The United States said that during the pandemic recovery period, oil supply did not keep up with demand, so there are reasons to use reserves.
US President Joe Biden has ordered the release of 50 million barrels of oil from the strategic reserve to help Reduce energy costs.
The White House said that Tuesday’s move was coordinated with other major energy-consuming countries, including China, India, the United Kingdom, Japan and South Korea.
A senior government official told reporters that the release will begin in mid-to-late December, and as the US government continues to respond to the “once-in-a-century epidemic”, further intervention may be possible to stabilize the market.
“As the President said, consumers are now facing the pain of pumps,” the official said.
Although aimed at the global energy market, the release of oil also has political implications because American voters Ready to respond Before the trip to Thanksgiving and winter holidays in the United States, inflation rates rose and prices rose.
According to the American Automobile Association, the price of gasoline is about $3.40 per gallon, more than twice the price a year ago.
At the same time, Biden scrambled to reshape most of his economic agenda around inflation, saying that the $1 trillion infrastructure package he recently passed will reduce price pressures by improving the efficiency and cost of cargo transportation.
Republican lawmakers criticized the government’s approach, saying it was the reason that caused inflation to reach a 31-year high in October.
Senate Republican leader Mitch McConnell criticized the government’s inflation problem in an on-site speech last week, saying that the victims of rising prices were middle-class citizens of the United States.
“The three biggest drivers of the shocking 6.2% inflation rate we recorded last month were housing, transportation and food,” he said. “These are not luxuries, but necessities, and they account for a much larger share of household budgets below the middle class.”
Representative of the Organization of Petroleum Exporting Countries (OPEC) Previous warning The organization is composed of major oil-producing countries. If the United States continues to release reserves, the organization may have to adjust the current production increase plan, saying that this move is unreasonable.
The largest known emergency reserve
The US Strategic Petroleum Reserve was started in 1975 as an emergency reserve used to protect the acquisition of oil in the event 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 Department of Energy. These reserves are stored in caves formed in the salt domes along the Gulf Coast of Texas and Louisiana.
There are approximately 605 million barrels of oil in the reserve, which can hold up to 714 million barrels.
The Biden administration argues that as the global economy recovers from the pandemic, oil supply has not kept up with demand, and reserves are the right tool to help alleviate the problem.
Energy Secretary Jennifer Granholm said in a statement on Tuesday: “As we move out of an unprecedented global economic shutdown, oil supply cannot keep up with demand, forcing working families and businesses to pay the price.” “This action highlights the president. Committed to using existing tools to reduce the cost of working families and continue our economic recovery.”
The decision was made after several weeks of diplomatic negotiations.
The White House stated that the U.S. Department of Energy will provide oil in two ways: 32 million barrels of oil will be released in the next few months, and the reserves will be returned in the next few years.
Another 18 million barrels will be part of the oil sales previously authorized by Congress.