Washington, D.C. – When Joe Biden announced that the United States would release more than 180 million barrels of oil from its strategic petroleum reserves over the next six months, the US President hailed it as a historic move that would bring down US fuel prices.
The price at the pump has risen amid Russia’s war in Ukraine, prompting the US and other nations to block oil and gas imports from Moscow and stoking concerns about global energy supplies with low inventories and limited new production capacity .
Beginning this week, Europe, Japan and others are expected to join the US in releasing more from their reserves, adding about 30-50 million barrels to the global market over the same six-month period.
But while the Ukraine conflict is urging Biden and other world leaders to dive into their stockpiles, experts say the real impact for consumers will be limited — and higher prices and more disruption lie ahead. With global supply and demand dictating prices, barrels of Russian oil coming off the market will far exceed what is being dumped back by the US and other nations.
Biden last month announced a ban on Russian oil imports because of the war in Ukraine [Andrew Harnik/AP Photo]
“By now, the Biden administration has realized that as long as we have a problem with Russia, oil prices will go up,” said Robert McNally, president of Washington-based consulting firm Rapidan Energy Group.
“It’s a big problem. It’s going to keep oil prices, and therefore pump prices, high and going up,” said McNally, a former energy adviser to President George W. Bush.
McNally told Al Jazeera that the situation could also prove politically costly for Biden, who took office promising to move the United States off fossil fuels but now faces soaring fuel prices amid rising US inflation .
“The top priority of every official in Washington is always the next election. These guys are scared of gas prices,” McNally said. “It’s simple but brutal, oil market math and political survival.”
Global Deliveries
Russia is the world’s third-largest oil producer, exporting 5 million barrels of crude oil a day, or about 12 percent of the world market, according to the International Energy Agency (IEA). About 60 percent of Russian oil goes to Europe and 20 percent to China, says the IEA.
The agency has also estimated that sanctions and private sector decisions not to buy from Russia will take 2.85 million barrels a day of Russian oil off the world market. McNally and others anticipate the supply reduction will be even larger, at about 3 million barrels per day.
Biden on March 31 ordered the release of 1 million barrels of oil per day from the US Strategic Petroleum Reserve over the next six months [File: Department of Energy handout via AP]
“The way oil economics works is that you have a commodity with a global price. So disruption everywhere affects price everywhere,” said David Goldwyn, head of Goldwyn Global Strategies and a former policy adviser in the Obama administration. “That’s the problem Biden is trying to solve.”
As the crisis between Russia and Ukraine unfolded, Biden administration officials begged domestic US producers and the Organization of the Petroleum Exporting Countries (OPEC) for more production. They were both turned down.
In the US, most producers are already tied to long-term production plans, and the industry is still recovering from the 2020 oil price plunge caused by the COVID-19 pandemic.
For their part, the 13 OPEC nations are sticking to their hard-fought 2021 deal to increase supply by 400,000 barrels a month after cutting production in response to the slowdown in the pandemic.
“That’s the deal they made and they want everyone to stick to that deal. They reject any pressure to deviate by going faster,” McNally said.
Switch to renewable energy
When Biden announced the de-listing of US oil reserves last week, he issued a second executive order to encourage mining of minerals and metals needed to make electric vehicles — lithium, nickel, cobalt.
The move sends a signal that the president, who ran for office in 2020 and vowed to cut fossil fuel use and switch to cleaner energy sources, remains committed to shifting the US economy away from its reliance on oil.
But with rising inflation and soaring gas prices, he faces harsh political realities ahead of the November midterm elections if he is to stay on course with those promises.
“Most voters are really more concerned about the here and now. And with gas prices rising, they care less about carbon emissions and more about how badly their wallets hurt,” Lee Ohanian, an economics professor at the University of California, Los Angeles, told Al Jazeera. “Biden is walking a tightrope.”
Still, environmentalists and other pundits say the war in Ukraine should accelerate—not hinder—that energy transition.
“This crisis is a clear sign that we cannot rely solely on oil and gas, but solely on fossil fuels. There is a clear need for renewable energy — wind and solar,” said Maria Ivanova, professor of global governance at the University of Massachusetts Boston.
Biden’s first act as president in 2021 was to bring the US back into the Paris climate accord, and he has proposed sweeping US action to incentivize electric vehicle development – many of which have yet to be passed by Congress .
But his recent push for more domestic production amid the war in Ukraine marks “a significant reversal” from those positions, Ivanova told Al Jazeera.
While she said she agrees that developing oil reserves and promoting higher production are necessary for now, she urged Biden not to abandon the push toward renewable energy. “We need to fundamentally rethink our economic system and I don’t think going back to oil and gas will work.”
Gas prices have risen in the US amid the ongoing war in Ukraine [File: Noah Berger/AP Photo]