Joe Biden burns his last cartridges in the fight against inflation three weeks before the mid-term legislative elections. The president of the United States has decided to release 15 million barrels of the country’s strategic reserves to try to lower gasoline prices and thus contain inflation, the main concern of voters. “Prices are going down, but not fast enough,” Biden said from the White House on Wednesday, announcing new measures and noting that he can take more reserves out of the market if necessary.
Biden has been trying to shift the focus of the election to abortion or the risks to democracy that come from extreme Trumpism. Yet in poll after poll, voters point to the economy, and rising prices in particular, as America’s number one problem, far above the others.
As main lines of defense, the White House uses the Inflation Reduction Act (whose name is political and has not served to reduce inflation) and counted as an achievement the reduction in gasoline prices from the maximum of more than five dollars per gallon (3,785 liters) that touched in June. However, gasoline prices have risen again since mid-September and Biden has also been disappointed with OPEC’s decision, encouraged by Saudi Arabia and with the approval of Russia, to cut crude oil production, which which encourages new rises at a particularly inopportune time.
There is no more inflation data to be published before the appointment of the polls on November 8 and price increases continue to be above 8% year-on-year, a rate not seen for 40 years. Biden wants at least that prices do not skyrocket at the pump in these weeks before the elections, in which the entire House of Representatives and more than a third of the Senate are renewed.
The Democrats have almost lost control of the House of Representatives, according to polls, while the Senate is up in the air and will depend on a handful of states. Republican candidates are delving into the wound of inflation in their public speeches and in debates, and the price of gasoline is the most obvious symptom of the problem for a country that does not know how to live without a car and is used to fuel prices very low.
When the president was asked about criticism from Republicans that the reserve release is an electioneering measure to help Democrats, he replied: “Where have you been for the last four months?” Biden has pointed out that it was not a politically motivated decision, but the continuation of a sustained effort in recent months. “The problem is that these guys were asleep. Where have they been”, he has said.
The last leg
The 15 million barrels of oil from the strategic reserves are the last tranche to be released of the total of 180 million announced in March by the White House after the Russian invasion of Ukraine and will go on the market in December, but the Government is confident that the announcement be felt already in the price of crude oil. Biden does not rule out releasing even more reserves in winter if the price does not give way.
Crude reserves have fallen to the lowest levels since the mid-1980s and Biden will try to rebuild them when prices moderate and are around 67-72 dollars per barrel, according to government officials. The United States has the capacity to store 714 million barrels and reserves were just over 400 million barrels before this latest move. The daily production of the country is about 12 million.
“As part of its commitment to guarantee the replenishment of the oil reserve, the Department of Energy is finalizing a rule that will allow it to sign fixed-price contracts through a bidding process for the product delivered at a future date,” the Department of Energy has announced. White House. “This buyback approach will protect taxpayers and help create certainty around future crude demand. That will encourage companies to invest in production right now, helping to improve America’s energy security and lower energy prices that have been raised by Putin’s war in Ukraine,” he added.
OPEC has agreed to a production cut of two million barrels per day. Brent crude prices, which had fallen to around 75 dollars per barrel, have climbed back towards 90 dollars, although those of the West Texas type are somewhat cheaper, around 83 dollars.
Biden has repeatedly complained to oil companies that they are not only benefiting from higher oil prices, but also fattening up their margins. The president has addressed the directors of the companies in public and in private so that they transfer the drops in the price of crude oil to consumers and will continue to insist on it.
He has criticized the great profits of the companies this Wednesday and has asked that they transfer the drop in crude oil prices to consumers. “Americans should be paying 60 cents less per gallon,” were it not for oil companies’ increased margins, he has said. “My message to American energy companies is this. They should not use their profits to buy back shares or for dividends. Not while the war is going on. They should use these record profits to increase production and refining. Invest in America for the American people. Lower the price you charge at the pump to reflect what is being paid for the product. They can still make a significant profit. Its shareholders will continue to do very well. And the American people will take the breather they deserve.”
According to the White House, the profit that energy refining companies now make on each gallon of gasoline is about double what is usual for this time of year, and the retailers’ markup on the refinery price is more than 40%. above the normal level. “These huge industry profit margins have kept pump prices higher than they should be. It is unacceptable that prices remain high even as input costs decline, and the President will ask businesses to pass on their savings to consumers now.
When asked if the Government would consider the possibility of temporarily limiting exports to increase national supply and lower prices, government officials indicated that “all options are on the table”, although without giving further explanations.
