The Biden administration announced on Tuesday (May 21) that it will release 1 million barrels of gasoline from reserves in the Northeastern United States to lower oil prices for this summer.
The gasoline will come from storage points in New Jersey and Maine, and will be sold in increments of 100,000 barrels. The U.S. Department of Energy stated that this method will create a competitive bidding process to ensure that the gasoline flows to local retailers before the U.S. Independence Day holiday on July 4th, and is sold at competitive prices.
The Department of Energy said that this move aims to help “reduce costs for American households and consumers.” Previously, Congress authorized the sale of gasoline reserves that have been in the Northeast for a decade, and then close these storage points. This measure was included in a spending agreement reached in March to avoid a partial government shutdown.
The Department of Energy also mentioned that the decision to release 1 million barrels (about 42 million gallons) of gasoline at this time is intended to relieve the pressure on drivers at the start of the summer driving season.
According to data from the American Automobile Association (AAA), the national average gasoline price is currently around $3.60 per gallon, which is an increase of 6 cents from a year ago. Utilizing oil reserves is one of the few actions U.S. presidents can take to control inflation, and inflation is a disadvantage for the Democratic Party in election years.
Energy Secretary Jennifer Granholm said in a statement, “The Biden-Harris administration is focused on lowering oil prices for American families, especially during the summer driving season. By strategically releasing this reserve during Memorial Day and July 4, we are ensuring an ample supply of gasoline to the three states and the Northeast region when hardworking Americans need it the most.”
The Department of Energy stated that the 1 million barrels of gasoline must be transferred to terminals or delivered to retailers by June 30.
Republican members of Congress have long criticized the gasoline reserves established by the Obama administration, arguing that any such reserves should be approved by Congress. The reserve was established after the 2012 Superstorm Sandy hit refineries.
A report by the U.S. Government Accountability Office (GAO) in 2022 stated that these unused gasoline reserves provide minimal relief in cases of severe gasoline shortages, and the annual maintenance cost of the reserve is about $19 million.
Following the surge in energy prices due to the Russia-Ukraine conflict, the Biden administration released 180 million barrels from the Strategic Petroleum Reserve in 2022, reducing the reserves to the lowest level since the 1980s. This move has sparked discontent among Republicans, who accuse President Biden of playing politics by using strategic reserves to address national emergencies.