The United States’ president, Joe Biden, has attributed the hikes in fuel or gas prices to Russian President Vladimir Putin’s actions, as the U.S. and other nations have banned the import of Russian oil over the past month.
“Our prices are rising because of [Russian President Vladimir] Putin’s actions,” Biden said during a speech. “There isn’t enough supply. And the bottom line is if we want lower gas prices we need to have more oil supply right now.”
Russia—one of the world’s largest oil suppliers—provided 60 percent of Europe’s oil and 20 percent of China’s oil in 2021. The sanctions imposed by the U.S., following Russia’s invasion of Ukraine, have prompted investors to price oil as though Russia’s supply is nonexistent; less supply results in higher costs.
On Thursday, Biden unveiled a historic strategy to reduce increasing fuel costs. The President said that up to 1 million barrels of oil per day are likely to be released from America’s strategic reserves. According to CNN, the removal will be the greatest since the reserve was established in 1974. Gas prices are presently averaging at $4.23 per gallon, up from $2.87 a year ago and $3.61 a month ago, according to AAA.
Biden admitted he wasn’t sure exactly how much gas prices would decline due to the withdrawal, but estimates it could drop anywhere between 10 cents to 35 cents a gallon. He also acknowledged that players within the oil industry aren’t thrilled with the move, as it will result in lower profits.
“Some companies have been pretty blunt. They don’t want to increase supply because Putin’s price hike means higher profits,” Biden said. “This is not the time to sit on record profits, it’s time to step up for the good of your country, the good of the world, to invest in immediate production that we need to respond to Vladimir Putin [and] provide some relief for your customers, not investors and executives.”
Biden will also invoke the Defense Production Act to boost production of materials that are needed for batteries used in electric vehicles. Furthermore, he has encouraged Congress to impose fees on companies that lease public lands but aren’t using their oil wells. Officials have referred to the proposal as a “use it, or loose it” policy.
“Companies that are producing from their leased acres and existing wells will not face higher fees,” the White House said in a statement. “But companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a fee for each idled well and unused acre.”