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U.S. weighs refilling oil reserves at $80 per barrel

Yahoo Finance's Rick Newman explains what the Biden administration is planning for Strategic Petroleum Reserve output after its oil release ends in October, plus the relationship between gas prices and Biden's approval rating.

Video Transcript

[AUDIO LOGO]

JARED BLIKRE: Welcome back. And we are watching oil prices this morning as crude oil WTI hovering around $88 per barrel. And global politics is continuing to influence the market. One story we're tracking right now reports that the US could buy oil to refill its emergency reserves once crude oil prices fall below or actually climb to $80 a barrel. And actually they are above that right now.

For a roundup of the energy situation, let's bring in Yahoo Finance's Rick Newman. Rick, so the SPR, the Strategic Petroleum Reserve, somewhat controversial. If Biden's going to fill it up at $80, I checked the purchase price. It was some dollar-- somewhere around $27. I could imagine the stories being written around that. But I mean, what are the details here? And let's be fair.

RICK NEWMAN: OK, just to make it even more fun, there are competing rumors out of the White House. One is that Biden wants to-- as you point out, that they're talking about refilling the SPR, the Strategic Reserve if oil prices get to $80 or lower. But then there are also other rumors that they may release more oil from the reserve if gas prices head up by the end of the year.

So just the basic background here-- earlier this year, Biden decided to release 180 million barrels from the reserve over a period of six months. So that's 30 million barrels a day, call it one a month, one million barrels a day. And that's going to end in October. So then what do we do next?

The addition of those barrels onto the market is probably pushing gas prices down by $0.15 or $0.20 a gallon, let's say, so not a huge impact. And we do need to rebuild that reserve. I mean, it's not empty, but it's lower than it has been in a long time. So that's part of what's driving this.

JARED BLIKRE: Well, and gas prices are a big factor in the upcoming election. And I want to get an update from you on how things are progressing on that front. Biden's approvals-- approval ratings rising as gas prices are falling.

RICK NEWMAN: Yeah.

JARED BLIKRE: We kind of expect that. But what are some of the details on the races here?

RICK NEWMAN: It really has been a fairly direct inverse correlation between Biden's approval rating and gas prices. So you're right. Biden's approval rating has ticked up by about six percentage points. The way I see it, from about 38% in July-- that was the low, it's around 44% now-- that's not great.

That's not anywhere near high enough for Democrats to say, oh, we're probably going to retain control of both houses of Congress. It's a cakewalk. So Democrats still have a lot of work to do if they're going to retain control of Congress. The Senate is easier. Call it maybe 50/50 chance there. The House is harder.

There are just some things working against the Democrats-- retirements of incumbents and things like that redistricting. So keeping the House is going to be a lot harder. If this whole situation improves and let's say gasoline falls to $3.50, $3.25 or something like that by the election in November, that would be the best possible news for Democrats and it might give them a fighting chance. If Democrats retain both houses of Congress, it would be a political earthquake. It has tons of implications. We don't have time to get into all of them now.

JARED BLIKRE: Yes.

RICK NEWMAN: But we certainly would if it were to happen.

JARED BLIKRE: Well, and you can imagine the market expectations with almost absolutely nothing being priced in until the day of anyway it seems.

RICK NEWMAN: Right.

JARED BLIKRE: More consternation, but we'll have to wait and see how that happens. Always great to see you in studio.

RICK NEWMAN: Same, Jared.

JARED BLIKRE: Yahoo Finance's Rick Newman.