In response to the U.S. and other energy-consuming countries announcing they would tap their national strategic petroleum reserves in an effort to lower gas prices, top oil producers Saudi Arabia and Russia are considering putting their planned efforts to increase oil production on hold.
Leaders in Riyadh and Moscow have led the 14-member OPEC, along with other oil-producing countries, in coordinating output closely. Other members of the cartel – such as the United Arab Emirates – are not sure whether such a pause is called for.
The move comes after President Joe Biden on Tuesday morning ordered an unprecedented 50 million barrels of oil released from the nation's Strategic Petroleum Reserve in an effort to lower gas prices, a decision made in conjunction with other countries including India, the United Kingdom and China.
The reserve was established after a 1973-74 oil embargo by Arab members of OPEC, and has been used in several emergencies, including in 2005 after Hurricane Katrina destroyed much of the Gulf of Mexico’s oil infrastructure. At the time, the Bush administration authorized the release of 20.8 million barrels of crude oil to U.S. producers.
"The fact is we always get through those spikes but we’re going to get through this one as well as hopefully faster," Biden said in remarks from the White House on Tuesday, adding: "While our combined actions will not solve the problems of high gas prices overnight, it will make a difference. It will take time, but before long you should see the price of gas drop where you fill up your tank."
Those in support of releasing barrels from the emergency stockpile say that doing so would increase oil supplies and reduce prices at the pump, while also generating billions in revenue for the federal government. Critics, however, argue that releasing emergency supplies is a short-term fix to a problem and does not actually increase the country's oil-production capabilities.
On Tuesday the average price for a gallon of gas was $3.41 nationwide, that’s up from $2.11 a year ago.
Biden has also called on the Federal Trade Commission to investigate whether oil and gas companies are engaging in criminal conduct by profiting from artificially high prices at the pump, even as wholesale fuel costs decline.
Washington pushed for the Saudi-led OPEC and a group of Russia-led oil producers to open up their taps and release more oil, the two groups – which call themselves OPEC+ – denied the request. The groups are set to meet next week to discuss a deal they reached to increase their collective oil output.
The deal involves plans to increase output by 400,000 barrels daily through next year until the group hits its pre-pandemic level. In 2020, the group put extreme cutbacks in place as the COVID-19 shut down the global economy and demand decreased.