A scene from a petrol station on October 7, 2021 in Washington, D.C., shows that U.S. oil prices have reached their highest level since 2014 due to the energy crisis in the world market.
Yasin Ozturk | Anadolu Agency | Getty Images
For months, the Biden administration has promised to use every tool at its disposal to stem rising energy prices that contribute to inflation across the country, but not many tools are available at the White House.
There are “no immediate plans” to tap emergency reserves or restrict energy exports outside the United States, the Department of Energy told CNBC. These are the two market levers that can pull the executive branch.
Administrative officials have privately suggested that the release from strategic petroleum reserves would have a negligible effect, and that reducing exports would create the risk of angering allies and breaching long-term trade agreements.
Retail gas prices – 25 3.38 per gallon on average 25 October – increased by almost 50% in 2021, exceeding pre-epidemic levels. Global oil prices have risen 70% this year as pump prices have risen due to a return to demand from the epidemic low.
Supplies are also limited, U.S. production is below pre-epidemic levels and OPEC and its allies are keeping barrels away from world markets.
The White House has acknowledged that it has a number of options. “There is a limit to what any president can do, because it has to do with gas prices,” Press Secretary Jane Saki told reporters Friday.
The White House said it had instructed the Federal Trade Commission to investigate possible price increases and called on the National Security Council to increase production in the countries represented by OPEC +.
A sticker affixed to a kiosk at a Wowa gas station in Clement, Delaware – Biden’s childhood home – shows the president pointing and smiling at the total purchase price.
Oil prices are a byproduct of supply and demand market power, and domestic energy advocates say the White House’s own environmental policy has worked to limit the supply of oil and natural gas to the market.
Earlier this year, President Joe Biden revoked a permit for the Keystone Pipeline and suspended drilling activity on federal land and water. A judge has lifted the drilling ban and ordered the Biden administration to resume leasing activities. The administration is appealing against this decision.
The federal government will resume leasing land for oil and gas drilling next year after the Land Management Bureau cancels a quarterly lease auction planned in 2021 to comply with a White House executive order.
The Bureau of Ocean Management will lease water to the Gulf of Mexico this year, a sale rescheduled following a federal judge’s ban.
Louisiana is one of 13 energy-producing states that is suing the administration for a drilling ban. State Solicitor General Liz Murrell said the White House should “stop handcuffing” energy producers if it wants to improve the situation quickly.
“I don’t think the administration can create a problem, and then declare a state of emergency arising from the problem it created,” Murrell told CNBC. “It’s not an emergency, it’s a problem you’ve created yourself.”
Combined with the rise in prices of various commodities, inflation is hitting the wallets of Americans and threatening an economic reversal in the mid-2022 elections.
Voters are increasingly blaming Biden for the rise in prices: In an early October poll conducted by CBS News, 66% of respondents blamed U.S. government policy for inflation and 60% said the administration was not paying enough attention to the issue.
“Politically speaking, Democrats need to keep the economy going as long as possible,” said Stephen Miro, managing partner of Beacon Policy Advisors and a former Treasury official. “At the same time, [Biden] Climate change and clean energy are priorities, and there are inevitably conflicts between those priorities. ”
Conflict is intensifying in the weeks leading up to the UN climate summit, which begins in Glasgow, Scotland, on 1 November. According to progressive lawmakers, Biden says he needs to show a trillion-dollar policy framework to protect against climate change. “American prestige.”
Patrick Manning and Pippa Stevens of CNBC contributed to this article.