BREAKING: US to Release 50 Million Barrels of Oil
The Department of Energy will release 50 million barrels of oil from the U.S.’s Strategic Petroleum Reserve in an effort to combat rising gas prices, the White House announced on Tuesday.
However, as the Associated Press reports, the move is unlikely to significantly impact gas prices as families travel for the holidays. “Gasoline usually responds at a lag to changes in oil prices, and administration officials suggested this is one of several steps toward ultimately bringing down costs,” the outlet said.
According to Claudio Galimberti, senior vice president for oil markets at Rystad Energy, while the market was expecting the news, they were underwhelmed by the details.
“The problem is that everybody knows that this measure is temporary,” Galimberti said. “So once it is stopped, then if demand continues to be above supply like it is right now, then you’re back to square one.”
Biden administration officials say it’s the biggest coordinated release from global strategic reserves. India says it will release 5 million barrels, Britain confirms up to 1.5 million barrels, and Japan and South Korea are also participating.
Meanwhile, Saudi Arabia and other Gulf countries have made clear they intend to control supply to keep prices high.
The move comes from the White House after inflation hit a 31-year high in October. The consumer price index increased 6.2% from a year ago, marking the biggest 12-month spike since 1990.
“The three biggest drivers of the staggering 6.2% inflation rate we logged last month were housing, transportation, and food,” Sen. Mitch McConnell (R-KY) 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 Biden administration has argued that tapping into the reserve is the right way to alleviate the supply problem. According to the Energy Information Administration, Americans used an average of 20.7 million barrels a day during September. That means that the release nearly equals about two-and-a-half days of additional supply.
White House Press Secretary Jen Psaki said Monday evening the White House would keep tabs on the oil companies that “have made record profits” and will watch for price-gouging “when there’s a supply of oil or the price of oil is coming down and the price of gas is not coming down.”