An
aerial
view
shows an
oil
factory
of
Idemitsu
Kosan
Co. in
Ichihara,
east of
Tokyo,
Japan
November
12,
2021, in
this
photo
taken by
Kyodo.
Mandatory
credit
Kyodo/via
REUTERS |
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FILE -
President
Joe
Biden
speaks
as he
announces
that he
is
nominating
Jerome
Powell
for a
second
four-year
term as
Federal
Reserve
chair,
during
an event
in the
South
Court
Auditorium
on the
White
House
complex
in
Washington,
Monday,
Nov. 22,
2021.
The
White
House on
Tuesday
said it
had
ordered
50
million
barrels
of oil
released
from
strategic
reserve
to bring
down
energy
costs.
(AP
Photo/Susan
Walsh,
File) |
|
US to
release
50
million
barrels
of oil
to ease
energy
costs
By
JOSH
BOAK
and
COLLEEN
LONG
apnews.com
WASHINGTON
-
President
Joe
Biden on
Tuesday
ordered
50
million
barrels
of oil
released
from
America’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 U.S.
voters
who are
coping
with
higher
inflation
and
rising
prices
ahead of
Thanksgiving
and
winter
holiday
travel.
Gasoline
prices
are at
about
$3.40 a
gallon,
more
than 50%
higher
than a
year
ago,
according
to the
American
Automobile
Association.
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% in
anticipation
of the
news.
The
government
will
begin to
move
barrels
into the
market
in mid
to late
December.
But
the
actions
are
unlikely
to
immediately
bring
down gas
prices
significantly
as
families
begin
traveling
for the
holidays.
Administration
officials
noted
that
gasoline
usually
responds
at a lag
to
changes
in oil
prices,
and they
suggested
this is
one of
several
steps in
ultimately
bringing
down
costs.
There
was no
discernable
impact
on the
price
for a
benchmark
barrel
of U.S.
crude
right
after
the
announcement.
Prices
have
been up
and down
all
month,
and were
up less
than 1%
so far
in this
holiday
shortened
week.
The
actions
by the
U.S. and
others
risk
counter
moves by
Gulf
nations,
especially
Saudi
Arabia,
and by
Russia.
Saudi
Arabia
and
other
Gulf
countries
have
made
clear
they
intend
to
control
supply
to keep
prices
high for
the time
being.
As
word
spread
in
recent
days of
a coming
joint
release
from
U.S. and
other
countries’
reserves,
there
were
warnings
from
OPEC
interests
that
those
countries
may
respond
in turn,
reneging
on
promises
to
increase
supplies
in
coming
months.
Biden
has
scrambled
to
reshape
much of
his
economic
agenda
around
the
issue of
inflation,
saying
that his
recently
passed
$1
trillion
infrastructure
package
will
reduce
price
pressures
by
making
it more
efficient
and
cheaper
to
transport
goods.
Republican
lawmakers
have
hammered
the
administration
for
inflation
hitting
a
31-year
high in
October.
The
consumer
price
index
soared
6.2%
from a
year ago
— the
biggest
12-month
jump
since
1990.
Senate
Republican
Leader
Mitch
McConnell
tore
into the
White
House in
a floor
speech
last
week,
saying
the
victims
of
higher
prices
were
middle
class
Americans.
“The
three
biggest
drivers
of the
staggering
6.2%
inflation
rate we
logged
last
month
were
housing,
transportation,
and
food,”
the
Kentucky
senator
said.
“Those
aren’t
luxuries,
they’re
essentials,
and they
take up
a much
bigger
share of
families’
budgets
from the
middle
class on
down.”
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.
“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,”
Energy
Secretary
Jennifer
Granholm
said in
a
statement.
“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.”
The
Biden
administration
has
argued
that the
reserve
is the
right
tool to
help
ease the
supply
problem.
Americans
used an
average
of 20.7
million
barrels
a day
during
September,
according
to the
Energy
Information
Administration.
That
means
that the
release
nearly
equals
about
two-and-a-half
days of
additional
supply.
The
pandemic
made
energy
markets
— like
everything
else —
haywire
on
multiple
fronts.
As the
closures
began in
April,
2020,
demand
collapsed
and oil
futures
prices
turned
negative.
Energy
traders
did not
want to
get
stuck
with
crude
that
they
could
not
store.
But as
the
economy
recovered,
prices
jumped
to a
seven-year
high in
October.
U.S.
production
has not
recovered.
Energy
Information
Administration
figures
indicate
that
domestic
production
is
averaging
roughly
11
million
barrels
daily,
down
from
12.8
million
before
the
pandemic
started.
Republicans
have
also
seized
on
Biden’s
efforts
to
minimize
drilling
and
support
renewable
energy
as a
reason
for the
decreased
production,
though
there
are
multiple
market
dynamics
at play
as
fossil
fuel
prices
are
higher
around
the
world.
“President
Biden’s
policies
are
hiking
inflation
and
energy
prices
for the
American
people.
Tapping
the
Strategic
Petroleum
Reserve
will not
fix the
problem,”
said
Sen.
John
Barrasso,
R-Wyoming.
“We are
experiencing
higher
prices
because
the
administration
and
Democrats
in
Congress
are
waging a
war on
American
energy.”
Meanwhile,
Biden
and
administration
officials
insist
that
tapping
more oil
from the
reserve
is not a
contradiction
with the
president’s
long-term
climate
goals,
because
this is
a
short-term
fix to
meet a
specific
problem,
while
climate
policies
are a
long-term
answer
over
decades.
They
argue
that
because
they are
pushing
to boost
renewable
energy,
there
will
eventually
be less
dependence
in the
U.S. on
fossil
fuels.
But
that’s a
politically
convenient
argument
- in
simple
terms,
higher
prices
reduce
usage,
and
significantly
higher
gasoline
prices
could
force
Americans
into
less
reliance
on
fossil
fuels.
The
White
House
decision
comes
after
weeks of
diplomatic
negotiations.
Biden
and
China
President
Xi
Jinping
talked
over
steps to
counter
tight
petroleum
supplies
in their
virtual
meeting
earlier
this
month,
when the
two
“discussed
the
importance
of
taking
measures
to
address
global
energy
supplies,”
according
to the
White
House
account
of the
conversation.
Japan
and
South
Korea
are also
participating.
Administration
officials
say it’s
the
biggest
coordinated
release
from
global
strategic
reserves.
The
U.S.
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
authorized.
White
House
Press
Secretary
Jen
Psaki
said
Monday
evening
that the
White
House
would
also
keep
tabs on
the oil
companies,
too.
“We
will
continue
to press
oil
companies
who have
made
record
profits
and are
overseeing
what we
consider
to be
price
gouging
out
there
when
there’s
a supply
of oil
or the
price of
oil is
coming
down and
the
price of
gas is
not
coming
down,”
Psaki
said.
“It does
not take
an
economic
expert
to know
that’s a
problem.”
___
AP
writer
Charles
Sheehan
contributed
from New
York.
Matthew
Daly and
Ellen
Knickmeyer
contributed
from
Washington.
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