To tackle high fuel prices at the pump, the United States will release oil from its national strategic oil reserves. It concerns 50 million barrels of oil, almost 8 billion liters, that will hit the market in the coming months, President Biden announced.
The extra crude oil is intended to tackle the raging inflation and make gasoline cheaper, Biden says. Inflation in the US rose to 6.2 percent in October, the strongest increase in thirty years and is largely driven by high energy prices.
“Americans suffer from high gas prices at the pump and energy bills at home, just like companies,” Biden said. “It is the result of the demand for oil as the global economy is rebounding and there is not enough oil on the market.”
India, Japan, China, South Korea and the United Kingdom are also drawing on their strategic supplies, the White House says. These countries would have significantly fewer barrels of oil, for example India 5 million barrels and the United Kingdom 1.5 million barrels.
Opec to ramp up production
The US has already called on OPEC+ to increase oil production, but the cartel of oil-producing countries plus Saudi Arabia and Russia does not seem to intend to do so for the time being. The current oil price of around 80 dollars is apparently a good price in the eyes of Opec. Opec+ has already indicated that it wants to increase production by 400,000 barrels per day in December. In the eyes of the US, that is actually not enough and also too late.
Oil companies actually borrow the reserve oil, because the oil has to be returned later with interest to the government. The crude oil is also sold directly to oil companies for refining
The US strategic oil reserve, the Strategic Petroleum Reserve, contains approximately 600 million barrels of crude oil and is stored underground in the states of Texas and Louisiana. The strategic oil reserves were created in the 1970s at the time of the oil crises. The last time the reserves were used was in 2011 when the civil war in Libya sent the price of oil soaring.