(WASHINGTON) — Oil prices are dropping Thursday morning in response to news that President Joe Biden is moving forward with a plan to release roughly 1 million barrels of oil per day from the nation’s strategic petroleum reserve over the next six months, the White House has confirmed.
Biden is expected to announce this step on Thursday afternoon during a scheduled event to discuss actions his administration is taking to rein in soaring gas prices that have spiked even further following Russia’s invasion of Ukraine.
Biden will also call on “Congress to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing,” the White House said in a release.
About 3 million barrels a day of Russian oil will come off the market in April due to Western sanctions, according to the International Energy Agency, and this plan could help alleviate pain at the pump by helping to replace that loss.
This would be the third time Biden has had to tap into the strategic petroleum reserve. In November, he authorized the release of 50 million barrels as gas prices surged ahead of the holidays, and along with 30 other countries, the U.S. released 30 million barrels following the start of the war in Ukraine, though that did little to ease skyrocketing prices.
As of Friday, there were more than 568 million barrels of oil in the reserve, according to the Department of Energy.
Given the complexity and volatility of the oil market, many geopolitical and economic factors feed into oil prices and there is no guarantee this release will keep prices down for an extended period of time.
Overnight, crude oil prices were down roughly 5% in reaction to this plan, which means the price at the gas pump could also dip in the coming days.
The current national average for a gallon of gas is $4.23, according to AAA, $1.35 higher than this time last year.
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