WHAT YOU NEED TO KNOW:
- President Joe Biden on Tuesday announced the release of 50 million barrels of oil to bring down high energy costs.
- The move is the largest release from the oil reserve in US history.
- Biden also noted that it “will not solve the problem of high gas prices overnight.”
President Joe Biden on Tuesday announced the White House had ordered 50 million barrels of oil released from the strategic reserve to ease energy costs. The move is in coordination with other countries including China.
The administration’s action is an effort to bring down rising gas prices. which averages about $3.40 a gallon. That’s more than double their price a year ago, according to the American Automobile Association.
The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues, and other events. Maintained by the Energy Department, the reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf Coasts. There are roughly 605 million barrels of sweet and sour petroleum in the reserve.
The Biden administration has argued that the supply of oil has not kept pace with demand as the global economy emerged from the pandemic, and the reserve is the right tool to help ease the problem.
The decision comes after weeks of diplomatic negotiations and the release will be taken in parallel with other nations including, India, Japan, the Republic of Korea, and the United Kingdom.
The U.S. Department of Energy will make the oil available in two ways; 32 million barrels will be released in the next few months and will return to the reserve in the years ahead. Another 18 million barrels will be part of a sale of oil that Congress had previously authorized.
White House Press Secretary Jen Psaki said Monday evening that the White House would also keep tabs on the oil companies, too.
“We will continue to press oil companies who have made record profits and are overseeing what we consider to be price gouging out there when there’s a supply of oil or the price of oil is coming down and the price of gas is not coming down,” Psaki said. “It does not take an economic expert to know that’s a problem.”
Biden also noted that the oil release “will not solve the problem of high gas prices overnight.”
“It will take time, but before long, you should see the price of gas drop where you fill up your tank,” the president. “And in the longer term, we will reduce our reliance on oil as we shift to clean energy.”
Source: AP News