The Biden administration has signaled it’s preparing to take some kind of action to try to blunt high gasoline prices after insisting for weeks that President Joe Biden’s hands are tied.
Energy Secretary Jennifer Granholm foreshadowed a pending “announcement” this week from the White House, whose strategy amid the high oil prices has focused on pressuring OPEC to boost its production to bring relief at the pump.
That strategy hasn’t worked, with prices remaining at their highest in seven years, and the administration now is indicating it’s looking for a new solution. Granholm, who has faced criticism for laughing off the suggestion that domestic production could increase, told MSNBC on Monday that Biden is “looking at what options he has in the limited range of tools a president might have to address the cost of gasoline at the pump.”
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Here are some of the things Biden could try:
1. Successfully pressure OPEC
The solution that would offer the quickest and most substantial relief is the one his administration has been trying: Call up Saudi Arabia.
“The most effective tool any president has is to call up Saudi Arabia and persuade them to produce a lot more oil. That’s about the only thing that can work in the near term,” said Bob McNally, president of Rapidan Energy Group and a former oil official in the George W. Bush administration. “And that option isn’t really available. This administration does not get along well with Saudi Arabia.”
Biden acknowledged during a CNN town hall last month the ability of the Saudis, who last year were second in the world only to the United States in total oil production, to command prices.
“It’s going to be hard. There’s a possibility to be able to bring it down,” he said. “Depends on — little bit on Saudi Arabia and a few other things that are in the offing.”
Hope for more supply from OPEC has since faded, with the cartel declining last week to boost production significantly.
2. Open the Strategic Petroleum Reserve
The next most likely option would be a release from the nation’s Strategic Petroleum Reserve, according to analysts.
“The betting here is the most likely option is an SPR release,” McNally said.
“It could be like, ‘Look, this isn’t year after year after year. It’s just got to get us through the winter. You know, let’s throw some SPR barrels at it and hope it gets better,'” he said, gaming out the administration’s thinking.
Researchers at ClearView Energy Partners noted in a report Monday morning its “growing expectation” for the administration to sell crude oil from the SPR, but expectations for a major cut in prices are low.
“These are things that can make a difference in the short run, but in a structurally tight market, maybe not,” said Kevin Book, managing director of ClearView.
A decision to employ the SPR would be something of a shift for Biden, who discussed the possibility during the same town hall in October, but he suggested that the effect would be negligible.
“I could go in the petroleum reserve and take out and probably reduce the price of gas — maybe 18 cents or so a gallon. It’s still going to be above $3,” Biden said.
3. Jawbone domestic producers to add supply
Biden could also lean more heavily on the domestic oil industry for help, something the White House reportedly started to do in October and that congressional Republicans have insisted is the solution to the energy crunch.
“We will not ask OPEC to solve our problems,” House Minority Leader Kevin McCarthy said in a recent energy roundtable with fellow GOP lawmakers. “We can solve them here in America.”
But domestic producers are functionally at peak capacity, McNally said, leaving the White House no real domestic solution there immediately.
“Near term, very near term, they’re pretty much maxed out. What you produce today is pretty much what you can produce tomorrow,” he said, adding the qualification that such a dynamic is “a result of years of decisions on investment and decisions on policy.”
4. Ease up on policies aimed at limiting fossil fuels
The approach that’s top of mind among Biden’s critics would be for his administration to ease up on the oil and gas industry and to encourage investment in pipelines and exploration.
Biden revoked permitting for the Keystone XL pipeline and imposed a pause on all new oil and gas leases on federal lands during his first week in office, moves hailed by many liberal and environmentalist groups but bashed by Republicans and the fossil industry as constraining U.S. energy independence.
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“Blocking pipelines, pausing leasing on federal lands, and targeting Alaskan development will make it more difficult for future administrations to respond to an energy crisis — particularly if the SPR has already been depleted,” said Tristan Abbey, president of Comarus Analytics and a former Republican senior policy adviser at the Senate Committee on Energy and Natural Resources. Even so, Biden’s critics and sympathizers alike have said that reversing course on pipelines and leasing would not alleviate gas prices today.
Biden and top officials inside his administration have repeatedly said that the White House has little to do to affect gas prices significantly in the short term, but Granholm’s signaling that Biden plans to do something indicates he’s feeling the pressure to make a move.
“The president is in a difficult position because he’s — simultaneously, he’s raising expectations of doing something, like, soon, but he doesn’t have anything good to do,” McNally said.
Josh Siegel contributed to this report.
