Biden Expands Effort to Secure U.S. Energy Independence

Source: By Alan Rappeport and Ana Swanson, New York Times • Posted: Thursday, October 20, 2022

Depleting emergency oil reserves spurs criticism that the White House is trying to lower gas prices with midterm election politics in mind.

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The president rejected the notion that the move to release more oil was politically motivated by the upcoming midterm elections.Haiyun Jiang/The New York Times

WASHINGTON — President Biden expanded his efforts on Wednesday to blunt the pain of rising gas prices and reduce America’s exposure to global energy markets, which have become more volatile because of provocative actions by Russia and Saudi Arabia.

The administration announced $2.8 billion in grants to expand domestic manufacturing of batteries for electric vehicles and the electrical grid, one day after officials said that the United States would release millions of barrels of oilfrom the Strategic Petroleum Reserve and that Mr. Biden would consider additional withdrawals this winter.

The moves highlight how energy security is now at the center of the Biden administration’s economic agenda, which has been derailed by soaring inflation and Russia’s war in Ukraine. Those concerns come at a perilous political moment, with midterm elections that will determine dynamics in Washington less than three weeks away.

Mr. Biden’s decision to order the release of 15 million additional barrels of oilfrom the Strategic Petroleum Reserve is designed to address the immediate worry of rising gas prices, which was exacerbated further by Saudi Arabia’s recent decision, in concert with Russia, to cut oil production. In total, 180 million barrels of oil have been released since Mr. Biden authorized the use of the reserve in March.

The Biden administration is prepared to dip further into its emergency supplies this winter, despite concerns that depleting the reserve could put the nation’s energy security at risk.

“We’re calling it a ready and release plan,” Mr. Biden said on Wednesday. “This allows us to move quickly to prevent oil price spikes and respond to international events.”

Mr. Biden has described the releases as a way to blunt the impact of Russia’s war in Ukraine while domestic energy producers ramp up production. There are about 400 million barrels remaining in the stockpile, which has the capacity to hold about 700 million barrels.

In remarks at the White House, Mr. Biden rebutted the notion that his administration had placed curbs on domestic oil production. Instead, he called on companies to expand production and said even if demand for oil slows in future years, they would be able to sell it back to the federal government to refill the Strategic Petroleum Reserve when oil prices decline to around $70 a barrel.

The president also accused oil companies of profiteering and warned them not to gouge prices as Americans are grappling with inflation.

“When the cost of oil comes down, we should see the price of the gas station at the pump come down as well,” he said. “My message to the American energy companies is, you should not be using your profits to buy back stock or for dividends. Not now. Not while a war is raging.”

Separately on Wednesday, the White House announced that the Energy Department is awarding $2.8 billion of grants that were created as part of the infrastructure legislation passed earlier this year.

The money will go to 20 companies in 12 states and will be used for projects related to the production of lithium, graphite and nickel that is used in batteries that power electric vehicles. One grant recipient, Talon Nickel, said it would use the $114 million it had been awarded to help set up a processing facility for battery materials in Mercer County, North Dakota.

The North Dakota facility will process ore that the company plans to mine in Minnesota, one link in the first fully domestic supply chain for battery-grade nickel that Talon is building out in partnership with Tesla.

While the Biden administration has stressed the importance of building up some domestic manufacturing of electric vehicle batteries, which is now heavily reliant on China, administration officials have also acknowledged the pollution risks in permitting new mines and processing facilities in the United States.

Talon’s plan to build an underground mine to extract nickel from a water-rich area of northern Minnesota drew concerns from some in the area, including Ojibwe tribes who gather wild rice nearby.

Todd Malan, the company’s chief external affairs officer, said the decision to locate the processing facility at an industrial site in North Dakota, instead of near the company’s proposed mine in Minnesota, was a “direct response” to those concerns. He said the company would create a “cemented containment facility” that would neutralize and contain waste from ore processing.

“We hope that this is seen as a step toward addressing their concerns while still producing the necessary materials for the U.S. electric vehicle battery supply chain,” he said.

Gene Berdichevsky, the co-founder and chief executive of Sila, a maker of battery materials, said the $100 million grant the company received would allow it to expand the size of a factory in Moses Lake, Wash.

Sila’s technology substitutes silicon for graphite in electric vehicle batteries, making them smaller and lighter and reducing the need for materials imported from China. Mercedes-Benz, Sila’s first announced customer, plans to deploy the technology in sport utility vehicles that will be available for sale around the middle of the decade.

During a manufacturing event at the White House with recipients of the grants, Mr. Biden described the race to make batteries in the United States as part of a broader economic contest with China. He noted that 75 percent of battery manufacturing is done in China and that the country controls nearly half of the global production of the contents of batteries.

“China’s battery technology is not more innovative than anyone else,” Mr. Biden said. “By undercutting U.S. manufacturers with their unfair subsidies and trade practices, China seized a significant portion of the market. Today we’re stepping up, really, to take it back.”

The grant funds, which could take years to yield results, are part of the Biden administration’s longer-term strategy to transition away from cars with combustion engines and reach a goal of making half of all new vehicles sold electric by 2030.

But the use of the strategic oil reserves has fueled criticism that Mr. Biden is putting the nation’s near-term energy security at risk for political purposes.

“The Strategic Petroleum Reserve was built for a national energy crisis — not for a Democrat election crisis,” said Senator John Barrasso, Republican of Wyoming. “Joe Biden is draining our emergency oil supply to a 40-year low.”

Mr. Barrasso, the top Republican on the Senate Energy and Natural Resources Committee, said the president’s “dismal approval rating is not a justifiable reason to continue to raid our nation’s oil reserves.”

On Wednesday, Mr. Biden denied that he was releasing more oil with the midterm elections in mind.

“It’s not politically motivated at all,” Mr. Biden said, explaining that he has been working for months to lower gas prices. “It’s motivated to make sure that I continue to push on what I’ve been pushing.”

Jack Ewing contributed reporting from New York.