Storage tanks are shown at a refinery in Detroit. The White House said it had ordered the release of 50 million barrels of oil from strategic reserves to reduce energy costs.
Highlight
- President Biden orders release of 50 million barrels of oil from strategic reserves to reduce inflation
- The US Department of Energy will provide oil from the Strategic Petroleum Reserve in two ways.
- Gas prices more than double what they were a year ago
President Joe Biden on Tuesday ordered the release of 50 million barrels of oil from strategic reserves to help reduce energy costs, in coordination with other major energy-consuming countries including China, India and the United Kingdom.
The move is aimed at global energy markets, but also at voters who face high inflation and rising prices ahead of Thanksgiving and winter holiday travel. According to the American Automobile Association, gas prices are around $3.40 per gallon, more than double the price from a year ago.
Biden has scrambled to reshape much of his economic agenda around the issue of inflation, saying his recently passed $1 trillion infrastructure package would make it more efficient and cheaper to transport goods. This will reduce the price pressure.
Republican lawmakers have criticized the administration for causing inflation to hit a 31-year high in October.
Senate Republican leader Mitch McConnell in a floor speech last week slammed the administration over inflation, saying the victims of the high prices were middle-class Americans.
“The three biggest drivers of the 6.2% inflation rate we recorded last month were housing, transportation, and food,” the Kentucky senator said. “They are not luxuries, they are essential, and they take up a substantial portion of the budget of families from the below middle class.”
The Strategic Petroleum Reserve is an emergency reserve to maintain access to oil in case of natural disasters, national security issues, and other events. Maintained by the Department of Energy, the reserves are stored in caves formed in salt domes along the Texas and Louisiana Gulf Coasts. The reserve holds about 605 million barrels of sweet and sour petroleum.
“As we emerge from an unprecedented global economic shutdown, oil supply has not kept pace with demand, leaving working families and businesses at a price,” Energy Secretary Jennifer Granholm said in a statement.
“This action underscores the president’s commitment to using the tools available to reduce costs for working families and to continue our economic recovery.”
The Biden administration has argued that oil supply has not kept pace with demand as the global economy emerges from the pandemic, and reserves are the right tool to help mitigate the problem.
According to the Energy Information Administration, Americans used an average of 20.7 million barrels a day during September. This means that the release equates to an additional supply of about two and a half days.
The decision comes after weeks of diplomatic talks and the release will be done parallel to other countries. Japan and South Korea are also participating.
The US Department of Energy will provide oil from the Strategic Petroleum Reserve in two ways; The White House said 32 million barrels would be released over the next few months and returned to reserves in the coming years. Another 18 barrels would be part of the oil sale that Congress had previously authorized.
White House Press Secretary Jen Psaki said Monday evening that the White House would also keep an eye on oil companies.
“We will continue to put pressure on oil companies that have made record profits, and we are monitoring price increases when the supply of oil is coming down or the price of oil is coming down and the price of gas is not coming down. Huh.” Said Saki. “It doesn’t take an economic expert to know it’s a problem.”
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