President Joe Biden is ordering the release of 50 million barrels from the US strategic petroleum reserve in a bid to ease rising gas prices over the next few months, a senior White House official said Tuesday.
The official said Mr Biden’s decision was driven in part by a desire to reduce the burden placed on American families by higher prices that are in part due to increased fuel costs.
“One of the biggest sources of increased prices for families across the country is gas prices…the increase in gas prices has occurred because global oil supply has not kept pace with global oil demand. As the economy has recovered from the pandemic and as countries and companies have held back on supplying oil, and because the declines in oil prices that that we have seen have not translated into lower prices at the pump, the President is taking action on both fronts and is committed to using every tool as needed,” the official said.
“That is why today we are announcing that the Department of Energy will make available a release of 50 million barrels of oil from strategic petroleum reserves to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply”.
Mr Biden’s decision to release oil from US reserves will be made in concert with similar efforts by China, Japan, India, South Korea, and the UK. The unprecedented effort to tame oil prices comes amid fears that oil producing nations are deliberately holding back production.
The official added that the White House would be monitoring finished gasoline prices to make sure that consumers are not being gouged by gasoline producers keeping prices high even after oil prices have dropped.
The official said the petroleum released from the US reserves could hit oil markets as early as next month.
Of the 50mm barrels that will be released, 18 million will move through a sale that Congress previously authorized, while the other 32mm barrels will be released in what White House officials describe as an “exchange” that will see them replaced in the next few years. Officials said such an “exchange” will allow the government to repurchase oil for storage at a price that is lower than the one at which the released barrels were purchased.
Congress established the US Strategic Petroleum Reserve was established under the auspices of the Department of Energy after an embargo by oil producing countries against the West caused the 1973 energy crisis. It is the largest such emergency stockpile in the world, and can hold more than 700mm barrels in facilities spread across Texas and Louisiana.