Biden is Releasing 100 Million Barrels of Oil. Will This Actually Have Any Effect on Gas Prices? Thursday's decision is the first of its kind in U.S. history.
By Emily Rella
Opinions expressed by Entrepreneur contributors are their own.
Gas prices have shot to exorbitant, record-breaking highs as a result of the Russia and Ukraine conflict, as the U.S. has banned Russian oil imports.
Cities and states are experiencing never-before-seen prices per gallon, with highs amid the conflict reaching nearly $140 per barrel.
But President Joe Biden's latest move may have an optimistically positive effect on the price of fuel for consumers.
Biden has announced that the U.S. will release oil from its reserves in an attempt to lower gas prices, something that has never been done before.
"After consultation with allies and partners, the President will announce the largest release of oil reserves in history, putting one million additional barrels on the market per day on average -- every day -- for the next six months," the White House said. "The scale of this release is unprecedented: The world has never had a release of oil reserves at this 1 million per day rate for this length of time. This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up."
In simplest terms, prices would drop simply because the demand for fuel and oil wouldn't be as high after the oil barrels are tapped from where they are being held in Louisiana and Texas.
"A significant amount of Russian oil is not making it to market," the White House explained. "The President banned the import of Russian oil – which Republicans and Democrats in Congress called for and supported. It was the right thing to do. But, as the President said, Russian oil coming off the global market would come with a cost, and Americans are seeing that at the pump."
Biden will also authorize the Defense Production Act to help bolster the production of materials that are used to create the batteries that run electric vehicles, as many Americans have been making the switch to EVs out of preemptive fear of and the settling reality of higher gas prices.
But when Biden has ordered the release of barrels at smaller scales in the past, gas prices in the U.S. did not see a dramatic drop or shift.
Last November, the White House released 50 million barrels and then another 30 million earlier this month, which would mean a total of 180 million barrels will have been released over a less than one-year-long period.
The outlook does look positive, though, as Brent crude oil dropped around 4% early Thursday, below $100 a barrel.
It's hard to determine precisely what kind of impact Biden's new order will have, but experts are telling citizens to heed caution, especially if these next 100 million barrels are not the last to be released.
"If we tap into the strategic oil reserve again, we will do nothing but put another Band-Aid on another big wound, and we will only hinder ourselves if we ever got ourselves into a serious emergency here," said Director of operations for Pecos Country Operating, Rey Trevino to WCNC.
According to data from AAA, the average national gas price as of Thursday afternoon was $4.225, down from last week's average of $4.236.
