In the face of record inflation and rising gas prices, President Joe Biden will likely again turn to the country’s strategic oil reserve for relief. The president announced that he would release 180 million barrels of oil from the reserve — as much as 1 million per day — this is the largest withdrawal from the reserve in its history.
Biden was the first to dip into the reserve. In November, he announced that 50 million barrels had been released from the stockpile in an effort to lower energy prices. This was before Russia invaded Ukraine in February. The west imposed tough sanctions on Russia and put further pressure on the world’s oil supply.
Biden pledged to release an additional 30,000,000 barrels of oil from his strategic reserve in order to counter rising gas prices after the war broke out.
Consumers have not seen a significant change in gas prices as a result of these moves. According to the American Automobile Association, the national average for gas remains at well over $4.
What are the strategic petroleum reserves?
The country’s emergency oil stockpile is called the strategic petroleum reserve. The Department of Energy manages it and keeps it available for emergency situations that cause petroleum shortages, such as natural disasters or wars.
After the 1973 oil crisis, oil-producing Middle Eastern countries imposed an embargo on the United States due to its support for Israel in the Arab-Israeli War.
The reserve was created by President Gerald Ford in 1975 when he signed the Energy Policy and Conservation Act. This law allowed for a stockpile up to 1 million barrels of oil.
Are there strategic petroleum reserves available?
According to the Department of Energy, the nation’s reserves are held in giant underground salt caverns located at four locations along the Louisiana and Texas Gulf Coasts.
What is the strategic oil reserve?
It had a peak of 727 million oil barrels in 2009.
Prior to Biden’s November release of 50,000,000 barrels, the reserve contained 605 million barrels. According to the Department of Energy, the reserve contained 568 million barrels of crude oil as of March 25.
According to Patrick De Haan, a GasBuddy petroleum analyst, the 180 million barrel release would bring the reserve levels down to 388 million barrels, the lowest level since 1984.
Are there any other countries with strategic reserves?
Yes, other countries also have emergency petroleum stocks. They have drawn on them to address the energy crisis caused by the conflict in Ukraine. Along with the United States, 30 European countries drew from their stocks in March. China also has oil reserves.
Is the oil release going to make a difference in the gas prices at the pump?
De Haan said that while 180 million barrels of oil from the stockpile might provide some temporary relief at the pump, it’s not a long-term solution to energy crises, especially if the war with Ukraine continues indefinitely.
De Haan stated that most Americans want long-term significant relief at their pump. “This isn’t going to provide the relief that millions of Americans want. Because 180 million barrels is less that two days’ global consumption.
The United States consumes approximately 20 million barrels per day of oil.
De Haan believes that the last two releases had only a slight impact on gas prices. He estimates that a release from the reserve of 180 million barrels can drop gas prices by 30 cents.
De Haan stated, “And don’t run with the $30 cents because that’s probably the lowest possible.” “Maybe in the 10-20 cent range, but it could be temporary.”