NATIONAL NEWS

US to release 50 million barrels of oil to ease energy costs

Nov 23, 2021, 5:29 AM | Updated: 7:35 am
FILE: A fuel truck leaves a fuel terminal after filling its tanks with gas on April 29, 2021 in Ric...
FILE: A fuel truck leaves a fuel terminal after filling its tanks with gas on April 29, 2021 in Richmond, California. (Photo by Justin Sullivan/Getty Images)
(Photo by Justin Sullivan/Getty Images)

WASHINGTON (AP) — President Joe Biden on Tuesday ordered 50 million barrels of oil released from the nation’s strategic reserve to help bring down energy costs, in coordination with other major energy consuming nations, including China, India and the United Kingdom.

The move is aimed at global energy markets, but also at voters who are coping with higher inflation and rising prices ahead of Thanksgiving and winter holiday travel. Gas prices are at about $3.40 a gallon, more than 50% higher than their price a year ago, according to the American Automobile Association.

Administration officials said that reports of a possible release and consultations with other countries ahead of the announcement had caused oil prices to drop nearly 10% in anticipation of the news. The government will begin to move barrels into the market in mid to late December.

There was no discernable impact on the price for a benchmark barrel of U.S. crude right after the announcement. Prices have been up and down all month, and were up less than 1% so far in this holiday shortened week.

Biden has scrambled to reshape much of his economic agenda around the issue of inflation, saying that his recently passed $1 trillion infrastructure package will reduce price pressures by making it more efficient and cheaper to transport goods.

Republican lawmakers have hammered the administration for inflation hitting a 31-year high in October. The consumer price index soared 6.2% from a year ago — the biggest 12-month jump since 1990.

Senate Republican Leader Mitch McConnell tore into the White House in a floor speech last week, saying the victims of higher prices were middle class Americans.

“The three biggest drivers of the staggering 6.2% inflation rate we logged last month were housing, transportation, and food,” the Kentucky senator 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 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.

“As we come out of an unprecedented global economic shutdown, oil supply has not kept up with demand, forcing working families and businesses to pay the price,” Energy Secretary Jennifer Granholm said in a statement. “This action underscores the president’s commitment to using the tools available to bring down costs for working families and to continue our economic recovery.”

The Biden administration has argued that the reserve is the right tool to help ease the supply problem. Americans used an average of 20.7 million barrels a day during September, according to the Energy Information Administration. That means that the release nearly equals about two-and-a-half days of additional supply.

The pandemic made energy markets — like everything else — haywire on multiple fronts. As the closures began in April, 2020, demand collapsed and oil futures prices turned negative. Energy traders did not want to get stuck with crude that they could not store. But as the economy recovered, prices jumped to a seven-year high in October.

U.S. production has not recovered. Energy Information Administration figures indicate that domestic production is averaging roughly 11 million barrels daily, down from 12.8 million before the pandemic started.

Republicans have also seized on Biden’s efforts to minimize drilling and support renewable energy as a reason for the decreased production, though there are multiple market dynamics at play as fossil fuel prices are higher around the world.

“President Biden’s policies are hiking inflation and energy prices for the American people. Tapping the Strategic Petroleum Reserve will not fix the problem,” said Sen. John Barrasso, R-Wyoming. “We are experiencing higher prices because the administration and Democrats in Congress are waging a war on American energy.”

Meanwhile, Biden and administration officials insist that tapping more oil from the reserve is not a contradiction with the president’s long-term climate goals, because this is a short-term fix to meet a specific problem, while climate policies are a long-term answer over decades.

They argue that because they are pushing to boost renewable energy, there will eventually be less dependence in the U.S. on fossil fuels. But that’s a politically convenient argument – in simple terms, higher prices reduce usage, and significantly higher gasoline prices could force Americans into less reliance on fossil fuels.

The White House decision comes after weeks of diplomatic negotiations and the release will be taken in parallel with other nations. Japan and South Korea are also participating.

The U.S. Department of Energy will make the oil available from the Strategic Petroleum Reserve in two ways; 32 million barrels will be released in the next few months and will return to the reserve in the years ahead, the White House said. Another 18 million barrels will be part of a sale of oil that Congress had previously authorized.

The U.S. Chamber of Commerce criticized the move as an “ineffectual Band-Aid.”

“The Department of Energy’s reserve should only be used for supply disruptions,” Christopher Guith, the chamber’s senior vice president at the Global Energy Institute, said in a statement. “The White House should focus on policies that will encourage domestic production of oil and natural gas.”

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.”

___

AP writer Charles Sheehan contributed from New York. Matthew Daly contributed from Washington.

KSL 5 TV Live

Top Stories

National News

LOS ANGELES, CALIFORNIA - FEBRUARY 05: First Lady of the United States Dr. Jill Biden speaks onstag...
Lisa Respers France

Grammy winners 2023: See who won

Harry Styles won album of the year at the Grammy Awards, taking home the top honor on a night that Beyoncé dominated and became the ceremony’s most decorated artist.
1 day ago
LOS ANGELES, CALIFORNIA - FEBRUARY 05: Beyoncé accepts Best Dance/Electronic Music Album for “Re...
Scottie Andrew

Beyoncé officially has the most Grammys of any artist

Bey just became the most awarded artist in Grammys history, with a record 32 wins.
1 day ago
USU student Max Shulga during Saturday night's game....
Shelby Lofton

Utah State community responds to ‘Russia’ chants directed at Ukrainian player

Some USU students say that the Colorado State University students crossed a line that goes beyond simple trash talk during a game.
1 day ago
FILE (Sean Gallup/Getty Images)...
Associated Press

Judge: Banning guns for marijuana users unconstitutional

A federal judge in Oklahoma has ruled a federal law prohibiting people who use marijuana from owning firearms is unconstitutional.
1 day ago
Five lucky couples who get engaged at a Cracker Barrel restaurant will have the chance to win free ...
Zoe Sottile

Valentines’ Day proposals at Cracker Barrel might win you free food for a year

The restaurant chain has announced a romantic new venture for Valentine's Day. Five lucky couples will have the chance to win free Cracker Barrel for a year, according to its website.
1 day ago
Miami police unveiled a Black History Month-inspired vehicle wrap featuring the pan-African colors ...
Hannah Sarisohn and Eric Levenson

Miami PD unveil Black History Month-inspired vehicle wrap

The Miami Police on Thursday unveiled a Black History Month-inspired vehicle wrap that features the pan-African colors, outlines of the African continent, raised fists and kente cloth.
1 day ago

Sponsored Articles

vintage photo of lighting showroom featuring chandeliers, lamps, wall lights and mirrors...
Lighting Design

History of Lighting Design | Over 25 Years of Providing Utah With the Latest Trends and Styles

Read about the history of Lighting Design, a family-owned and operated business that paved the way for the lighting industry in Utah.
Fiber Optical cables connected to an optic ports and Network cables connected to ethernet ports...
Brian Huston, CE and Anthony Perkins, BICSI

Why Every Business Needs a Structured Cabling System

A structured cabling system benefits businesses by giving you faster processing speeds and making your network more efficient and reliable.
notebook with password notes highlighted...
PC Laptops

How to Create Strong Passwords You Can Actually Remember

Learn how you can create strong passwords that are actually easy to remember! In a short time you can create new ones in seconds.
house with for rent sign posted...
Chase Harrington, president and COO of Entrata

Top 5 Reasons You May Want to Consider Apartment Life Over Owning a Home

There are many benefits of renting that can be overshadowed by the allure of buying a home. Here are five reasons why renting might be right for you.
Festive kitchen in Christmas decorations. Christmas dining room....
Lighting Design

6 Holiday Decor Trends to Try in 2022

We've rounded out the top 6 holiday decor trends for 2022 so you can be ahead of the game before you start shopping. 
Happy diverse college or university students are having fun on their graduation day...
BYU MBA at the Marriott School of Business

How to Choose What MBA Program is Right for You: Take this Quiz Before You Apply!

Wondering what MBA program is right for you? Take this quiz before you apply to see if it will help you meet your goals.
US to release 50 million barrels of oil to ease energy costs