The president of the United States, Joe Biden, announced on Tuesday that the Department of Energy will release 50 million barrels of oil from the Strategic Petroleum Reserve of the world’s leading power in order to reduce prices and address the mismatch between demand. and the offer. It is a coordinated movement with other major oil consumers such as China, Japan, the United Kingdom or South Korea. The US has the largest crude oil reserves in the world, some 620 million barrels.
Of the 50 million barrels that are offered, more than half, 32 million, will be available during the next months through the exchange mechanism, thus releasing a volume of oil that will eventually return to the Strategic Reserve in the coming years automatically. The rest, 18 million, will be put into circulation in an accelerated way in the coming months as part of a sale that the US Congress had previously authorized.
As reported by the White House, the measure will be taken in parallel with other major nations with high energy demand, such as China, India, Japan, South Korea and the United Kingdom. The pact ends weeks of consultations with countries around the world, which has resulted in a fall in prices of almost 10% since reports began to be made public in recent weeks. These previous steps include Biden’s request to OPEC Plus, a group made up of OPEC members plus a dozen countries, including Russia, to increase their production, to no avail.
The White House announcement, an open challenge to OPEC (Organization of the Petroleum Exporting Countries), comes hours after the Democratic caucus in the House of Representatives urged Biden to release oil from the Strategic Reserve and to restore, by less temporarily, a ban on crude oil exports to help lower prices and ensure “affordable energy for American families.” The movement occurs when inflation has registered its highest level (6.2%) in the last 30 years, an increase that is especially noticeable in two basic expenses such as rents and the electricity and gas bill.
“The President is willing to take additional steps, if necessary, and is willing to use all his powers working in coordination with the rest of the world to maintain an adequate supply as we emerge from the pandemic,” the White House said in a statement, underscoring that the announcement reflects the president’s commitment to do everything in his power to reduce costs to the American people and continue the strong economic recovery.
“American consumers are feeling the impact of high gasoline prices at the pump and on their home heating bills, and so are businesses because the oil supply has not kept up with demand at as the world economy emerges from the pandemic. That is why President Biden is using all the tools available to work to reduce prices and address the lack of supply, “explains the White House in the note published on Tuesday.
Nonetheless, the Administration emphasizes its commitment to the president’s ambitious clean energy goals, as reflected in the two major plans that form the backbone of Biden’s mandate (the Bipartisan Infrastructure Act and the Build Back Better Act), which They represent the largest investment in the fight against climate change in the history of the United States, and they represent a fundamental step towards achieving an economy of net zero emissions by 2050 and reducing dependence on fossil fuels from abroad.
This Monday, after the announcement that Jerome Powell has been appointed for a new term at the head of the Federal Reserve, the White House reported that, if he achieves the approval of the Senate, the central banker will make the fight against climate change one of his management priorities, as requested by the most progressive faction of the Democratic Party.
Anti-competitive practices
On the other hand, and despite the presidential effort to address oil supply imbalances, the White House position also focuses on how consolidation in the oil and gas sector can result in anticompetitive practices that prevent consumers from Americans benefit from falling oil prices.
“There is growing evidence that falling oil prices do not translate into lower prices at the pump,” says the US Administration, recalling that last week Biden asked the Federal Trade Commission to examine what is happening in the oil and gas markets. At the same time, last week Biden decided to ban oil and gas exploration for 20 years in the Chaco Canyon, a national park in northwestern New Mexico closely linked to the history of the Pueblo tribe and other native populations.