The United States President Joe Biden has ordered the release of 50 million barrels of oil from the country’s strategic reserve to cool down ‘heated’ gas prices.
This move was effected in harmony with other major energy-consuming nations, including China, India, the United Kingdom, Japan and South Korea, the White House said.
According to a Senior Official at the White House, the release would start in mid to late December, and that further intervention was possible to steady the market as the US government continues to respond “to a once-in-a-century pandemic”.
“As the president has said, consumers are facing pain at the pump right now,” the official said.
The move is targeted at global energy markets, but also has political implications as US voters prepare to cope with higher inflation and rising prices, and US Thanksgiving and winter holiday travel approaches.
Currently, gas prices are at about $3.40 per gallon, more than double their price a year ago, according to the American Automobile Association.
Meanwhile, President Joe Biden has struggled to push much of his economic agenda around the issue of inflation, touting his recently passed $1 trillion infrastructure package will reduce price pressures by making it more efficient and cheaper to transport goods.
Criticisms from Republican legislators about the Biden’s administration implicate him for inflation hitting a 31-year high in October, 2021.
Some delegates from the Organization of the Petroleum Exporting Countries (OPEC) had previously warned the organisation may have to adjust current plans to boost production if the US goes ahead with releasing the reserves, saying the move is unjustified.
The US Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other events.
It is the largest known emergency oil reserve in the world and is maintained by the Energy Department. The reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf Coasts.
As it stands now, there are roughly 605 million barrels of petroleum in the reserve, which can hold up to 714 million barrels.
For the past month, supply of oil has not kept pace with demand, following the rebound in global economic conditions from the pandemic. Therefore, to help ease the problem the reserve is the right tool, according to the Biden administration.
Energy Secretary Jennifer Granholm said in a statement: “As we come out of an unprecedented global economic shutdown, oil supply has not kept up with demand, forcing working families and businesses to pay the price.
“This action underscores the president’s commitment to using the tools available to bring down costs for working families and to continue our economic recovery.”Jennifer Granholm , Exec. Secretary
This decision comes weeks after several diplomatic negotiations, including Biden calling out on the major consumers to release their strategic domestic reserves.
The US Department of Energy will make the oil available in two ways: 32 million barrels will be released in the next few months and will be returned to the reserve in the years ahead. An additional release of 18 million barrels will be part of a sale of oil that had been previously authorised, the White House said.