The actions demonstrate forcefully that oil remains a key vulnerability for the U.S. at home and abroad. Higher prices have hurt Biden’s approval domestically, while also adding billions of oil-export dollars to the Russian war chest as it wages war on Ukraine.
The markets reacted quickly with crude oil prices dropping about 4% in Thursday trading to under $104 a barrel. Still, oil is up from roughly $60 a year ago, with supplies failing to keep up with demand as the world economy has begun to rebound from the coronavirus pandemic. That inflationary problem was compounded by Russian President Vladimir Putin’s invasion of Ukraine, which created new uncertainties about oil and natural gas supplies and led to retaliatory sanctions from the U.S.
Domestic oil production is equal to more than half of U.S. usage, but high prices have not led companies to return to their pre-pandemic levels of output. The U.S. is producing on average 11.7 million barrels daily, down from 13 million barrels in early 2020. Daines called Biden’s actions “desperate moves” that avoid what he called the real solution: “investing in American energy production,” especially oil and gas.
Oil producers have been more focused on meeting the needs of investors than consumers, according to a survey released last week by the Dallas Federal Reserve. About 59% of the executives surveyed said investor pressure to preserve “capital discipline” amid high prices was the reason they weren’t pumping more, while fewer than 10% blamed government regulation.
The American Petroleum Institute, the oil and gas industry’s top lobbying group, said Biden needs to stop focusing on interim steps such as the strategic reserve.
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