Senior officials described the historic release as a "wartime bridge" to alleviate supply constraints created by Russian oil coming off the market and widespread boycotts of Russian oil in response to the Ukraine crisis. The release is intended to provide immediate relief until other initiatives intended to incentivize domestic production of oil gain traction, they said.
The first million barrels of the release announced Thursday are expected to hit the market by May, senior officials said.
Sen. Joe Manchin, D-W.Va, chairman of the Senate Committee on Energy and Natural Resources, voiced support for efforts to stabilize oil prices through the Strategic Petroleum Reserve releases in a statement Thursday.
Along with the oil reserve release, the White House said it is also calling on Congress to implement a "use it or lose it" policy to encourage the U.S. oil industry to produce more oil under existing federal oil leases. Under the policy the White House wants Congress to adopt, companies would face fees if they refuse to produce under a lease and continue to sit on dormant wells, senior officials said.
The White House said in a fact sheet released Thursday that companies should be made to pay fees "on wells from their leases that they haven't used in years and on acres of public lands that they are hoarding without producing."
"Companies that are producing from their leased acres and existing wells will not face higher fees. 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," the White House said.
The expected uptick in production under existing leases would enable the federal government to replenish the Strategic Petroleum Reserve when oil prices stabilize, administration officials said.
Oil and gas producers pushed back on the suggestion they are "sitting on" leased federal land without action. In a statement sent to Law360 Thursday, Dan Naatz, the executive vice president of the Independent Petroleum Association of America, said it's in the best interests of independent oil and natural gas producers to develop their leases on onshore and offshore federal lands.
"Although the Biden administration wants to make the public believe exploring for oil and natural gas on federal lands is a simple process, nothing could be further from the truth," Naatz said. "Our industry is heavily regulated and there are various factors that cause companies to wait to explore and drill wells."
According to the U.S. Department of Energy, the Strategic Petroleum Reserve is the world's largest supply of emergency crude oil. The federally owned stockpile is stored in huge underground salt caverns in Louisiana and Texas.
At the beginning of March, Biden authorized the DOE to release 30 million barrels from the reserve as part of a coordinated, international effort to shore up the petroleum supply as Russia continued to invade Ukraine.
And in November, the president directed the DOE to arrange for 50 million barrels of oil to be released from the federal reserves to address supply shortages attributed to the COVID-19 pandemic.
The oil release and production incentives announced Thursday are part one of Biden's plan to respond to the rising costs of oil. The second part of the plan will include steps to accelerate the clean energy transition to enable the country to achieve energy independence.
In its fact sheet, the White House said that despite the U.S being the largest oil producer in the world and "a net energy exporter," the impact Russia's invasion of Ukraine has had on energy prices shows "the actions of a dictator half a world away can still impact American families' pocketbooks." The White House said achieving real energy independence requires the country weaning itself from a dependence on oil through clean energy alternatives.
Therefore, the president intends to direct that the Defense Production Act be used to accelerate domestic production of minerals and materials needed for clean energy technology, the White House said.
Such materials include lithium, nickel, cobalt, graphite, and manganese, which are used in large-capacity batteries, according to the fact sheet.
Manchin also said Thursday he is pleased the Biden administration took to heart bipartisan calls to invoke the Defense Production Act to increase domestic production of critical minerals.
"These minerals are essential to the technologies we have come to depend on and accelerating their production is vital to our energy and national security, Manchin said. "Building out our domestic supply chain and reducing our reliance on Russia, China and other adversarial nations is more important than ever before."
In a statement Thursday, the Natural Resources Defense Council called for any efforts to increase production of the strategic minerals to be done in a "reliable, durable and sustainable" way.
Bobby McEnaney, senior land analyst with the NRDC said in a statement Thursday that a clean energy economy is "how we break our dependence on fossil fuels, confront the climate crisis, end our support for belligerent petro states like Russia and help our European allies do the same."
"What's important now is ensuring that supplies of the minerals needed to manufacture those batteries be secured in ways that are reliable, durable and sustainable. Rather than just digging up or importing more, we should start with improved recovery and waste reduction throughout supply chains,"McEnaney said. "We must reclaim and recycle these materials in a way that ensures they stay in circulation and honors our commitment to protect the environment, public health and vulnerable communities."
--Editing by Alyssa Miller.
Correction: A previous version of this story misstated details of the "use it or lose it" policy proposal. The errors have been corrected.
Update: This story has been updated with more details and comments.
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