On Thursday, The U.S. announced an unprecedented release from the nation’s vast oil reserves, putting an extra 1 million barrels into circulation every day for the next six months.
The White House says the release, which will total 180 million barrels of oil, will be a “bridge” as domestic and global production slowly climbs to normal output.
In another move, Biden says that he will increase pressure on oil companies to ramp up their production. The administration claims that it will start punishing companies for unused leases on federal land.
Interesting change of direction by the White House, considering its staunch resistance to restart construction of the Keystone XL pipeline.
Also on Thursday, OPEC+ confirmed that it will continue with its plan to raise production by 432,000 barrels a day in May. The consortium has resisted pressure for larger increases, choosing instead to continue with last year’s decision to gradually bring output back up to pre-pandemic levels.
As the national average for a gallon of regular gas has now settled at well over the $4 mark, the White House is also considering the option of adding more ethanol to gasoline blends in a further effort to bring down prices.
Analysts say temporarily removing summer restrictions for higher ethanol blends could reduce pump prices, as ethanol is cheaper to produce than gasoline. E15 contains up to 15% ethanol, as opposed to the 10% content in most U.S. gasoline. Concerns that it contributes to smog in hotter weather is what led to the summertime ban.
Some research says the 15% blend does not produce more smog compared to the 10% blends, and several Midwestern lawmakers want the administration to rescind the ban.
The Environmental Protection Agency (EPA) is considering several actions to help alleviate the effects of the Ukraine war on U.S. consumers, but would not directly address the possible ethanol increase.
Critics of the move say adding more ethanol, which is made from corn, may lift food prices even as gasoline prices ease.
Another concern is that ethanol blends are known to reduce the lifespan of small engines, and some warranties are voided if it is used.
One thing is clear. The administration knows beyond a doubt that if inflation is still crippling American consumers come November, many legislators with a “D” beside their name will be looking for a new job. What is unclear is whether the White House will allow the industry itself to solve the energy supply issue or continue to apply band-aids, hoping one will stop the bleeding.