10:51 A.M. EDT
MS. SIMONS: Thank you so much for joining this call. As a reminder, this call is on background as “senior administration officials” and is not under embargo.
On this call, our senior administration officials will provide an overview on President Biden’s plan to respond to Putin’s price hike at the pump. We will take some questions at the end.
Not for reporting but for your awareness, the speakers on the call today are [senior administration official], [senior administration official], and [senior administration official].
With that, I will now turn it over to [senior administration official].
SENIOR ADMINISTRATION OFFICIAL: Great. Thanks so much for everyone joining. The President will be speaking this afternoon on the effect of Putin’s price hike on gas prices for American families.
Prices at the pump right now are up almost $1 since Vladimir Putin accelerated his military buildup in January. That’s because Russian oil now is coming off the market. The United States banned the import of Russian oil, which Republicans and Democrats in Congress called for and supported. It was the right thing to do.
And as the United States and others aren’t buying Russian oil, supply is dropping and the price has increased.
The President has said from the start that standing up to Putin’s aggression would never be painless, but he is committed to doing everything he can to help American families. That’s why today he is announcing a two-part plan to bring American families relief.
Part one involves immediately increasing the supply of oil as a wartime bridge to greater domestic production. Part two is charting a path towards real American energy independence by accelerating the clean energy transition so that we are no longer reliant on foreign oil.
Starting with part one, which is about immediately increasing supply: The fact is that there is nothing standing in the way of domestic oil production, which is expected to increase by a million barrels a day this year alone.
U.S. oil companies are recording their largest profits in years and can put those profits toward productive use. While some companies have already announced they are increasing immediate production, too many are choosing right now to make extraordinary profits without investing in more supply.
That’s why, today, the President is proposing a “use it or lose it” policy to incentivize companies to produce more in the short term with the resources they already have.
Right now, the oil and gas industry is sitting on more than 9,000 unused but approved permits for production on federal lands and more than 12 million unused acres.
Congress should make companies pay fees on unused wells on federal lands and on acres of public land that they are sitting on without producing.
You know, the industry has indicated that they can get online an additional million barrels per day this year, as I said. That is something that we need, that they should be doing. But we know it will take months, not days, for that production to come online, including through the kinds of measures the President is laying out today to encourage additional production.
We need a bridge to that additional supply. That’s why the President is announcing a historic release of a million barrels a day for the next six months from the Strategic Petroleum Reserve.
That release will immediately shore up global supplies. These barrels will be a wartime bridge to additional U.S. production and other production that we expect later this year.
Importantly, from rev- — with revenues from that sale, we’ll restock the reserve when prices are lower. And the Department of Energy already has that authority. That can also incentivize the additional production we need this year, knowing that those purchases will occur in the future at a lower price when we’re through this emergency.
This release is being coordinated with allies and partners around the world. Together, our combined efforts will supply well over 1 million barrels per day to the market.
This will be the largest release from reserves over time that has been done, so it is a historic release.
These actions will increase our immediate supply and help us meet the immediate emergency and address the lack of supply as a result of Putin’s actions.
The second part of President Biden’s plan is to declare real American energy independence for the long term so that Americans aren’t subject to the kind of volatility in the oil market and at the pump that we now see due to Putin’s actions.
I’ll now turn it over to [senior administration official] to talk more about that.
SENIOR ADMINISTRATION OFFICIAL: Great. Thanks, [senior administration official]. And thanks, everybody.
Look, President Biden knows that the path to real American energy independence depends on reducing our reliance on foreign oil and on fossil fuels, and that the path to that energy security runs through clean energy.
That’s why President Biden is calling on Congress to pass his landmark plan to speed the transition to a cleaner energy future made here in the United States of America.
Implementing the President’s climate plans would save Americans more than $900 a year in gasoline from the adoption of electric and hydrogen vehicles. It would save Americans $500 a year by increasing the use of clean electricity to power homes, not only on the grid but in the household as well — technologies like heat pumps and solar and storage.
And altogether, this would create millions of good-paying union jobs — jobs that cannot be outsourced.
Together, these actions would move us towards freeing ourselves from dependence on fossil fuels and, certainly, on sourcing outside of North America.
And President Biden, of course, is not waiting on Congress to take action, and this week alone is illustrative of that push to achieve real American energy independence.
One example of that, that he will announce today, is taking the next step in using the Defense Production Act by issuing an authorization for use of the DPA to secure American supplies of the critical materials needed to boost our clean energy economy. That is specifically focused on the procurement of the tools needed to build batteries here in the United States — batteries that will go into electric vehicles, batteries that will help us support a cleaner electricity grid. And all of this to be done in a way that respects and really sets the best — the highest standards on labor, on environment, on engagement with communities, and with Tribal Nations.
Second, he will make $3.2 billion available to states, Tribes, and territories for the weatherization of homes through the Bipartisan Infrastructure Law. That’s 10x the amount of historic funding levels that will help electrify and make efficient homes all around the country.
The third is advancing a set of strong energy efficiency standards designed to lower consumer and small-business costs. These are the appliance efficiency and equipment efficiency standards set by the Department of Energy. The President will talk about the 100 actions that his administration will take by the end of this year that will save families $100 annually through more efficiency in these appliances and equipment.
And finally, he will talk about the upcoming finalization of new fuel economy standards for cars and trucks that will save drivers money at the pump through more efficient vehicles — combining more production here at home in the short run to meet the emergency situation that [senior administration official] described, with a strategy that drives a reduced dependence on fossil fuels and an increased production of homemade clean energy means more energy security. That is what real American energy independence is all about, and that’s the plan the President will speak to today.
MS. SIMONS: All right. Thank you so much, [senior administration officials].
We’ll now take some questions. If you can use the “raise hand” feature, we’ll try and get to as many of you as we can in our allotted time.
The first question will go to Justin Sink at Bloomberg.
Q Hey, guys, can you hear me?
MS. SIMONS: Yep.
Q Great. So, I have two quick questions. The first was how you guys were planning to deal with the Jones Act to move this amount of product. And the second was if you had any more details on the partner release of strategic oil that would be part of this. Is it coordinated through the IEA? Do you have a sense of how much and how soon we would see those sort of additional releases from partners?
SENIOR ADMINISTRATION OFFICIAL: Sure. So, I’ll take that — the first question and then turn it over to [senior administration official].
When it comes to the Jones Act, the administration is obviously releasing a historic amount of oil through this action by the President — over the next six months, a million barrels a day. We are also committed to fully complying with the Jones Act and the President’s Made in America commitment.
A sizable portion of the release of a million barrels a day will be carried by pipeline. In fact, in the most recent reserve drawdown, the vast majority of the sales, 85 percent, were delivered via pipeline, while 15 percent have been slated for shipment by sea.
However, shipping is likely to also be needed to transport oil to parts of the country not serviced by pipelines. Based upon the support offered by American carriers and labor unions, we expect the Jones Act-qualified vessels will be available to meet those needs.
However, given the historic volumes we plan to release, it is also possible that Jones Act-qualified vessels may not always be available to carry additional shipments in a timely manner.
When that is the case, the administration stands ready to promptly process Jones Act waiver requests to ensure orderly and timely delivery of oil. Several agencies have already coordinated to make this process work smoothly. We will be receiving requests seven days a week, and we will work to process any waiver requests quickly with the goal of providing a response within two days.
On your second question, I’ll now turn it over to [senior administration official].
SENIOR ADMINISTRATION OFFICIAL: Thanks so much. I really appreciate the question. Regarding working with partners and allies, this is an effort and a cadence we’ve been doing for the last several weeks and months.
Just most recently, the President was in Europe, where he talked about the importance of energy supply with his G7 counterparts. And earlier this week, we gave a readout of the call he had with the Quint, where he again — once again, they discussed the importance of ensuring energy supply in the markets.
And so, regarding the collective action and actions taken with other countries, as you all know, the United States has a much larger reserve than other countries. And the President has said he would not hesitate to act to protect Americans from Putin’s price hike.
I will not speak to what other countries will do, but I will note that tomorrow there is a meeting of the International Energy Agency to further discuss collaborative efforts to address energy markets and supply, and we will not prejudge those outcomes.
MS. SIMONS: Next question will go to Weijia Jiang from CBS News.
Q Thank you so much, and thanks for taking my question. To better understand how this latest release is going to bring down gas prices, can you share what the deficit is in the global market supply of oil since the U.S. and other nations sanctioned Russian oil? In other words, every day, how many millions of oil — barrels of oil have been removed from the market supply?
And then, just more basically, you know, once this release is triggered, how quickly could that actually have an impact on U.S. gas prices? Thank you.
SENIOR ADMINISTRATION OFFICIAL: Yeah. So, to take your question — so, thanks for the questions.
First, when it comes to the effect on global supply, what we know is that there is reduced global supply right now. Obviously, outside analysts have given us sort of a range of estimates of the reduction in supply. We know, for instance, that, you know, across points of last year, the United States was importing 700,000 barrels per day of crude and petroleum product from Russia; we obviously have now banned those imports.
What we know is that there is a lack of supply and that the kind of action that the President is taking today, this historic action — the million barrels per day that will be released from the reserve over the next six months as we see a ramp-up in U.S. production and production elsewhere — will be very important in helping to address that lack of supply.
When it comes to, you know, how quickly will this translate into relief: You know, obviously, we’ve seen, even overnight, markets responding to the initial news of a reserve release — where we’ve seen, you know, with a reduction in the oil price.
But we’re not focused right now on sort of the immediate, short-term price movements. What we’re focused on is a real challenge we have. You know, looking ahead with Russian supply coming off the market, we want to address that lack of supply. We know and believe that that will then translate into helping to provide relief to American consumers. We think that this historic release from the reserve will be an important step in that direction, will have meaningful effects. And then, in combination with actions by other countries taken around the world, it will mean we will have well in excess of a million barrels per day being released from reserves around the world in response.
MR. SIMONS: Next, we’ll go to Jeremy Diamond.
Q Hey, thanks very much for doing this. Just to follow up on Weijia’s question, you just said that you think this release will be an important step in the direction of helping to reduce gas prices. But do you not have an estimate of how quickly that will happen or by how much Americans can expect to see their gas prices reduced, say in three months from now or six months from now?
And then secondly, what are your plans in terms of replenishing the Strategic Petroleum Reserve? Thanks.
SENIOR ADMINISTRATION OFFICIAL: Yeah. So, what we — where we’re focused is a structural challenge right now in the oil market as a result of Putin’s actions. We know that there is too little supply to meet demand, as Russian oil was coming off the market. Obviously, United States banned Russian imports; others also are not purchasing. We know that there’s a reduction in supply. And we are focused on the difference, that deficit between supply and demand, and that this historic action — a million barrels per day — will help to address that in coordination with other countries around the world.
You know, when it comes to the particular price effects, there is good evidence from studies of prior reserve releases that it can have significant effects in that sort of interim period, that short-term period, in order to provide relief. That’s where we’re focused. This is a bridge towards greater supply coming on the market from production both in the United States and elsewhere.
When it comes to the refilling, restocking the reserves, all of the funds that will be attained by the Department of Energy as a result of the sale of this oil will then go to restocking the reserve. That is an authority that the Department of Energy already has; that’s how they can deploy those funds. We expect that to occur. Once the oil price has come down, we are no longer in an emergency. You know, I direct you to the Department of Energy for more details on that.
The final thing I would say: You know, our commitment to restocking the reserve in order for it to be ready for future emergencies also can have good effects right now. It can encourage the additional production we need right now in order to respond to Putin’s action. So there really is a double benefit, both making sure that we are ready for future emergencies and also encouraging the production we need immediately in order to respond to Putin’s actions.
MS. SIMONS: Next, we’ll go to Josh Boak from the Associated Press.
Q Thanks so much again for doing this. You’ve released — you’ve had two prior releases from the Strategic Reserve. And you’re describing this release, which is much larger as a bridge. Has the administration had talks or conversations with oil companies to ensure that the increased production will be out there and that this will be a bridge, since this also would reduce prices and presumably some of the incentives to pump more?
SENIOR ADMINISTRATION OFFICIAL: Yeah, appreciate the question, Josh. So, the President has had discussions with leaders in the industry. Senior administration officials have been closely monitoring and also in discussions with the industry as well.
You know, as I said, we believe that the industry needs to step up, it needs to do more, it needs to be investing in additional production.
There are companies out there that have said they are; that are doing the right thing right now in increasing production. You know, that’s where, for instance, the million barrels a day that we — in additional production that we expect this year comes from.
However, there are also companies out there that haven’t said that. And, in fact, you know, some leaders in the industry who have said that it doesn’t matter where the price point is, they’re not going to produce more; they’re instead focused on returning dividends and other distributions to shareholders and their owners.
We don’t think that’s the right thing. We think these companies need to be stepping up, given the moment that we are in. There are some that have. And obviously — and I think you’ll hear the President say today: There is nothing standing in their way. There are, you know, thousands of unused
permits right now out there. There are the acres that aren’t being developed and they should be, given the current moment.
When it comes to the reserve and its effect on incentives, we do think that this is a bridge. And this is a discussion we’re having with the industry, but we — and I want to focus on, you know, two aspects of it. It, obviously, can help address the real lack of supply that exists right now — that difference between supply and demand as a result of Putin’s actions.
But we are committed, as I said, to restocking the Strategic Petroleum Reserve. Once we’re through this emergency and prices are down, our commitment to do that then provides an important signal to the market that, you know, additional production should be coming online, in part because the government will be purchasing that oil to restock the reserve, looking ahead to prepare for future emergencies.
MS. SIMONS: And next we’ll go to Kayla Tausche from CNBC.
Q Hi, guys. Thank you so much for doing this. I just wanted to ask for a little bit of clarification on the 1 million barrels. It looks, from the release, like the 1 million barrel total is the U.S. and allies combined. But I know it was also just said that other allies and the IEA would be discussing this at a meeting tomorrow and that their policy positions might not be final. So, could you just clarify that the 1 million barrels is specifically from the U.S. reserves?
SENIOR ADMINISTRATION OFFICIAL: Yes, the United States will be releasing 1 million barrels per day, on average, for the next six months, and that will come from U.S. reserves. In combination with releases from other countries around the world, we expect it to be well in excess of 1 million barrels per day.
MS. SIMONS: Next, James Politi from the Financial Times.
Q Thank you very much. I was just wondering, will there be any consequences for U.S. energy producers that don’t step up in this moment and produce more oil? What would those consequences be?
And in terms of the price for repurchasing and restocking the reserve, is that — you know, are you thinking a particular price where you could say, okay, well, it’s low enough now that we can buy; that it’s time to kind of shift?
And finally, what’s the state of the discussion with the Saudis? And should we be expecting them to increase production later this year as part of getting well over a million barrels per day?
SENIOR ADMINISTRATION OFFICIAL: So, first, when it comes to the industry, we do think that there should be
consequences if you’re sitting on unused approved permits for production on federal lands and also undeveloped acres of land that have been leased. That’s why the President will today call for a “use it or lose it” policy that will charge companies if they’re sitting on — on wells that aren’t producing and leases that they’re not developing. We think that can help encourage additional production this year.
The — and I’m forgetting what your second question was. Sorry.
We might’ve lo- — we can — and I can — I remember your last question was on the OPEC, and I can turn it over for — to [senior administration official] to respond to that.
SENIOR ADMINISTRATION OFFICIAL: Great. So, regarding your OPEC/Saudi question, as you know, OPEC took a decision this morning, and we will not — you know, OPEC Plus will make the decisions as it always has, and we continue to be in touch with relevant OPEC Plus partners on energy security and supply.
The President has been clear that he will act, if needed, to provide additional oil supply to calm turbulent markets. And when there’s an oil disruption, such as the one that we’re facing today, we know that consumers need relief now and that’s why the President has acted.
And I’m — I’m remembering the second question was on restocking the reserves. The bottom line is we are committed to doing so when the — when prices come down, both to prepare for future emergencies and also to provide the right signal to the market now.
We’ll defer to the Department of Energy on exactly how we’re going — on exactly the execution of that. But that is our strong commitment and an authority that the Department of Energy has.
MS. SIMONS: And we’ll do one final question. Timothy Gardner from Reuters.
Q Thank you. Two questions. First, when exactly will we see the first million barrels of this release come to markets? And secondly, could you — obviously, with
Saudi Arabia and UAE and others playing a very important role in oil markets, can you say when this plan was communicated to them?
SENIOR ADMINISTRATION OFFICIAL: So, on the first question, the barrels will be coming to market very soon, so we’re already releasing barrels from the previous releases. We expect the Department of Energy to soon issue a notice, which would put additional — the additional barrels on the market starting in the month of May — for May delivery. And we’ll defer — we’ll refer you to them for additional operational details. But these barrels will be coming on the market very, very soon, and we expect a notice of sale that would begin making them available in the month of May.
And on the question around consultations, we’ll turn it over to [senior administration official].
SENIOR ADMINISTRATION OFFICIAL: Thank you. As we’ve always done, we’ve always been in touch with relevant OPEC partners on energy security and supply. And I’ve had those conversations over the last several weeks.
MS. SIMONS: All right. Thanks to everyone so much for joining. Please feel free to send me your questions. We will do our best to get you an answer.
And I hope everyone has a great day and tunes into the President’s remarks this afternoon. Thank you.
11:18 A.M. EDT