Will Biden’s plan to tap national reserve lower gas prices?

SALT LAKE CITY — In an attempt to lower gas prices, President Joe Biden announced plans to withdraw 1 million barrels of oil per day for the next six months from the U.S. Strategic Petroleum Reserve. But will that ease pain at the pump?

Gas prices now and last year

The average price of regular gas Wednesday in Utah is $4.42 a gallon, according to AAA.

Kathleen Sgamma of Western Energy Alliance joins KSL NewsRadio’s Dave & Dujanovic to explain what difference — if any — the withdrawal would make to drivers/consumers.

In 2021, U.S. motorists burned about 369 million gallons of gas per day or about 8.80 million barrels per day, according to the US Energy Information Administration. So Mr. Biden’s plan would supply the country with over 20 days’ worth of gasoline from the reserve.

“This is a wartime bridge to increase oil supply until production ramps up later this year. And it is by far the largest release of our national reserve in our history,” the president said.

Will gas prices drop under Biden’s plan?

“The president predicted that gas prices would drop as much as 35 cents a gallon,” Debbie Dujanovic said. “So will this million barrels a day of release, will that make a difference in gas prices?”

“Well, hard to say,” Sgamma said. “Last time there was a release that President Biden did, released from the Strategic Petroleum Reserve, the price actually increased. So it’s a temporary stopgap measure.”

She added that the producers of oil say the better option is to develop the untapped reserve in the ground in the United States.

“Why don’t we just have private investors invest in oil and gas production and we the producers produce it?” she said, adding replacing the oil withdrawn from the national reserve will be at the expense of taxpayers.

Federal roadblocks to drilling for oil and gas

“Why can’t you guys just produce more oil?” Dave Noriega asked.

“We are indeed working to produce more oil,” Sgamma said. “There are more rigs running in the United States now than there were a few months ago.”

She added the Interior Department has slowed permitting and stopped leasing on federal lands.

Noriega pointed out that there are nearly 9,000 permits that are not being used.

Sgamma said 8,800 outstanding permits are not being drilled now and await other permits, such as pipeline permits and gas-gathering line permits.

“We are experiencing a situation where the [Biden] administration has discouraged investment in the oil and natural gas industry. And that means that we can’t get capital to drill some of those wells,” she said.

Drill or pay a fee

Debbie asked Sgamma for her response to Mr. Biden’s use it or lose it policy. 

“Congress should make companies pay fees on wells on federal leases they haven’t used in years and acres of public land they’re hoarding without production. Companies that are already producing from these wells won’t be affected,” the president said.

“I think it’s a positive thing that the president suddenly wants us to develop on federal lands,” Sgamma said, “. . . But his own Interior Department is stopping us from developing on many of them.”

She closed by saying most of the drilling for oil and gas happens on private lands.

“About a quarter of our supply comes from federal lands and waters, but the vast majority is on private and state lands,” she said.

Dave & Dujanovic can be heard on weekdays from 9 a.m. to noon. on KSL NewsRadio. 

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