President Joe Biden’s top economic advisor said Thursday the White House will “make sure gas prices remain affordable” when asked whether the administration would consider tapping the Strategic Petroleum Reserve.
“There are of course things that have been done in the past and we’ll continue to very closely monitor, make sure that gas prices remain affordable for so many American families going into the summer driving season,” National Economic Advisor Lael Brainard said at Semafor’s World Economy Summit.
Gasoline futures have risen nearly 29% this year with prices at the pump currently averaging $3.67 a gallon, according to the motorist association AAA. U.S. crude oil has gained 15% year to date on stronger demand, tighter supplies due to OPEC+ production cuts and mounting geopolitical risks in the MidEast and Eastern Europe.
“We’re highly attentive to the international oil markets and domestic gas prices. We’ll continue to monitor closely and want to make sure that those gas prices remain in current ranges,” Brainard said. U.S. crude oil hit a high of $87.67 per barrel this year before pulling back to around $83 a barrel.
Iran’s unprecedented weekend air assault on Israel has raised fears that an Israeli counterattack could trigger a wider war in the region that impacts crude oil supplies. The White House is keeping a close eye on “geostrategic risk” in the Middle East, Brainard said.
And Ukraine’s repeated drone strikes on Russian oil refineries also have the Biden administration concerned about their effect on prices. Defense Secretary Lloyd Austin told Congress last week that those attacks could have “a knock-on effect in terms of the global energy situation.”
White House climate advisor 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 ease prices at the pump.
The White House released 180 million barrels from the SPR in 2022 as oil and gas prices surged in the wake of the Russian 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.
Russia’s decision to deepen its cuts by 470,000 barrels per day to meet its pledges to OPEC+ could prove particularly problematic, according to a March research note from JPMorgan. The price of global benchmark Brent crude oil could approach $100 by September — just two months before the November presidential election — without countermeasure, according to the firm.
The chances of another release from the SPR will rise if gasoline prices move closer to $4 per gallon, which could happen as soon as May, according to JPMorgan. Despite the SPR’s low levels, the Biden administration has space to release another 60 million barrels of crude oil, according to the bank.
Oil prices have pulled back more than 3% this week as war fears eased along with Israel’s decision not to strike back immediately against Iran, but the situation remains highly uncertain. Daniel Yergin, vice chairman of S&P Global, said oil prices above $90 a barrel presents 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 running for reelection,” Yergin told CNBC’s “Squawk Box” earlier this month.