One hour after U.S. government data showed on Wednesday that American inflation had soared to a 31-year high, President Joe Biden vowed to fight the surge as “a top priority.”
Key to his administration’s response, Biden said in a statement, would be addressing the rising cost of energy — what he described as “the largest share of the increase in prices.” He promised his National Economic Council would explore how to reduce prices.
The reality is that a small group of top Biden aides has already been meeting for several weeks, trying to come up with the best way to bring down the cost of gasoline. But even after extensive discussions, they’ve yet to reach consensus, according to people familiar with the matter. Some key officials at the Energy Department are inclined to take a wait-and-see approach. But White House aides are pushing to tap the nation’s emergency oil reserves, or to take the even more radical step of halting oil exports, the people said.
The indecision had dragged out any real action from the administration as gasoline prices have soared to seven-year highs. It also underscores how the pressure to tamp down inflation has pitted the Biden administration’s own policies on energy, free trade and climate change against each other. The final decision, which may not come until early next week once international climate talks in Glasgow are over, is likely to have a profound impact on the oil market, and spill over American foreign policy.
“It’s decision time for the Biden administration,” said Bob McNally, president of consultant Rapidan Energy Group and a former White House official under President George W. Bush.
A White House representative pushed back on the notion of a divide in the administration and said it’s committed to taking action, if needed.
Officials designing the response include White House Chief of Staff Ron Klain; Brian Deese, the head of the National Economic Council; National Security Advisor Jake Sullivan; Energy Secretary Jennifer Granholm and her deputy, David Turk; and Amos Hochstein, an energy expert Biden hired earlier this year to work at the State Department.
The group has met regularly in recent days, people familiar with the matter said, asking not to be identified because the talks are private. Deese and others are worried about the economic and political impact of high inflation and want to attack the problem now with forceful measures, the people said.
But Turk has argued against a stockpile release, citing U.S. forecasts showing the oil market may tip into a surplus in early 2022, which would then open the door to lower prices. And the State Department is opposed to banning exports because it says that could hurt countries it’s trying to re-engage with after the trade disputes of the Trump administration. The Treasury Department is also involved in the discussions.
An initial effort to reduce oil prices failed. Rather than act unilaterally, the White House tried to convince Saudi Arabia, Russia and other influential members of OPEC+ to pump more oil. When OPEC+ refused to change course this month, the debate shifted to what the U.S. itself could do.