Biden adviser says oil reserve releases must stop

One of Biden’s top energy aides confirmed Friday that the administration will not extend releases of oil from the Strategic Petroleum Reserve that are scheduled to end this fall.

The strategic oil release “was really a stopgap measure,” said Amos Hochstein, Biden’s special presidential coordinator for international energy affairs. “We cannot be an oil supplier. It is a reserve and therefore we must keep it.

He promised that the end of the releases would not cause supply shocks, noting that the private sector had assured him that he would be able to increase production once there was no longer access to the reserve. .

“I myself had these conversations with the leaders of several companies,” added Hochstein, who previously worked in the oil industry.

At least some companies are now investing in the months-long process of ramping up production, he said, which makes him optimistic that fears of a price crash may be overblown.

U.S. Senior Energy Security Adviser Amos Hochstein arrives for a meeting with Lebanon's acting Minister of Energy (unseen) in Beirut on June 13, 2022. - Hochstein is currently mediating the maritime border talks between Lebanon and Israel, which technically remains at war but has agreed to US-mediated talks aimed at demarcating the border to allow the two countries to boost gas exploration.  (Photo by ANWAR AMRO/AFP) (Photo by ANWAR AMRO/AFP via Getty Images)

Amos Hochstein is the Biden administration’s senior energy security adviser. (ANWAR AMRO/AFP via Getty Images)

“There’s a bit of hysteria right now in the analysis of oil markets,” he said in Friday’s chat with Akiko Fujita of Yahoo Finance.

For example, some experts predicted record prices this summer, he noted — but drivers instead benefited from a month of lower crude oil and pump prices.

“Really a palliative measure”

Crude oil prices were below $95 a barrel on Friday, while the average U.S. gasoline price was $4.41 a gallon. Both represent significant declines from this time last month.

Hochstein says he has secured promises from CEOs that ongoing investments in upgrades such as drill profiles and rigs will pay off with an increase of around 800,000 to 1 million barrels per day toward the end of the year. That would replace, he argues, the extra million barrels a day currently on the market due to Biden’s decision in April to release oil reserves.

Speaking to Yahoo Finance, Hochstein stuck to his previous prediction that gas prices would “soon drop further toward $4” a gallon, noting that the administration is able to keep prices low.

“I can’t guarantee that, there are all sorts of external factors to that,” he said.

“We are not going to change”

Still, many oil and gas executives have expressed skepticism about calls to ramp up production quickly.

Energy leaders fear they are on the wrong side of another boom and bust cycle in gas prices. Just two years ago, oil companies ramped up production, then suffered massive losses when they couldn’t get new oil to market in time before prices crashed.

At one point in 2020, oil prices even turned negative.

“Whether it’s $150, $200 or $100 oil, we’re not going to change our growth plans,” said Scott Sheffield, CEO of energy exploration company Pioneer Natural Resources, in Bloomberg in February.

For his part, Hochstein acknowledged that some oil companies are resisting increasing production. However, he called the stance “wrong” and noted that many drivers were suffering at the pumps. These companies could see more pressure when their quarterly earnings show massive earnings, he noted.

The Biden administration previously summoned energy executives to Washington last month for what a senior adviser described as a “harsh message” about their high profits.

“Look at these results [in the coming weeks] and tell me if the American people think these companies should put that money back into the economy, into more production,” Hochstein said.

US Vice President Joseph R. Biden (left) and Amos J. Hochstein, US State Department Special Envoy and Coordinator for International Energy Affairs, speak before the Caribbean Energy Security Initiative luncheon during of the Caribbean Energy Security Summit at the US Department of State on January 26, 2015 in Washington, DC.  Leaders from across the Caribbean attended the summit to discuss energy and regional issues.  AFP PHOTO/BRENDAN SMIALOWSKI (Photo credit should read BRENDAN SMIALOWSKI/AFP via Getty Images)

Then Vice President Joe Biden and Amos Hochstein, the State Department’s special envoy for international energy affairs, in 2015. (BRENDAN SMIALOWSKI/AFP via Getty Images)

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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