Policy Brief: President Biden’s Strategy for Addressing Fuel Price Increases Linked to Russia’s War in Ukraine

American drivers are experiencing higher gasoline prices that the administration directly associates with the economic shock created by Vladimir Putin’s decision to invade Ukraine. Since Russia began intensifying its military presence around Ukraine, the average price of gasoline in the United States has risen by roughly one dollar per gallon. The war has disrupted global energy markets, reduced the volume of Russian oil reaching international buyers, and tightened overall supply, which in turn has pushed up prices at the pump. President Biden has stated that he is committed to using all available policy tools to support households facing these cost increases. In response, the administration is introducing a two-part strategy designed to alleviate current price pressures by expanding oil supply in the near term and to build longer term energy security by reducing dependence on oil and strengthening the clean energy sector in the United States.

Short-Term Measures to Increase Oil Supply

At the beginning of the year, gasoline prices were approximately 3.30 dollars per gallon. They now exceed 4.20 dollars per gallon, a rise of nearly one dollar. A key factor in this increase is the sudden reduction of Russian oil on global markets. The United States has prohibited imports of Russian oil, a step that received bipartisan support in Congress. The administration has acknowledged that removing Russian oil from the international supply chain carries an economic cost that is now visible in higher prices for consumers.

The first component of President Biden’s plan focuses on immediately increasing available supply. The administration intends to promote higher domestic production and to deploy a historic release of crude oil from the Strategic Petroleum Reserve. Together, these actions are intended to serve as a temporary bridge until additional production capacity comes online in the coming months.

Supporting Higher Domestic Production

According to the administration, there are no formal policy barriers that prevent an increase in U.S. oil production. The United States is already nearing record levels of oil and natural gas output, and some companies have announced plans to expand production in response to current market conditions. Projections indicate that domestic production is expected to grow by about one million barrels per day this year and by nearly 700,000 barrels per day in the following year.

However, federal officials note that a number of producers are prioritizing elevated profits instead of further increasing investment in new production. One chief executive officer has publicly indicated that their firm would not significantly raise output even if oil prices reached 200 dollars per barrel. At the same time, the oil and gas sector currently holds more than 12 million acres of federal land that are under lease but not producing, along with approximately 9,000 unused drilling permits that have already been approved.

To address this situation, President Biden is urging Congress to require companies to pay fees on leased wells that have remained idle for years and on non-producing federal acreage that firms continue to hold. The intent is to create an incentive either to move forward with production or to release the leases rather than keep them inactive. Companies that are actively producing from their existing federal leases would not face the new fees. The proposed charges would apply only to idle wells and unused acres that remain out of production while still being held by private operators.

Strategic Petroleum Reserve Release as a Crisis Bridge

After consultations with allies and partners, the President will authorize the largest release of oil from the Strategic Petroleum Reserve in history. The plan calls for an average of one million barrels of oil per day to be released for approximately six months. Such a sustained release at this scale has no precedent in previous emergency drawdowns. The administration expects this action to inject a significant amount of supply into global markets and to help stabilize prices until the end of the year, when expanded domestic production is projected to be fully realized.

The Department of Energy plans to use revenues generated by the sale of these barrels to replenish the Strategic Petroleum Reserve in future years. This approach aims to send a signal of future demand that can encourage producers to invest in added capacity today, while also maintaining the long term readiness of the reserve for future emergencies. In addition, the United States is coordinating with other countries that may also release oil from their strategic reserves. When combined, these international contributions are expected to raise the total additional supply to well above an average of one million barrels per day.

Long-Term Goal: Genuine American Energy Independence

Although the United States is currently the world’s largest oil producer and is a net exporter of energy, developments in distant regions still influence fuel costs for American families. Events such as Russia’s invasion of Ukraine demonstrate that global oil markets remain vulnerable to geopolitical disruptions. For that reason, President Biden emphasizes that lasting energy independence will depend less on increasing oil production and more on reducing overall demand for oil.

The administration is calling on Congress to approve a set of measures that will accelerate the transition to domestically produced clean energy. These policies are designed to create millions of well paid union jobs in advanced industries, including electric vehicles, battery manufacturing, renewable power, and building electrification. The White House estimates that these changes can produce near term savings for households. For example, switching to electric vehicles could reduce annual gasoline expenditures by more than 950 dollars per family, while using clean electricity sources such as solar power and efficient heat pumps for home energy needs could save an additional 500 dollars per year.

Use of the Defense Production Act for Critical Energy Materials

To support the clean energy transition and reduce reliance on foreign supply chains, the President plans to issue a directive invoking the Defense Production Act. This action will promote domestic production and processing of key minerals and materials required for large capacity batteries. These include lithium, nickel, cobalt, graphite, and manganese. The Department of Defense will administer this authority, applying strong standards for environmental protection, labor rights, community engagement, and consultation with tribal governments.

Large capacity batteries underpin two major sectors of the clean energy transition: transportation and electricity generation. Together, these sectors represent more than half of total U.S. carbon emissions. Strengthening domestic capacity in battery materials is therefore intended to advance both national security and climate objectives. The President is also evaluating additional applications of the Defense Production Act beyond minerals and materials in order to secure cleaner, safer, and more resilient energy systems for the United States.

Recent Actions to Improve Efficiency and Lower Energy Costs

In the same week, the administration has highlighted additional steps aimed at improving energy efficiency and lowering costs for consumers. The Department of Energy has opened applications for more than 3 billion dollars in funding under the Bipartisan Infrastructure Law to expand the Weatherization Assistance Program. This represents roughly ten times the program’s traditional funding level and will support efficiency and electrification upgrades in thousands of homes, helping families reduce utility bills by hundreds of dollars per year.

The administration is also advancing updated efficiency standards that are expected to lower household expenses. A roadmap of 100 planned actions will promote more efficient appliances and equipment that could save families about 100 dollars annually. New fuel economy standards for cars and trucks are intended to reduce gasoline consumption and provide additional savings at the pump. At the same time, federal agencies are exploring options to deploy more heat pumps in buildings, to replace fossil fuel combustion for space and water heating, and to implement programs that support efficiency, electrification, and the use of clean fuels in the industrial sector. Together, these measures form a broader framework to enhance energy resilience, protect consumers from price volatility, and advance the transition to a low carbon economy.

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