US to release 50 million barrels of oil to ease energy costsTuesday, November 23, 2021
WASHINGTON, United States (AP) — President Joe Biden on Tuesday ordered 50 million barrels of oil released from the nation's strategic reserve to help bring down energy costs, in coordination with other major energy consuming nations, including China, India and the United Kingdom.
The move is aimed at global energy markets, but also at voters who are coping with higher inflation and rising prices ahead of Thanksgiving and winter holiday travel. Gas prices are at about US $3.40 a gallon, more than 50 percent higher than their price a year ago, according to the American Automobile Association.
The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other events. Maintained by the Energy Department, the reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf Coasts. There are roughly 605 million barrels of sweet and sour petroleum in the reserve.
Administration officials said that reports of a possible release and consultations with other countries ahead of the announcement had caused oil prices to drop nearly 10 percent in anticipation of the news.
The government will begin to move barrels into the market in mid to late December.
The Biden administration has argued that the reserve is the right tool to help ease the supply problem.
The White House decision comes after weeks of diplomatic negotiations and the release will be taken in parallel with other nations. Japan and South Korea are also participating.
The US Department of Energy will make the oil available from the Strategic Petroleum Reserve in two ways; 32 million barrels will be released in the next few months and will return to the reserve in the years ahead, the White House said. Another 18 million barrels will be part of a sale of oil that Congress had previously authorised.
The US Chamber of Commerce criticized the move as an “ineffectual Band-Aid.”
“The Department of Energy's reserve should only be used for supply disruptions,” Christopher Guith, the chamber's senior vice president at the Global Energy Institute, said in a statement. “The White House should focus on policies that will encourage domestic production of oil and natural gas.”