Biden calls for increase in domestic oil production

US president blasts retailers and refiners for pulling in record profits amid global economic uncertainty

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US President Joe Biden called for an increase in domestic oil production as he announced the release of 15 million barrels from the country's Strategic Petroleum Reserve.

"We need to responsibly increase American oil production without delaying or deferring our transition to clean energy,” Mr Biden said in remarks from the White House on Wednesday.

The move comes as the Biden administration struggles to lower petrol prices in the weeks before the November 8 midterm elections that will decide who controls the US Congress.

The Saudi Arabia-led Opec+ alliance this month agreed to cut oil production by 2 million barrels per day, in a move that many in Washington interpreted as a snub to Mr Biden to hinder his Democratic Party at the polls. Riyadh has defended the reduction as "purely economic".

“Families are hurting,” Mr Biden said. “When the price of gas goes up, other expenses get cut. That's why I have been doing everything in my power to reduce gas prices.”

The Biden administration will refill the country's strategic reserves, housed in vast salt caves in Texas and Louisiana, when oil prices are at or below about $67-$72 per barrel.

Pumping extra US oil has long been a rallying cry for Republicans, who see energy independence as crucial. Last week, Democratic Senator Joe Manchin, who sometimes votes with the Republicans, called for an increase in domestic production including in Alaska.

Oil prices rose on Wednesday as worries over tightening global supplies offset the price-lowering impacts of softening Chinese demand and the release from the US reserves.

US fuel costs have dropped over the past two weeks but remain higher than a month ago.

The reserve sale will complete the 180 million-barrel drawdown Mr Biden announced in the spring, the White House said.

More reserve sales could come, Mr Biden said, having alerted the Department of Energy to be ready to move forward with additional “significant” sales this winter due to “Russian or other actions disrupting global markets”.

Mr Biden also urged refiners and retailers to pass their savings on to consumers, condemning their “record” profits amid a global inflation crisis “at the expense of the vast majority of Americans”.

He called out US oil companies for using those profits to buy back their own stocks.

“That's great if you own a lot of stock in an oil company or if you're an executive at an oil company. Puts a lot of money in your pocket. But it's not the case for the vast majority of Americans paying at the pump,” said Mr Biden.

“My message to the American energy companies is this: you should not be using your profits to buy back stock or for dividends. Not now. Not while a war is raging. You should be using these record-breaking profits to increase production and refining. Invest in America for the American people.”

The White House added in a statement: “These outsize industry profit margins — adding more than $0.60 to the average price of a gallon of gas — have kept pump prices higher than they should be. Keeping prices high even as input costs fall is unacceptable.”

The announcement came after the White House said it was re-evaluating its relationship with Saudi Arabia over the Opec+ decision to cut production.

The recent reserve barrels will be available from December, the White House said.

Updated: October 19, 2022, 7:39 PM