Biden administration officials are concerned that escalating conflict in the Middle East could send global oil prices soaring, so they are looking for ways to control U.S. gasoline prices if such a surge occurs.
Administration officials say those efforts include discussions with big oil-producing countries like Saudi Arabia that are blocking supply and with U.S. oil producers that already have the capacity to pump more than they produce.
It’s also possible that President Biden could authorize a new round of releases from the nation, a senior administration official said in an interview. strategic petroleum reserve, an emergency reserve of crude oil stored in underground salt caverns near the Gulf of Mexico. Mr Biden aggressively tapped reserves after Russia’s invasion of Ukraine last year, sending oil prices skyrocketing, leaving the amount of oil in those reserves at historically low levels.
Oil prices have not increased yet due to the conflict in the Middle East. A barrel of brent crude oil It was trading at around $88 in global markets on Wednesday. That’s up from around $84 earlier this month, shortly before Hamas attacked Israel and sent markets reeling. But analysts and administration officials fear prices could rise much higher if the conflict in Israel spreads, restricting the flow of oil from Iran or other major producers in the region.
So far, American drivers have not experienced any problems. The average price of gasoline nationally was $3.54 per gallon on Wednesday, according to AAA. That was down about 30 cents from a month ago and 25 cents from the same day last year.
Administration officials are wary of the possibility that prices could again rise above $5 a gallon, a level they touched in the spring of 2022. Mr Biden then made extraordinary efforts to help bring down prices – but those steps are likely to be much less effective in the event of a new oil shock.
“They were successful in the second half last year, but this year I think they have run out of bullets,” said Amrita Sen, research director at Energy Aspects.
That’s because the administration did not replenish the strategic reserve more aggressively when prices fell, Ms. Sen said. This may now reduce its ability to cope with rising prices.
“They got a little overconfident that prices would stay low,” he said. “In some ways, they’ve missed the boat.”