Judy: As we reported, president
Biden has authorized the release
of more oil from the U.S.
Strategic reserve.
Geoff Bennett digs deeper into
what the administration is doing
to reduce gas prices and the
questions around its broader
approach.
Geoff: President Biden's
announcement is aimed at easing
the oil supply shortage and
lowering gas prices, which have
become a major concern for the
white house just three weeks
ahead of the November midterms.
The release of 15 million
barrels from the nation's
stockpile, known as the
strategic petroleum reserve, is
the final tranche of the 180
million that president Biden
pledged this spring to release
over six months.
This is all unfolding as oil
prices shot higher last week
after OPEC announced a cut in
oil production by 2 million
barrels a day.
Brian Deese is white house
director of the national
economic council and joins me
now.
Welcome back to the newshour.
Brian: Happy to be here.
Geoff: The release of 15 million
barrels from the nation's
reserve, it is a small amount
compared to how much oil is
consumed daily in this country.
What is the expectation for how
effective this will be?
Brian: It is important we put
this move in perspective.
When Putin invaded Ukraine, that
created a global supply
challenge.
It took Russian barrels of oil
off the market and meant we
needed to stabilize supply.
Last spring, the president
announced he would authorize a
historic amount, 180 million
barrels, of releases from our
strategic petroleum reserve.
We have been executing on that
on a monthly basis and providing
supply into the market.
Today's announcement is the last
tranche of that.
Many independent analysts that
has looked at that announcement
and effort in the aggregate
agreed it has had a significant
impact on moderating energy
prices.
If you step back, prices ran up
in the wake of Putin's invasion
of Ukraine.
Because of the actions we have
taken, and other steps, we have
seen prices come down by nearly
30% since midsummer.
What that means is the price of
a gallon of gas in this country
is down by $1.15 from those
highs in the summer.
The president is making good on
the commitment to release 180
million barrels, but he
announced we will, as a
government, repurchase oil when
the price of oil falls to $70 a
barrel so that we can refill
that national stockpile, and
provide the industry and the
markets some certainty that
there will be a buyer at those
lower prices.
That is something we have heard
is important to providing an
incentive to do more production
today.
Geoff: We will talk more about
that in a minute.
What is the right white house
reaction to analysts who say the
strategic petroleum reserve was
created for unforeseen events?
To be used in hurricanes, cyber
attacks, if there are pipeline
shutdowns.
That they should not be used in
times of a political crisis.
There are voters who will see
this happening weeks before the
midterm election, and see
politics at play with this
decision.
Geoff: The use of --
Brian: Use of the reserve is
fundamentally linked to Putin's
invasion of Ukraine and the
unprecedented crisis that
created.
President's announcement of 80
million barrels of release was
made last spring.
This last installment is making
good on that commitment, and to
do so in a way that is a
responsible use of this national
asset.
180 million barrels has
represented about one million
barrels a day in additional
supply onto the market, less
over this.
It'.
The goal of that was to provide
a bridge so our U.S. Domestic
producers could increase
production without American
consumers and the global economy
paying the price and burying the
brunt of Putin's unexpected and
unconscionable invasion of
Ukraine.
This is a responsible use of the
asset in the repurchase plan is
a responsible use.
Geoff: There are analysts who
say tapping the reserves has a
small effect on the prices that
can be seen at the pump.
The consequences could be dire
in the event of a national
crisis.
The president has laid out a
plan to restock the reserves.
That could take a while.
Brian: Respectfully, serious
analysts who have looked at the
say number one, the strategic
petroleum reserve remains with
over 400 million barrels in it.
Well enough to respond to
additional contingencies and
emergencies.
And two, this action the
president has taken across the
set of months in response to
Putin's actions has had a impact
on moderating increases in
global oil prices.
One of the attendant -- the
intended impacts is the price of
a gallon of gas is down by
$1.15.
The price of a barrel of oil is
down 30% over this period.
This was an effort to create a
bridge over an inner many --
many intermediate period of
time.
We have a strong petroleum
reserve.
We have a clear plan to provide
the market certainty about how
we will refill and replenish
that asset.
Geoff: When OPEC plus announced
it would defy the white house
and cut its oil production, was
the white house surprised by
that announcement or the timing?
Brian: We were disappointed.
We thought it was not justified,
given the same dynamics we are
talking about now.
The dominant challenge in the
global market is insufficient
supply and security of supply,
given Putin's invasion of
Ukraine and that has taken oil
of the market.
Insufficient supply used to be
the dominant challenge in global
oil markets.
That is why the president
continues to stay the course of
the commitment he made this year
to release 180 million barrels.
We were disappointed.
At the same time, if you look at
what is happening in prices now,
gas prices are coming down.
They are coming down over the
course of the last week.
They have come down over the
course of the last three months.
There are lots of series
analysts who have looked at this
and have said the president's
use of the strategic reserve in
this context is one important
factor in that trajectory.
Geoff: Does the white house have
less influence now with the
Saudi's given that they rejected
the white house's request to
delay their announcement of this
oil production cut?
Brian: I think we made our views
clear to OPEC.
And we have relationships with
these countries that span a
broad set of issues.
What the president is doing is
using the assets and tools he
has available, both the reserve
and assets, to represent what is
important for the American
people and American economy.
And the steps he has taken has
been focused on this issue.
In the face of an unprecedented
supply shock to the global
economy, what can we do to
stabilize supply and bring down
prices?
That is what we are seeing
happen.
We need to have more of that
happen on behalf of the American
people.
Geoff: In terms of domestic oil
production, president Biden has
been consistent in calling on
oil companies to lower the costs
to consumers.
The oil industry says look,
there are bigger market factors
at play here, they want the
president to open up more
federal lands for drilling,
pipeline construction.
The president has articulated,
agreeing energy policy that does
not really account for any of
that.
Is there any room for compromise
between the energy plan that
president Biden has articulated
and what these oil companies
want to see?
Brian: Today, U.S. Oil
production is at 12 million
barrels a day.
That is at near record highs.
We are on path to hit record
highs in terms of oil production
in 2023.
One of the things the industry
has raised is the concern that
if prices fall, then they may
not have sufficient certainty to
invest in production today.
That is why the president's
announcement about refilling the
strategic reserve is not only a
good approach for taxpayers, but
it is helpful in providing
certainty to industry.
The strategic petroleum reserve
will be a buyer of oil into the
market, when prices come down to
$70 a barrel.
For taxpayers, we have sold oil
at a higher price and are buying
for less price and we can refill
more oil into the strategic
petroleum reserve as a result.
It also provides the industry
certainty that there will be a
buyer at that price.
That is something a number of
them have identified.
Geoff: Brian Deese, director of
the economic council, thank you
for being with us.
Brian: Happy to.