Expert says prices at the pump should go down in the next few weeks
KELSEY SNELL, HOST:
One thing that's helping to drive the inflation that people across the U.S. are experiencing is the high cost of energy. Last month, gas prices hit their highest point in seven years. That's put pressure on President Biden, who announced last week that the U.S. will release 50 million barrels of oil from a national emergency stockpile. He called it a major effort to moderate the price of oil. Joining us now to talk about the Biden administration's approach to the high cost of energy is David M. Turk, deputy secretary at the Department of Energy. Thanks for joining us.
DAVID M TURK: Well, thank you for having me here, Kelsey. It's a pleasure to be with you.
SNELL: Well, one of the big reasons that oil is so costly right now is because there isn't enough global supply to meet demand as the world has opened back up. You know, the president has already called on major oil-producing countries, the group known as OPEC, to start pumping more. And they refused. Short of getting OPEC to reconsider, isn't the high price of gas a problem largely outside of the control of any American president?
TURK: Well, we do have tools. The 50 million barrels is one tool. And then we also have other producers. We have private sector producers here in our own country and in other countries, as well. And so we would hope the free market would work as it should work. And we should have a balancing of supply and demand. But right now we have demand increasing and supply not keeping up with it. And this 50 million barrels is a solution to deal with the particular market circumstances we find ourselves in.
SNELL: Some observers are saying that the 50 million gallons that you're talking about is likely to have a modest and short-term effect. What's your response to that?
TURK: What we have is what oil analysts call a backwardated market, where the price is high right now, but supply is expected to catch up to demand. And prices are expected to decrease as we get into 2022. So this exchange mechanism that we're using right now allows us to put more oil into the market right now when prices are very high, reducing the prices at the pump. And then as the prices go down, we'll take that oil back into our strategic petroleum reserve. So at the end of the day, we'll actually have more oil in our strategic stocks. But we'll just moderate the price level right now to reduce the peak of the price.
SNELL: When can people expect to feel the relief you're talking about?
TURK: Well, what we've seen already is over the last several days, some moderating price at the pump in many parts of our country. Oil prices have gone down in expectation of this, just what we did. And other countries are also releasing some stocks from their strategic reserves, as well. Retail gas lags the oil markets. And so the retail gas reduction should be kicking in over a period of the next several weeks.
SNELL: In a statement about the release last week, the White House said that the president stands ready to take additional action if needed. If this doesn't prove to be an effective way to fight high gas prices and inflation, what are those next actions?
TURK: Well, the first thing to underscore is what we announced - the 50 million barrels is going to take place over the course of the next four to five months. So there's two components to it. There's an exchange, and then there's an outright sale to it. We've got flexibility in how to deploy those two tools depending on how - where prices go, depending on a number of other factors. So this is not just a tool that has one impact on one given day. We can fluctuate it. We can use it flexibly. And we have other tools at our disposal. And those will certainly be under active discussion, as I think the American citizens and taxpayers would expect their president and their Department of Energy to continue to do that analysis and figure out what more we need to do if we need to do anything else.
SNELL: Lastly, some may have trouble squaring President Biden's push to up oil production and release these reserves with his emphasis on transitioning away from fossil fuels to address climate change. Is it a contradiction?
TURK: Well, I don't think so at all. And I think the thing we need to understand is if we had more clean energy right now in the system, more diverse clean energy sources, if we had more geothermal, if we had more offshore wind, if we had more storage, if we had more CCUS, carbon capture utilization and storage - if we had more of those technologies built out even at greater scale than we currently had, we'd have a diverse range of supplies. And we wouldn't be beholden so much to the price of one commodity or another commodity.
So the solution, medium and longer term, is to do exactly what this administration is doing, exactly what Congress has done with one bill so far and another bill that's pending to diversify and to accelerate our clean energy transition. And we'll be much better off. Consumers will be much better off. But as we go through this transition, we certainly need to make sure that those sources of energy that consumers are relying on currently are at a price that everyone can afford.
SNELL: That's David M. Turk, deputy secretary at the Department of Energy. Thanks for being with us.
TURK: Thank you very much, Kelsey. It's a pleasure to be with you.
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