A customer fuels up at a Shell gas station in Hercules, California, U.S., Tuesday, May 23, 2023.
David Paul Morris | Bloomberg | Getty Images
President Joe Biden’s top economic adviser said Thursday that the White House will “make sure gas prices remain affordable” when asked whether the administration would consider using the strategic oil reserve.
“Of course there are things that have been done in the past that we will continue to monitor closely, making sure that gas prices remain affordable for so many American families as they enter the summer driving season,” National Economic Advisor Lael Brainard told the event. Semafor World Economy Summit.
Gasoline futures are up nearly 29% this year, with prices at the pump currently averaging $3.67 a gallon, according to the motorists’ association AAA. U.S. crude oil has gained 15% year to date due to stronger demand, reduced supply due to OPEC+ production cuts and growing geopolitical risks in the Middle East and Eastern Europe.
“We are very attentive to international oil markets and domestic gas prices. We will continue to monitor closely and want to make sure those gas prices remain in current ranges,” Brainard said. U.S. crude oil hit a high of $87.67 a barrel this year before falling back to around $83 a barrel.
Iran’s unprecedented airstrike on Israel over the weekend has raised fears that an Israeli counterattack could trigger a wider war in the region, impacting crude oil supplies. The White House is keeping an eye on “geostrategic risk” in the Middle East, Brainard said.
And Ukraine’s repeated drone attacks on Russian oil refineries have also worried the Biden administration about their effect on prices. Defense Secretary Lloyd Austin told Congress last week that these attacks could have “a ripple effect in terms of the global energy situation.”
White House climate adviser John Podesta said Tuesday that Biden will “do what he can to make sure” gasoline is affordable, noting that the administration has in the past tapped the Strategic Petroleum Reserve to drive down prices at the pump.
The White House released 180 million barrels from the SPR in 2022 as oil and gas prices surged following Russia’s invasion of Ukraine. The reserve currently stands at about 365 million barrels, the lowest level in decades, a point of contention with Republicans in Congress.
According to a March research note from JPMorgan, Russia’s decision to increase cuts by 470,000 barrels per day to meet its commitments to OPEC+ could prove particularly problematic. According to the firm, the price of global benchmark Brent crude oil could approach $100 by September – just two months before the November presidential election – without countermeasures.
The chances of another release from the SPR will increase if gasoline prices approach $4 a gallon, which could happen as early as May, according to JPMorgan. Despite the low SPR levels, the Biden administration has room to release another 60 million barrels of crude oil, according to the bank.
Oil prices fell more than 3% this week as war fears eased along with Israel’s decision not to immediately retaliate against Iran, but the situation remains highly uncertain. Daniel Yergin, vice president of S&P Global, said oil prices above $90 a barrel pose a problem for the broader market.
“It’s also a problem for inflation in general, and it’s a real problem if you’re an incumbent president running for re-election,” Yergin told CNBC’s “Squawk Box” earlier this month.