Ukraine Live Updates: Biden Taps U.S. Oil Reserves as War Disrupts Supply

Under growing pressure to bring down high energy prices, President Biden announced on Thursday that the United States would release up to 180 million barrels of oil from a strategic reserve to counteract the economic impact of Russia’s invasion of Ukraine.

With midterm elections just months away, gasoline prices have risen nearly $1.50 a gallon over the last year, undercutting consumer confidence. And the cost of diesel, the fuel used by most farmers and shippers, has climbed even faster, threatening to push up already high inflation on all manner of goods and services.

“I know how much it hurts,” Mr. Biden said Thursday as he announced the plan. “As you’ve heard me say before, I grew up in a family like many of you where the price of a gallon gasoline went up, it was a discussion at the kitchen table.”

Mr. Biden has few tools to control commodity prices that are set on global markets, so he is turning to the Strategic Petroleum Reserve, ordering the largest release since that emergency stockpile was established in the early 1970s. But the move will most likely have a modest impact because it cannot make up for all the oil, diesel and other fuels that Russia used to sell to the world but is no longer able to.

“Our prices are rising because of Putin’s action,” Mr. Biden added, referring to President Vladimir V. Putin of Russia. “There isn’t enough supply. And the bottom line is if we want lower gas prices, we need to have more oil supply right now.”

Mr. Biden’s plan, to release one million barrels of oil a day for 180 days, would represent roughly 5 percent of American demand and 1 percent of global demand. To put that in context, Russian oil exports are down about three million barrels a day. The U.S. benchmark oil price fell about 6 percent on Thursday.

The administration’s announcement came as Russia conveyed mixed signals about its aims for the war in Ukraine, now in its sixth week. Despite Kremlin claims that it was withdrawing from the outskirts of Kyiv, the capital, fighting continued in that area on Thursday, and Western officials said they saw little evidence of a Russian pullback.

“Russia maintains pressure on Kyiv and other cities, so we can expect additional offensive actions, bringing even more suffering,” the NATO secretary general, Jens Stoltenberg, said at a news conference.

Russian officials also said they would allow a respite for greater humanitarian access to the devastated southeast port of Mariupol, once home to 400,000 people, which has come to symbolize Russia’s battlefield tactic of indiscriminate destruction. Previous agreements for pauses in fighting around Mariupol have repeatedly broken down.

Largely as a result of the ceaseless war, energy experts expect oil prices to stay high for a while without big interventions like the U.S. reserve release.

Reaction from the oil industry to Mr. Biden’s announcement was muted. The reserve has mostly been used to increase the supply of oil during wars, foreign threats to energy supplies or natural disasters. Smaller reserve releases by the Biden administration starting late last year have had little impact on the prices that drivers and businesses pay for fuel.

“It will lower the oil price a little and encourage more demand,” said Scott Sheffield, chief executive of Pioneer Natural Resources, a major Texas oil company. “But it is still a Band-Aid on a significant shortfall of supply.”

The American Petroleum Institute, which represents oil and gas companies, said Mr. Biden ought to encourage domestic oil production by reducing regulations. The reserve “was put in place to reduce the impact of significant supply chain disruptions,” said Mike Sommers, the group’s president, “and while today’s release may provide some short-term relief, it is far from a long-term solution to the economic pain Americans are feeling at the pump.”

After sinking to historically low levels during the early months of the coronavirus pandemic, oil prices have been climbing for the last year, reaching their highest levels in nearly a decade.

Oil exploration and production in the United States and elsewhere slid during the pandemic, and still has not quite recovered. American companies, under pressure from investors, have been cautious about spending too much money to drill new wells, lest prices fall again. Instead, many have been paying out larger dividends and buying back their stock.

While that calculation might make sense for individual businesses, it has caused political problems for Democrats who had hoped to reduce the use of fossil fuels to address climate change. Now, under attack from Republicans for high prices, Mr. Biden and Democrats are trying to get the oil industry to drill more.

Credit…Tannen Maury/EPA, via Shutterstock

Both sides of the political divide are eyeing the November congressional election, when inflation is expected to be a major issue.

Reacting to news of the release from the reserve, a spokesman for Representative Kevin McCarthy, the Republican leader in the House, accused the president of “attacks on American energy production in order to fulfill his campaign promise to ‘get rid of fossil fuels.’”

Mark Bednar, the spokesman, added: “As a result, the American people are paying the price, as gas is more than $4 per gallon, and we are more reliant on other countries for energy.”

But Senator Joe Manchin III, Democrat of West Virginia, welcomed the Biden announcement, saying it would “provide much-needed relief while also allowing for the simultaneous ramping up of domestic oil and gas production to backfill Russian energy resources.”

Aides to Mr. Biden are hoping to blunt Republican criticisms by taking actions to try to lower prices. In a statement about the oil release Thursday morning, the White House said that Mr. Biden was “committed to doing everything in his power to help American families who are paying more out of pocket as a result.”

They are also trying to pin some of the blame for high prices on oil companies, which the administration argues are not producing more energy to increase their profits. The administration plans to call on Congress to require companies to produce oil on more than 12 million acres of federal lands that are already permitted for extraction or pay fines, a proposal that will probably face an uphill climb.

Energy experts said the reserve release would pack more punch if other countries, like China, also sold oil from their stockpiles. The International Energy Agency, an organization of more than 30 countries, will meet Friday and may recommend further releases from national reserves.

Russian oil exports normally represent more than one of every 10 barrels the world consumes. The United States, Britain and Canada have stopped importing Russian oil, and many oil companies and shippers in Europe have voluntarily stopped buying Russia’s energy products. That has produced a deficit so far of about three million barrels a day.

The average price of regular gasoline in the United States is $4.23 a gallon, according to AAA, the motor club. That’s about the same as it was a week ago but up 62 cents a gallon in the last month.

Oil prices had dropped this week after peace talks between Russia and Ukraine showed the first signs of progress. Energy traders are also concerned that demand could fall as China, the world’s largest oil importer, imposes lockdowns in Shanghai and other places to deal with coronavirus outbreaks.

“The price effect is likely to be short term,” David Goldwyn, who was a senior State Department official in the Obama administration, said about Mr. Biden’s announcement. “But part of the benefit of this release is that it will provide a bridge to when new physical supply comes online in the second half of this year from the U.S., Canada, Brazil and other countries.”

Some environmentalists criticized the reserve release. “Putting more oil on the market is not the solution to our problem but the perpetuation of our problem,” said Mark Brownstein, a senior vice president at the Environmental Defense Fund.

But Meghan L. O’Sullivan, director of the Geopolitics of Energy Project at Harvard’s Kennedy School, said releasing reserves to ease shortages would not imperil the transition to clean energy. “What the last month has told us is that if there is no energy security today, the appetite for taking hard steps on the path of transition will evaporate,” she said.

The release is not without risk. Goldman Sachs analysts wrote in a research note that a large discharge could cause “congestion” on the Gulf Coast, keeping new oil production from fields in West Texas out of pipelines and storage tanks.

Mr. Biden’s move could also discourage Saudi Arabia and other producers from increasing supply to reduce prices. OPEC Plus, a group led by Saudi Arabia that includes Russia, on Thursday decided to maintain a policy of only modestly increasing supply.

Bob McNally, who was an energy adviser to President George W. Bush, said the release was “not big enough to offset the potential loss of Russian oil exports should the conflict and sanctions pressure continue to extend.”

The oil market tends to go in cycles, so the release may allow the government to sell high and, later, buy low, potentially earning billions of dollars for the Treasury. The government will use the money it makes from oil sales to refill the reserve, which in turn could help raise prices again.

While pushing up those prices, Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy and a former aide to President Barack Obama, said an eventual refill could also “send a signal to shale producers that may help encourage them to invest in more production, which may help with today’s potential shortages.”

The U.S. reserve contains nearly 600 million barrels, approximately a month of total American consumption, and it can release up to 4.4 million barrels a day. The stockpile was established after the 1973 energy crisis, when Saudi Arabia and other Arab producers proclaimed an oil embargo.

Megan Specia contributed reporting from Krakow, Poland, and Steven Erlanger from Brussels.

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Rising Gas Prices Have Drivers Asking, ‘Is This for Real?’

After months of working from home, Caroline McNaney, 29, was excited about going back to work in an office, even if her new job in Trenton, N.J., meant commuting an hour each way.

But when she spent $68 filling the tank of her blue Nissan Maxima this week, she felt a surge of regret about switching jobs.

“Is this for real?” Ms. McNaney recalled thinking. “I took a job further from home to make more money, and now I feel like I didn’t do anything for myself because gas is so high.”

The recent rise in gas prices — which the war in Ukraine has pushed even higher — has contributed to her sense of disappointment with President Biden. “I feel like he wants us to go out and spend money into the economy, but at the same time everything is being inflated,” she said.

higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.

While oil prices worldwide have shot up since the Russian invasion of Ukraine, President Biden and Democrats, who hold control of Congress, have faced consumers’ ire.

Cat Abad, 37, who lives in the San Francisco area, where prices have hit nearly $6 for the highest-grade gas, said she saw stickers on the pumps at one local station saying that Mr. Biden was responsible for the rise. She took the stickers off, she said, believing that he was not at fault.

Still, she said, “It’s a good time to have a Prius,” as she filled up for her commute down the peninsula to Foster City.

Inflation is already proving a perilous issue for Mr. Biden and fellow Democrats as the midterm elections approach, with many voters blaming them for failing to control the rising cost of living. The higher gas prices add further political complexity for Mr. Biden, who has vowed to curb the nation’s dependence on fossil fuels.

In light of the war in Ukraine, the energy industry is pushing the Biden administration to support more domestic oil production by opening up drilling in federal lands and restarting pipeline projects.

“This moment is a reminder that oil and natural gas are strategic assets and we need to continue to make investments in them,” said Frank Macchiarola, a senior vice president at the American Petroleum Institute, a trade group.

There is a chance that the strain on consumers may be temporary as global oil supply and demand are rebalanced. And, in the near term, lower consumer spending may have some benefits. Reduced spending could help constrain inflation, but at the expense of slower economic growth.

Even before Russia invaded Ukraine, rapidly rising energy prices were contributing to the fastest inflation in 40 years. Energy prices — including not just gasoline but home heating and electricity as well — accounted for more than a sixth of the total increase in the Consumer Price Index over the 12 months ending in January.

The recent jump in energy prices will only make the problem worse. Forecasters surveyed by FactSet expect the February inflation report, which the Labor Department will release on Thursday, to show that consumer prices rose 0.7 percent last month, and are up 7.9 percent over the past year. The continued run-up in gasoline prices over the past week suggests overall inflation in March will top 8 percent for the first time since 1982.

Some drivers said the higher gas prices were a necessary result of taking a hard line on Mr. Putin.

Alan Zweig, 62, a window contractor in San Francisco, said: “I don’t care if it goes to $10 a gallon. It’s costing me dearly, but not what it’s costing those poor people in Ukraine.”

Destiny Harrell, 26, drives her silver Kia Niro hybrid about 15 minutes each day from her home in Santa Barbara to her job at a public library. She is now considering asking her boss if she can spend some days working from home.

She said the rise in prices has contributed to her anger at Mr. Putin and his decision to invade Ukraine.

“It’s super frustrating that a war that shouldn’t even really affect us has global reach.”

Ben Casselman, Coral Murphy Marcos and Clifford Krauss contributed reporting.

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The Lithium Gold Rush: Inside the Race to Power Electric Vehicles

Atop a long-dormant volcano in northern Nevada, workers are preparing to start blasting and digging out a giant pit that will serve as the first new large-scale lithium mine in the United States in more than a decade — a new domestic supply of an essential ingredient in electric car batteries and renewable energy.

The mine, constructed on leased federal lands, could help address the near total reliance by the United States on foreign sources of lithium.

But the project, known as Lithium Americas, has drawn protests from members of a Native American tribe, ranchers and environmental groups because it is expected to use billions of gallons of precious ground water, potentially contaminating some of it for 300 years, while leaving behind a giant mound of waste.

“Blowing up a mountain isn’t green, no matter how much marketing spin people put on it,” said Max Wilbert, who has been living in a tent on the proposed mine site while two lawsuits seeking to block the project wend their way through federal courts.

Electric cars and renewable energy may not be as green as they appear. Production of raw materials like lithium, cobalt and nickel that are essential to these technologies are often ruinous to land, water, wildlife and people.

That environmental toll has often been overlooked in part because there is a race underway among the United States, China, Europe and other major powers. Echoing past contests and wars over gold and oil, governments are fighting for supremacy over minerals that could help countries achieve economic and technological dominance for decades to come.

Developers and lawmakers see this Nevada project, given final approval in the last days of the Trump administration, as part of the opportunity for the United States to become a leader in producing some of these raw materials as President Biden moves aggressively to fight climate change. In addition to Nevada, businesses have proposed lithium production sites in California, Oregon, Tennessee, Arkansas and North Carolina.

But traditional mining is one of the dirtiest businesses out there. That reality is not lost on automakers and renewable-energy businesses.

“Our new clean-energy demands could be creating greater harm, even though its intention is to do good,” said Aimee Boulanger, executive director for the Initiative for Responsible Mining Assurance, a group that vets mines for companies like BMW and Ford Motor. “We can’t allow that to happen.”

assembled by Bloomberg, and a hint of the frenzy underway.

Some of those investors are backing alternatives including a plan to extract lithium from briny water beneath California’s largest lake, the Salton Sea, about 600 miles south of the Lithium Americas site.

At the Salton Sea, investors plan to use specially coated beads to extract lithium salt from the hot liquid pumped up from an aquifer more than 4,000 feet below the surface. The self-contained systems will be connected to geothermal power plants generating emission-free electricity. And in the process, they hope to generate the revenue needed to restore the lake, which has been fouled by toxic runoff from area farms for decades.

Businesses are also hoping to extract lithium from brine in Arkansas, Nevada, North Dakota and at least one more location in the United States.

The United States needs to quickly find new supplies of lithium as automakers ramp up manufacturing of electric vehicles. Lithium is used in electric car batteries because it is lightweight, can store lots of energy and can be repeatedly recharged. Analysts estimate that lithium demand is going to increase tenfold before the end of this decade as Tesla, Volkswagen, General Motors and other automakers introduce dozens of electric models. Other ingredients like cobalt are needed to keep the battery stable.

Even though the United States has some of the world’s largest reserves, the country today has only one large-scale lithium mine, Silver Peak in Nevada, which first opened in the 1960s and is producing just 5,000 tons a year — less than 2 percent of the world’s annual supply. Most of the raw lithium used domestically comes from Latin America or Australia, and most of it is processed and turned into battery cells in China and other Asian countries.

In March, she announced grants to increase production of crucial minerals. “This is a race to the future that America is going to win,” she said.

So far, the Biden administration has not moved to help push more environmentally friendly options — like lithium brine extraction, instead of open pit mines. The Interior Department declined to say whether it would shift its stand on the Lithium Americas permit, which it is defending in court.

Mining companies and related businesses want to accelerate domestic production of lithium and are pressing the administration and key lawmakers to insert a $10 billion grant program into Mr. Biden’s infrastructure bill, arguing that it is a matter of national security.

“Right now, if China decided to cut off the U.S. for a variety of reasons we’re in trouble,” said Ben Steinberg, an Obama administration official turned lobbyist. He was hired in January by ​Piedmont Lithium, which is working to build an open-pit mine in North Carolina and is one of several companies that have created a trade association for the industry.

Investors are rushing to get permits for new mines and begin production to secure contracts with battery companies and automakers.

Ultimately, federal and state officials will decide which of the two methods — traditional mining or brine extraction — is approved. Both could take hold. Much will depend on how successful environmentalists, tribes and local groups are in blocking projects.

370 feet.

Mr. Bartell’s biggest fear is that the mine will consume the water that keeps his cattle alive. The company has said the mine will consume 3,224 gallons per minute. That could cause the water table to drop on land Mr. Bartell owns by an estimated 12 feet, according to a Lithium Americas consultant.

While producing 66,000 tons a year of battery-grade lithium carbonate, the mine may cause groundwater contamination with metals including antimony and arsenic, according to federal documents.

The lithium will be extracted by mixing clay dug out from the mountainside with as much as 5,800 tons a day of sulfuric acid. This whole process will also create 354 million cubic yards of mining waste that will be loaded with discharge from the sulfuric acid treatment, and may contain modestly radioactive uranium, permit documents disclose.

A December assessment by the Interior Department found that over its 41-year life, the mine would degrade nearly 5,000 acres of winter range used by pronghorn antelope and hurt the habitat of the sage grouse. It would probably also destroy a nesting area for a pair of golden eagles whose feathers are vital to the local tribe’s religious ceremonies.

a lawsuit to try to block the mine.

At the Fort McDermitt Indian Reservation, anger over the project has boiled over, even causing some fights between members as Lithium Americas has offered to hire tribal members in jobs that will pay an average annual wage of $62,675 — twice the county’s per capita income — but that will come with a big trade-off.

“Tell me, what water am I going to drink for 300 years?” Deland Hinkey, a member of the tribe, yelled as a federal official arrived at the reservation in March to brief tribal leaders on the mining plan. “Anybody, answer my question. After you contaminate my water, what I am going to drink for 300 years? You are lying!”

The reservation is nearly 50 miles from the mine site — and far beyond the area where groundwater may be contaminated — but tribe members fear the pollution could spread.

hiring a lobbying team that includes a former Trump White House aide, Jonathan Slemrod.

Lithium Americas, which estimates there is $3.9 billion worth of recoverable lithium at the site, hopes to start mining operations next year. Its largest shareholder is the Chinese company Ganfeng Lithium.

CalEnergy, and another business, Energy Source, have tapped the Buttes’ geothermal heat to produce electricity. The systems use naturally occurring underground steam. This same water is loaded with lithium.

Now, Berkshire Hathaway and two other companies — Controlled Thermal Resources and Materials Research — want to install equipment that will extract lithium after the water passes through the geothermal plants, in a process that will take only about two hours.

Rod Colwell, a burly Australian, has spent much of the last decade pitching investors and lawmakers on putting the brine to use. In February, a backhoe plowed dirt on a 7,000-acre site being developed by his company, Controlled Thermal Resources.

“This is the sweet spot,” Mr. Colwell said. “This is the most sustainable lithium in the world, made in America. Who would have thought it? We’ve got this massive opportunity.”

unemployment rate of nearly 16 percent.

“Our region is very rich in natural resources and mineral resources,” said Luis Olmedo, executive director of Comite Civico del Valle, which represents area farm workers. “However, they’re very poorly distributed. The population has not been afforded a seat at the table.”

The state has given millions in grants to lithium extraction companies, and the Legislature is considering requiring carmakers by 2035 to use California sources for some of the lithium in vehicles they sell in the state, the country’s largest electric-car market.

But even these projects have raised some questions.

Geothermal plants produce energy without emissions, but they can require tens of billions of gallons of water annually for cooling. And lithium extraction from brine dredges up minerals like iron and salt that need to be removed before the brine is injected back into the ground.

Similar extraction efforts at the Salton Sea have previously failed. In 2000, CalEnergy proposed spending $200 million to extract zinc and to help restore the Salton Sea. The company gave up on the effort in 2004.

opened demonstration projects using the brine extraction technology, with Standard Lithium tapping into a brine source already being extracted from the ground by an Arkansas chemical plant, meaning it did not need to take additional water from the ground.

“This green aspect is incredibly important,” said Robert Mintak, chief executive of Standard Lithium, who hopes the company will produce 21,000 tons a year of lithium in Arkansas within five years if it can raise $440 million in financing. “The Fred Flintstone approach is not the solution to the lithium challenge.”

Lilac Solutions, whose clients include Controlled Thermal Resources, is also working on direct lithium extraction in Nevada, North Dakota and at least one other U.S. location that it would not disclose. The company predicts that within five years, these projects could produce about 100,000 tons of lithium annually, or 20 times current domestic production.

Executives from companies like Lithium Americans question if these more innovative approaches can deliver all the lithium the world needs.

But automakers are keen to pursue approaches that have a much smaller impact on the environment.

“Indigenous tribes being pushed out or their water being poisoned or any of those types of issues, we just don’t want to be party to that,” said Sue Slaughter, Ford’s purchasing director for supply chain sustainability. “We really want to force the industries that we’re buying materials from to make sure that they’re doing it in a responsible way. As an industry, we are going to be buying so much of these materials that we do have significant power to leverage that situation very strongly. And we intend to do that.”

Gabriella Angotti-Jones contributed reporting.

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