This is the biggest release from the reserves since its creation in 1975, in the midst of the Cold War, and the 2nd since the military conflict in Ukraine started.
There are currently 568 million barrels in the reserve in four locations across Southern Louisiana and Texas.
In his speech, Biden revealed a 2-point plan, which includes immediate action through the release of reserves and a call to reduce the dependence on fossil fuels altogether and speed up the transition to clean energy.
Biden identified Putin as one of the root causes of high gas prices, in addition to Covid-19, and reminded the U.S. has already banned the Russian import of oil, saying it was the right thing to do.
But the ban has come with a cost, as Russian oil comes off the global market, the supply of oil drops and prices are rising.
Therefore, the 1st part of the plan is to immediately increase the supply of oil.
Addressing the oil & gas producers in the U.S., Biden said some have already announced they’re increasing immediate production, but some companies have been pretty blunt:
- They don’t want to increase supply because Putin’s price hike means higher profits
- One CEO even acknowledged that they don’t care if the price of a barrel of oil goes to $200 a barrel
- They’re not going to step up the production
- I say: Enough. Enough of lavishing excessive profits on investors and payouts and buybacks when the American people are watching, the world is watching
Acknowledging that it takes months, not days, for companies to increase production, he emphasised the importance of the 2nd part of the plan.
The 2nd part of the plan is about declaring real American energy independence in the long term «so that we never have to deal with this problem again,» Biden said.
Calling for the reduction of dependence on fossil fuels altogether, Biden stated:
- We need to choose long-term security over energy and climate vulnerability
- We need to double down on our commitment to clean energy and tackling the climate crisis with our partners and allies around the world
«We need to end our long-term reliance on China and other countries for inputs that will power the future and I’ll use every tool I have to make that happen,» Biden said, promising that building a made-in-America clean energy future will help safeguard national security, help tackle climate change, and help ensure that America creates millions of jobs for generations to come.
The bottom line is, as Biden stated, that between ramping up production in the short term and driving down demand in the long term, the country can free itself from dependence on imported oil from across the world.
It is also worth reminding that the U.S. agreed to supply 15 billion m3 of LNG to the EU this year as part of efforts to ensure and strengthen European energy security, reduce reliance on Russian fossil fuels, and reduce Europe’s overall reliance on gas.