The increase in oil and gasoline prices threatens the U.S. economic rebound and poses a political risk for President Joe Biden. But his options for taming the surge are limited, and many of them would be either short-lived or conflict with his agenda of fighting climate change.
“Political leaders have to respond to an energy crisis. History shows that voters rebel against leaders when energy prices are high,” said Kevin Book, managing director of research firm ClearView Energy Partners, but still he added: “There aren’t really any easy fixes here.”
Here’s a look at some of the tools Biden has at his disposal:
Tapping the emergency stockpile
Biden could tap into the country’s emergency stashes of crude — possibly in coordination with similar releases from other nations. It’s not an uncommon tactic: President Barack Obama withdrew some 30 million barrels of crude amid supply disruptions in Libya a decade ago, and President Bill Clinton used the same strategy to tamp prices months before the 2000 presidential election.
The Energy Department is already obligated by law to sell 260 million barrels of oil in the Strategic Petroleum Reserve by fiscal year 2027. Additional releases now could slightly lower prices, analysts say, though the effects would be temporary.
A release could even be structured so it complies with a congressional mandate to sell 18 million barrels between fiscal 2022 and fiscal 2025.
Backing NOPEC legislation
Another option Biden has is calling for passage of existing legislation that proposes making OPEC a cartel subject to the Sherman antitrust law. The legislation, the No Oil Producing and Exporting Cartels Act, could be tacked onto the $1.75 trillion spending bill Congress is considering.
Threatening to pass the bill, which would allow the U.S. government to sue OPEC for manipulating the energy market, potentially seeking billions of dollars in reparations, could be more viable than actually passing it because it would alienate nations such as Saudi Arabia, ClearView Energy Partners said in a research note.
Banning crude exports
Although Congress in 2015 lifted a ban on most U.S. crude oil exports, Biden could invoke emergency powers to reinstate restrictions.
Oil industry allies and analysts warn the move could backfire by inviting retaliation by other countries and harm oil-producing states represented by Democrats in Congress.
If Biden were to ban crude oil exports, he may opt to pair that move with invoking the Defense Production Act to require oil drillers and refiners, who would be operating at a disincentive, to keep producing, though analysts say that move would be considered heavy-handed.
He could also restrict the amount of gasoline that is exported.
Shifting energy flows
The president could limit the movement of oil, gas and petroleum products by pipeline, rail, barge or ship. He could do this by drawing on emergency authority to coordinate domestic transportation that was created in the wake of the Sept. 11, 2001 terrorist attacks.
The power, which would be wielded by the head of the Transportation Security Administration, could be used to block fuels from leaving U.S. ports or shift energy to regions with high prices.
Waiving shipping rules
Biden could waive the Jones Act, which requires the use of American ships to move goods among U.S. ports, which would let companies move their oil around the country more easily, without being forced to rely on more expensive, U.S.-flagged, -crewed and -built tankers.
But waivers would be vehemently opposed by U.S. shipbuilding interests and their allies on Capitol Hill, who had successfully persuaded the Trump administration to back off creating new exemptions to the law.
Waiving fuel rules
When storms pinch gasoline supplies, the U.S. government sometimes has allowed fuel refiners and distributors to sell less-expensive blends.
Now, the administration is facing pressure to ease requirements for biofuel to be blended into diesel and gasoline. Experts disagree about the extent to which those Renewable Fuel Standard requirements affect gasoline prices, but refiners argue reductions would provide immediate help.
The administration could speed up the permitting of drilling projects and the sale of leases in Western states, where Biden paused auctions in January. The Interior Department is already set to sell drilling rights in the Gulf of Mexico later this month.
While leases sold today would takes years to produce oil, a rush of new auctions would have immediate signaling value to a market that has grown to expect the Biden administration will curtail oil and gas development as part of the president’s push to green the U.S. energy system. However, more leases don’t necessarily lead to more drilling.