Updated to reflect official announcement.
Soaring gas prices are a major problem in the United States, and to alleviate the problem, President Joe Biden announced the U.S. is releasing 1 million barrels of oil a day from reserves for the next six months or so.
“Our prices are rising because of (Russian President Vladimir) Putin’s actions. There isn’t enough supply. And the bottom line is if we want lower gas prices we need to have more oil supply right now,” Biden said.
“Your family budgets to fill a tank – none of it should hinge on whether a dictator declares war.”
The first part of the plan is to tap into the Strategic Petroleum Reserve to access as much as 180 million barrels, Bloomberg reported.
Secondarily, the U.S. will need to become self-sufficient in all things energy.
“Ultimately, we and the whole world need to reduce our dependence on fossil fuels altogether. We need to choose long-term security over energy and climate vulnerability,” Biden said.
Prior to the announcement, rumors of the plan sent the price of West Texas Intermediate futures down as much as 5.5% on Thursday.
The release of U.S. reserves accompanies a similar move by the International Energy Agency — which includes the United States and other major economies — to deploy 60 million barrels of oil stockpiles to help ease prices. As GOBankingRates previously reported, half of that deployment will come from the U.S. Strategic Petroleum Reserve, with the rest coming from IEA members in Europe and Asia.
Releasing U.S. emergency oil reserves shows just how desperate the White House is to rein in gas prices. According to the Department of Energy website, the Strategic Petroleum Reserve is the world’s largest supply of emergency crude oil. It was established to reduce the impact of disruptions in supplies of petroleum products and to help the U.S. meet its obligations under the international energy program.
There’s no question that supplies have been disrupted, both by ongoing supply-chain problems and the Ukraine conflict. Average gasoline prices have zoomed to $4.225 a gallon, according to AAA. That’s up from $3.610 a month ago and $2.874 a year ago. In parts of California, prices have surged above $6 a gallon.
Meanwhile, matters haven’t been helped by OPEC and its allies which refused to deviate from a strategy of gradual production increases rather than large ones to help ease the global oil crisis, Bloomberg reported. On Thursday, the oil cartel ratified the 432,000 barrel-a-day supply increase scheduled for May.
As Americans wait for prices to drop, some states are taking matters into their own hands.
California Gov. Gavin Newsom has proposed a $9 billion proposal to distribute $400 debit cards to drivers in the state to help ease the impact of soaring gas prices, CNN reported. Georgia Gov. Brian Kemp signed a bill that will provide tax refunds of $250 to $500 to the states’ taxpayers as financial relief against inflation. And in Maine, Gov. Janet Mills has proposed sending $850 relief checks to residents.
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