at the start of March.
Inflation
According to the latest inflation indicator, the PCE index released Thursday by the Commerce Department, consumer prices continued to climb in March in the United States, rising 6.4% year on year and 0, 6% over one month.
With the approach of the midterm legislative elections, the White House has made the fight against this runaway price, not seen since the 1980s, one of its priorities.
Drawing even more from 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 little finger “.
The thirteen members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their ten allies led by Moscow (OPEC +), in fact 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 and thus calm the volatility of prices.
On March 7, oil reached its historic price records reached during the 2008 financial crisis, exceeding 130 dollars a barrel before falling back to between 100 and 110 dollars currently.
The price of gasoline at the pump in the United States exceeded its 2008 peak, well above $4 per gallon (3.78 liters).