U.S. to release 50 million barrels of oil in effort to bring down gas prices
U.S. President Joe Biden said on Tuesday that the administration will tap the Strategic Petroleum Reserve as part of a global effort to control the rapid rise in fuel prices.
The coordinated release between the U.S., China, United Kingdom, India, Japan, Republic of Korea is the first such move of its kind. Biden had been working with countries across the world to address the mismatch between demand exiting the pandemic and supply.
Of the 50 million barrels, 32 million will eventually be returned to the strategic reserve over the years ahead once fuel prices come down in a bid to ensure the reserve remains stocked, the White House said.
“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.”
The U.S. Department of Energy will make the oil available from the Strategic Petroleum Reserve in two ways:
- 32 million barrels released over the next several months will eventually return to the Strategic Petroleum Reserve in the years ahead.
- Another 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized.
The move is an effort to bring down rising gas prices which is averaging about $3.40 a gallon, more than double 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. It is the world’s largest emergency stockpile of crude in the world. The facility was set up 40 years ago in response to the Arab oil embargo to mitigate the threat of an energy supply disruption.
