In a bid to control energy prices that have skyrocketed as the US and their allies have imposed steep sanctions on Russia over its invasion of Ukraine, President Biden is preparing to order the release of up to 1 million barrels of oil per day from the nation’s Strategic Petroleum Reserve.
As of March 25, more than 568 million barrels of oil were held in the Strategic Petroleum Reserve – the stockpile of crude oil stored in underground salt caverns in Louisiana and Texas – show the information given by the Department of Energy, which manages it.
It is expected that the announcement could come on Thursday, when Biden, according to the White House, is planning to elaborate on his administration’s plans to combat rising gas prices.
The idea of tapping the strategic reserve emerged in November, when the Biden administration announced the release of 60 million barrels from the strategic reserve in coordination 30 with other countries, with half of it coming from the US.
As Biden is considering his plans, oil prices fell more than $5 a barrel on Thursday with the US West Texas Intermediate futures reaching $5.24, or 4.9% lower, to $102.58 a barrel, while Brent futures decreased to $109.31 a barrel or 3.7%.
Despite generally having only a limited effect on gas prices due to the quantity of the oil that can be released at a time, tapping the reserve would act as a political sign that Biden is continuing to confront the problem.
The fact that high oil prices fuelled by the Russian invasion of Ukraine – crude oil traded at nearly $105 a barrel on Wednesday, up from about $60 a year ago – have not increased the production is creating a serious challenge for Biden whose popularity sank as inflation reached a 40-year high in February.
The Dallas Federal Reserve’s survey released last week shows that so far, the oil producers have been more focused on meeting the needs of investors than citizens with over 59% of the surveyed executives saying that they weren’t pumping more due to investor pressure to preserve capital discipline amid high prices.
Less than 10% of the executives blamed government regulation.
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