Financial Services Association, May 22 (Editor: Xiaoxiang) The Biden administration said on Tuesday that it will release 1 million barrels of gasoline from the northeastern US reserves to help curb the rise in oil prices this summer.

This reserve was established by the United States after Super Hurricane Sandy in 2012. According to reports, this sale plan will be carried out from storage sites in New Jersey and Maine, and will be released in increments of 100,000 barrels each time.

The US Department of Energy said that this approach will ensure that gasoline can flow into local retailers before July 4 (US Independence Day holiday) and be sold at competitive prices.

The US Department of Energy also stated that the move was aimed at “reducing costs for American households and consumers.” The timing window for the sale of 1 million barrels (about 42 million gallons) of gasoline is to provide relief to motorists at the beginning of the summer driving season.

According to the American Automobile Association (AAA), the average price of gasoline across the US is about $3.60 per gallon, up 6 cents from a year ago.

It is worth mentioning that this is also the second most expensive year for gasoline at US gas stations in the past ten years as US Veterans Day (next Monday) arrives, after 2022.

The Biden administration needs to take an urgent stance to reduce inflation

Analysts pointed out that using gasoline reserves is currently one of the few actions the Biden administration can take alone to try to control inflation. This is also a gesture that the White House desperately wants to show to the outside world before the election.

US Secretary of Energy Jennifer Granholm (Jennifer Granholm) said in a statement, “The Biden-Harris administration is focused on lowering fuel prices for American households, especially during the summer driving season. By strategically releasing this reserve between Memorial Day and July 4, we have ensured that sufficient supply flows to the three states of the New York metropolitan area (New York, New Jersey, and Connecticut) and the Northeast when Americans need it most.”

White House press secretary Karine Jean-Pierre (Karine Jean-Pierre) pointed out that the release of gasoline reserves in the Northeast was based on President Biden's actions to reduce gasoline and energy costs — including the historic release of strategic oil reserves and maximum investment in clean energy.

After the Russian-Ukrainian conflict broke out, Biden invested heavily in strategic oil reserves in 2022, reducing strategic oil reserves to the lowest level since the 1980s. Biden's move helped stabilize rising oil prices due to the Russian-Ukrainian war, but it attracted complaints from Republicans that it was using oil reserves used for a national emergency to play with politics.

It is worth mentioning that Biden's latest use of gasoline reserves is relatively independent and more regional. Republicans in the US Congress have long criticized the Northeast gasoline reserve established by former President Barack Obama, saying that any such reserve should be established by Congress. According to a 2022 report from the Government Accountability Office, gasoline reserves can only provide minimal relief in the face of severe gasoline shortages. However, this reserve has never been used, and annual maintenance costs are still as high as $19 million.

GasBuddy analyst Patrick De Haan said the sale of Northeast gasoline reserves had little impact on gasoline prices across the country, although the Northeast region may face slight downward price pressure. He pointed out that the reserves of one million barrels of gasoline are actually only equivalent to the total consumption of gasoline in the US in 2.7 hours.

In an interview, De Haan also stated, “As an analyst, gasoline reserves have never really made sense. Because gasoline has a shelf life, reserves are very small, and reserves must be replaced frequently. That's why, apart from the US, no country has emergency gasoline reserves.”