The Biden administration is concerned that escalating conflict in the Middle East could lead to a surge in global oil prices. In response, officials are exploring strategies to prevent a sharp increase in American gasoline prices.
These efforts involve discussions with major oil-producing countries like Saudi Arabia, which have been limiting supply, as well as American oil producers who can potentially increase their production. Additionally, the President may authorize the release of crude oil from the Strategic Petroleum Reserve, an emergency stockpile stored in underground salt caverns near the Gulf of Mexico. Last year, President Biden tapped into this reserve after Russia’s invasion of Ukraine caused oil prices to skyrocket.
Although the conflict in the Middle East has yet to drive up oil prices significantly, there is concern that prices could rise further if the situation escalates and restricts oil flow from Iran or other major producers in the region. Currently, Brent crude oil is trading at around $88 per barrel on global markets, up from $84 earlier this month.
So far, American drivers have not experienced any notable increase in gasoline prices. The national average price for gasoline is currently $3.54 per gallon, which is down 30 cents from a month ago and 25 cents from the same day last year, according to AAA.
However, administration officials are cautious of the potential for prices to surpass $5 per gallon, as they briefly did in the spring of 2022. The measures taken last year to lower prices may be less effective in the event of a new oil shock.
Amrita Sen, the director of research at Energy Aspects, believes that the administration’s ability to counter rising prices is hindered by the fact that they did not replenish the strategic reserve more aggressively when prices were lower. This oversight may diminish their capability to address price increases now.