US to release 50 million barrels of oil to reduce energy costs Oil and Gas News

The U.S. says oil supplies have not kept pace with demand in the wake of the pandemic, justifying the use of reserves.

U.S. President Joe Biden has ordered 50 million barrels of oil to help him get out of the strategic reserve lowering energy costs.

The move was coordinated with other major energy-consuming nations on Tuesday, including China, India, the United Kingdom, Japan and South Korea, the White House said.

A senior administration official told reporters that layoffs would begin in mid-December, and that more intervention was possible to stabilize the market as the U.S. government continues to respond to a “century-long pandemic”.

“As the President said, consumers are in pain at the pump right now,” the official said.

Although energy is targeted at global markets, the release of oil also has political consequences as a U.S. voter prepare to deal with higher inflation and rising prices ahead of the U.S. Thanksgiving and winter vacation travel.

Gas prices are about $ 3.40 a liter, more than double the price a year ago, according to the American Automobile Association.

Meanwhile, Biden has made efforts to reshape much of its economic agenda on the issue of inflation, saying the recently approved $ 1 trillion infrastructure package will reduce price pressure by making freight transportation more efficient and cheaper.

Republican lawmakers have criticized the administration’s approach, saying it is responsible for inflation reaching a 31-year high in October.

Republican Senate leader Mitch McConnell spoke out against the administration in a speech last week, saying the victims of high prices were middle-class U.S. citizens.

“The three biggest drivers of the staggering inflation rate we recorded at 6.2 per cent last year were housing, transport and food,” he said. “These are not luxuries, they are essential, and they take up a much larger share of families’ budgets than the middle class.”

It was attended by representatives of the Organization of the Petroleum Exporting Countries (OPEC) previously warned The organization, which is made up of major oil-producing countries, will have to adjust its current plans to boost production if the U.S. moves forward with the release of reserves, saying the move is unjustified.

The largest known emergency reserve

The U.S. Strategic Oil Reserve, which began in 1975, is an emergency repository to protect access to oil in the event of natural disasters, national security problems, and other events.

It is the largest known oil reserve in the world and is maintained by the Department of Energy. The reserves are stored in caves formed in salt domes along the Texas and Louisiana Gulf coasts.

There are approximately 605 million barrels of oil in reserve, and they can hold 714 million barrels.

The Biden administration has argued that the oil supply has not kept pace with demand as the global economy emerged from the pandemic, and is a suitable reserve tool to help alleviate the problem.

“As we emerge from an unprecedented global economic disruption, the oil supply has not kept up with demand, forcing working families and businesses to pay the price,” Energy Secretary Jennifer Granholm said Tuesday. “This action underscores the president’s commitment to using existing tools to reduce the costs of workers’ families and to continue our economic recovery.”

The decision came weeks after diplomatic negotiations.

The U.S. Department of Energy will make oil available in two ways: 32 million barrels will be released in the coming months and will be returned to the reserve in the coming years, the White House said.

Another 18 million barrels will be part of an oil sale previously authorized by Congress.