Biden decided to use strategic US oil reserves to stabilize gasoline prices

The United States will release 50 million barrels of strategic oil reserves amid rising gasoline prices, reports USAtoday.

Photo: Shutterstock

White House officials announced on November 23 that President Joe Biden would release 50 million barrels of oil from the country's emergency reserves to lower energy costs amid the recent surge in gasoline prices and soaring inflation.

Thirty-two million barrels will be released from the strategic oil reserve over the next few months and replaced in the coming years.

Another 18 million barrels, which Congress has already authorized for sale, will be released in the coming months.

“American consumers are feeling the impact of higher gasoline prices at the pump and on their home heating bills, and so are American businesses as oil supplies fail to keep up with demand as the global economy emerges from the pandemic. That's why President Biden is using every tool available to him to lower prices and close supply gaps,” the statement said.

The release of oil from national reserves comes after months of diplomatic negotiations and will take place in parallel with other major energy consuming countries, including China, India, Japan, the Republic of Korea and the United Kingdom.

Biden is under growing political pressure.

He wants to save Americans from higher gasoline prices and take steps to curb inflation, which hit a 31-year high last month.

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Republicans blame Biden's policies for increasing the cost of consumer goods, including energy prices, while Democrats point to other positive economic indicators such as declining unemployment.

Gasoline prices have risen this fall

The decision to increase the country's strategic reserves was made due to the fact that gasoline prices have been steadily growing over the past few months and stabilized last week.

Average gasoline prices fell this week for the second straight week, dropping 1,9 cents from last week, according to fuel prices website GasBuddy.

The average price is $ 3,39 a gallon, according to data compiled by GasBuddy from over 11 million individual price reports covering more than 150 gas stations nationwide.

The national average was up 2,8 cents from the previous month and $ 1,30 a gallon higher than a year ago.

The national average diesel price over the past week has risen by 0,1 percent to $ 3,63 per gallon.

Biden called on oil-producing countries such as Saudi Arabia and the United Arab Emirates to increase production to ease high gasoline prices for American consumers.

But those countries turned down requests to pump oil, leaving Biden with few options to lower gasoline prices.

Last week, Biden called on federal regulators to investigate whether oil and gas companies are engaging in "illegal activities" profiting from high gasoline prices that skyrocketed during the pandemic.

He requested an investigation in a letter to Federal Trade Commission Chairman Lina Khan, claiming that "there is growing evidence of anti-consumer behavior from oil and gas companies."

Earlier this month, the federal government said inflation has surged over the past 12 months as the U.S. economy recovers from the coronavirus pandemic.

According to the US Bureau of Labor Statistics, the consumer price index rose 0,9% in October, making prices 6,2% higher than a year earlier.

This is the largest increase in 12 months since 1990.

The Strategic Petroleum Reserve is a reserve for maintaining access to oil in the event of natural disasters, national security issues and other events.

The reserves, administered by the Department of Energy, are stored in caves created in salt domes along the Texas and Louisiana Gulf Coast.

There are about 605 million barrels of oil in the reserve.

What is a Strategic Oil Reserve?

The US Strategic Petroleum Reserve is a reservoir containing more than 600 million barrels of oil stored in underground chambers along the coasts of Texas and Louisiana.

The reserve was established by Congress in 1975 after the 1973 oil crisis, when oil-exporting countries cut production and caused a surge in energy prices.

In recent years, the US has used the reserve to boost revenues as changes in global oil production have made lawmakers less worried about potential shortages.

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The last major release of oil reserves occurred in 2011, when President Barack Obama released 30 million barrels of oil to counter supply disruptions due to civil unrest in Libya.

Former President George W. Bush also released 11 million barrels of oil from the reserve in 2005 to counter the devastation caused by Hurricane Katrina, while his father, President George H.W. Bush, fired 17 million barrels in the first Gulf War.

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