The Biden administration is taking another swing at bringing down gasoline prices, and this time it's busting out some new tools. On Wednesday, President Joe Biden outlined a plan to pump more oil into the economy and boost production by having the government serve as a buyer of last resort when prices fall.
To start, the Strategic Petroleum Reserve (SPR) will release an additional 15 million barrels in December, completing the 180-million barrel drawdown announced in March.
Biden touted the releases as having helped bring down the price of crude oil in recent months, citing Treasury Department economists who estimate the SPR helped shave 40 cents per gallon off the price. Gasoline currently costs $3.85 per gallon on average, according to AAA.
The president also said more SPR releases may be coming this winter "if needed."
"We're calling it a 'Ready and Release' plan," he said. "This allows us to move quickly to prevent oil price spikes and respond to international events."
In addition, Biden pushed back against criticism from Republicans that his administration has reduced oil production as part of its climate agenda.
"Let's debunk some myths here. My administration has not stopped or slowed U.S. oil production, quite the opposite," he said. "We're producing 12 million barrels of oil per day and by the end of this year, we will be producing 1 million barrels a day, more than the day in which I took office."
Longer-term, the administration said it will step in to purchase oil itself to boost supply, provide stability in the market, and refill the country's oil reserves.
"The United States government is going to purchase oil to refill the [SPR] when prices fall to $70 a barrel, " Biden said. "That means oil companies can invest to ramp up production now, with confidence they'll be able to sell their oil to us at that price in the future."
The logic here is that oil companies may be holding off on investing in new production out of fear that demand plummets again, like it did early in the pandemic. With the government standing by as a buyer of last resort, in theory these companies should have more peace of mind to sink their profits into expansion.
The current price of West Texas Intermediate crude oil is around $86 per barrel, nowhere near the government's threshold of $70 per barrel. However, oil prices have fluctuated significantly in recent years, plummeting to below zero early in the pandemic.
At the same time, Biden lambasted oil companies for increasing dividends and stock buybacks at a time when they should be investing in production. He also pointed out that oil companies have enjoyed record profits in recent years.
"Gas prices at the pump should be lower," he said. "If retailers and refiners were earning the average profit they've made over the last 17 years, Americans would be paying at least 60 cents less per gallon for every gallon they buy."
Responding to criticism from the left, the president emphasized that increased oil production should not come at the expense of the green transition. He called on Congress to pass legislation to speed up the process for clean energy projects.
"Our country needs to pass permanent reform to accelerate the development of clean energy," he said. "Right now, the process of getting clean energy projects approved is too cumbersome and too time-consuming.
With the plan coming weeks before the midterm election, one reporter asked Biden if the upcoming votes have anything to do with the effort.
"It's not politically motivated at all," he said.