President Biden is authorizing the release of 50 million barrels of oil from the Strategic Petroleum Reserve in a bid to lower soaring prices Americans are paying at the pumps, The White House announced on Tuesday.
Biden will coordinate with other nations in the coming days to pump oil out of the Strategic Petroleum Reserves, after OPEC+ nations in the Middle East rebuffed his pleas to pump more oil.
India, South Korea and Japan, and China are also involved in the plan to release some of their oil from its strategic reserves. Biden had called on Beijing to help during his bilateral meeting with President Xi Jinping.
As of November 19, the Strategic Petroleum Reserve had 604.5 million barrels of crude oil across four different sites in Louisiana and Texas, according to the Department of Energy.
Presidents typically tap them when emergencies or natural disasters disrupt the supply chain, although more recently have even tapped them to keep prices in check from time to time.
The last time that the oil reserve was tapped in the U.S. was as oil prices surged in the aftermath of Hurricane Katrina. At the time, then-President George Bush ordered 30 million barrels be released.
The average price of gasoline recently breached a seven-year high, and now costs $3.409 per gallon, according to AAA. In California, residents have reported paying up to $4.84 a gallon.
The Consumer Price Index is up 6.2 per cent over last year, and rose 0.9 per cent in October alone, tanking public trust in the president.
Following a presidential announcement for the release of oil, it usually takes 13 days to hit the market, according to the Energy Department.
Experts have predicted it could take two weeks for the prices to start dropping, but have also warned it is not a long-term solution because it doesn’t solve supply and demand problems in the aftermath of the pandemic.
Biden will formally announce the move to release reserve oil in a speech on Tuesday afternoon aimed at addressing the economy and lowering prices. Later Tuesday evening the president and first lady will leave Washington, D.C. to spend Thanksgiving with family in Nantucket, Massachusetts.
President Biden is authorizing the release of 50 million barrels of oil from the Strategic Petroleum Reserve in a bid to lower soaring prices Americans are paying at the pumps, The White House announced on Tuesday
The average price of gasoline recently breached a seven-year high, and now costs $3.409 per gallon, according to AAA. In California, residents have reported paying up to $4.84 a gallon
Prices for a gallon of gas are highest in west coast states and in the North East, according to AAA
‘American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic,’ The White House said in a statement released Friday morning.
‘That’s why President Biden is using every tool available to him to work to lower prices and address the lack of supply.
‘Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.’
Eighteen million barrels will be part of an accelerated release from previous sales and 32 million will be released as an exchange to be ‘replenished’ at a later date, the White House said.
Biden has already faced a lot of criticism over revoking a key permit upon taking office in January that suspended construction of the Keystone XL Pipeline. His administration has also threatened to close the Michigan Five Pipeline.
Republicans immediately weighed in on the announcement of tapping the reserve, claiming this emergency measure should be taken during war time.
Former President Donald Trump called it an ‘attack’ on the oil reserve.
‘For decades our Country’s very important Strategic Oil Reserves were low or virtually empty in that no President wanted to pay the price of filling them up. I filled them up three years ago, right to the top, when oil prices were very low,’ Trump praised his administration in a statement Tuesday morning.
‘Those reserves are meant to be used for serious emergencies, like war, and nothing else,’ he wrote. ‘Now I understand that Joe Biden will be announcing an ‘attack’ on the newly brimming Strategic Oil Reserves so that he could get the close to record-setting high oil prices artificially lowered.’
‘We were energy independent one year ago, now we are at the mercy of OPEC, gasoline is selling for $7 in parts of California, going up all over the Country, and they are taking oil from our Strategic Reserves. Is this any way to run a Country?’
Gas prices are surging nationwide – reaching some of the highest levels in California. A Chevron stations shows a gallon of gas at $5.09 in Visalia, California on November 16 (left) and a SevenEleven shows the price per gallon at $3.33 in Miami, Florida on November 22 (right)
GOP Representative Bob Gibbs’ spokesperson told DailyMail.com: ‘The President’s decision to tap into the strategic petroleum reserve is just a band-aid on a gaping wound caused by his anti-energy policies that are killing domestic energy production.’
‘Long-term price stability can only be guaranteed by a stable and affordable domestic energy supply,’ they continued. ‘It’s reprehensible that the Biden administration has killed thousands of American energy jobs but goes, hat in hand, to nations that include adversaries and begs them to increase production.’
‘Asking ‘Pretty, please’ is not a responsible energy policy. We wouldn’t have to tap our emergency reserves or beg OPEC if President Biden hadn’t allied himself with socialist anti-energy activists.’
Rystad Energy, an independent energy research and business intelligence company, called the move ‘anti-OPEC+’.
‘Today marks an official emergence of an ‘anti-OPEC+’, a group of top oil-consuming countries that are taking the supply-side dynamics into their own hands in the unconventional and unprecedented release of strategic petroleum reserves to create artificial looseness in the oil market and deliver a negative blow to oil prices,’ the company’s Senior Oil Markets Analyst Louise Dickson said.
‘The orchestrated supply-side via SPRs is a last ditch effort after the US was unsuccessful [in] influencing OPEC+ to release supply, an ongoing call since August,’ Dickson continued. ‘The supply side support is intended to quell oil prices and keep pandemic GDP recovery on track, especially amid the backdrop of an increasingly inflationary macro environment.’
‘The White House didn’t provide a chartered schedule for the release, but some of the barrels will be hitting the market as early as December. Much of the downward price impact has already been priced into the futures curve over the past week since China announced it was ready to cooperate following the Xi-Biden summit.’
Inflation is at its highest in 30 years – one of the factors leading to a massive decrease in approval for Joe Biden
On the other hand, Democrats said their calls for Biden to tap the reserve were answered Tuesday.
Senate Majority Leader Chuck Schumer called it ‘good news for families.’
‘I called for this to provide relief at the pump and signal to OPEC they can’t manipulate supply to inflate gas prices,’ the New York Democrat continued on Twitter. ‘Of course—the only long term solution is to keep working to eliminate fossil fuel dependence and create a robust green energy economy.’
The Organization of Petroleum Exporting Countries and its allies are scheduled to meet Dec. 2 and are eyeing plans to increase oil production by a mere 400,000 barrels per day in January.
But, OPEC+ officials warned in turn they would respond if the world’s largest oil consumers tapped their reserves, setting up a fight for control of the global oil market.
OPEC+ officials have said they may reconsider plans to add production at their meeting next week, according to Al Jazeera.
The standoff demonstrates a fraught relationship between Washington and Riyadh, Saudi Arabia, traditionally a strong trade ally of the US.
Biden has repeatedly pointed to OPEC+ and Russia for price hikes, and even called on the Federal Trade Commission to investigate for price-gouging as he tries to find a culprit for the inflation that is beguiling his administration.
‘If you take a look at gas prices and you take a look at oil prices that’s a consequence of thus far the refusal of Russia or the OPEC nations to pump more oil,’ he said.
OPEC+ in April 2020 cut output by more than 10 million barrels a day. The group has about 3.8 million bpd in supply cuts that it has not yet returned to the market.
But another reason prices have surged is that the US cut production of oil by three million barrels in the summer of 2020, as the pandemic crushed demand.
And as Biden begs other nations to pump more oil, he has taken a number of steps to curb oil and gas production within the US – pausing new oil and gas leases on federal land and revoking the permit for the Keystone XL pipeline.
‘American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills’: White House statement on Biden’s release of oil
President Biden Announces Release from the Strategic Petroleum Reserve As Part of Ongoing Efforts to Lower Prices and Address Lack of Supply Around the World
Announcement is in parallel with other major energy consuming nations, including China, India, Japan, Republic of Korea, and the United Kingdom
Over the last 18 months, the COVID-19 pandemic forced an unprecedented global economic shutdown. As the world is re-opening from a near economic standstill, countries across the globe are grappling with the challenges that arise as consumer demand for goods outpaces supply.
But here in the United States, the economic recovery is stronger and faster than anywhere else in the world – according to the Organization for Economic Co-operation and Development, the US is the only one of the major economies to have returned to pre-pandemic gross domestic product levels – in large part due to President Biden’s American Rescue Plan, which funded and facilitated a nationwide vaccination program, provided resources to schools and small businesses to keep them open in the face of COVID waves and put money in the pockets of those hit hardest by the pandemic. As a result of the strong recovery in the United States, Americans have nearly $100 more per month in disposable income in their pockets this year, even as COVID has continued to complicate the economic recovery around the world.
Even so, American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic. That’s why President Biden is using every tool available to him to work to lower prices and address the lack of supply.
Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.
The President has been working with countries across the world to address the lack of supply as the world exits the pandemic. And, as a result of President Biden’s leadership and our diplomatic efforts, this release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent.
The U.S. Department of Energy will make available releases of 50 million barrels from the Strategic Petroleum Reserve in two ways:
• 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead. The exchange is a tool matched to today’s specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the Strategic Petroleum Reserve over time to meet future needs.
• 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized.
The President stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic.
Even as the President is helping to lead the world in addressing oil supply imbalances, he is also focused on how consolidation in the oil and gas sector may be resulting in anti-competitive practices that keep American consumers from benefitting when oil prices fall. There is mounting evidence that declines in oil prices are not translating into lower prices at the pump. Last week, the President asked the Federal Trade Commission to examine what is going on in oil and gas markets and to consider ‘whether illegal conduct is costing families at the pump.’
Today’s announcement reflects the President’s commitment to do everything in his power to bring down costs for the American people and continue our strong economic recovery. At the same time, the Administration remains committed to the President’s ambitious clean energy goals, as reflected in the historic Bipartisan Infrastructure Law signed last week and the House-passed Build Back Better Act that together represent the largest investment in combatting climate change in American history and is a critical step towards reaching a net-zero emissions economy by 2050 and reducing our dependence on foreign fossil fuels.
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