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To Fight Soaring Gas Prices, US Releases 1M Barrels of Oil/day
To cut down soaring gas prices, the US will release a million barrels of oil daily from its reserves. For the next six months, the United States Strategic Petroleum Reserve will release a total of 180 million barrels of oil.
This move aims to counteract the rising prices of crude oil due to low domestic production and the effects of the Russia-Ukraine war.
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US To Fight Soaring Gas Prices, But Biden Doesn’t Know By How Much
The United States will release one million barrels of oil a day from the Strategic Petroleum Reserve for the next six months.
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President Joe Biden announced this decision last Thursday as Americans continue to struggle with soaring gas prices. In some parts of the country, automobile fuel prices are now at $5 per gallon.
The additional oil from the SPR hopes to mitigate the cost of spiraling oil prices. In turn, this hopes to bring down the price of gasoline.
However, Biden said he can’t give an exact answer on how much gas prices will go down. He also has no idea how soon Americans can expect relief from soaring gas prices.
Initial estimates bring a savings of between 10 to 35 cents a gallon. However, the White House hopes that this measure can provide temporary relief until US production increases later this year.
Expect A Slight Delay
“My guess is we'll see it come down and continue to come down,” Biden said during his announcement. “But how far down, I don't think anyone can tell. And there's gonna be a slight delay,” he added.
However, he did promise that soaring gas prices will eventually come down. “It could come down fairly significantly.
It could come down, the better part of, anything from 10 cents to 35 cents a gallon. It's unknown at this point,” the President added.
Previously, reports that Biden considered releasing oil from the Strategic Petroleum Reserve helped push oil prices down nearly $5 a barrel.
As a result, US West Texas Intermediate crude prices fell down to $101.65 a barrel. However, the overall economic impact of the SPR release remains unknown.
The current national average for gas prices is $4.23 per gallon. Previously, a gallon cost $3.61 a month ago and $2.87 last year.
Biden Now Blames Oil Companies For Soaring Gas Prices
In addition, Biden also criticized American oil companies for failing to produce the oil the country needs. These companies also sat on “record profits” while supply couldn’t keep up with demand.
During the pandemic, oil producers reduced their oil production as demand fell. However, they have yet to return production rates back to pre-pandemic levels.
Now, Biden wants to introduce a “Use it or Lose it” policy. This incentivizes companies to maximize their capability and produce more oil in the short term.
It also urged Congress to require oil companies to pay fees on unused wells sitting on federal lands. While some companies already stepped up, Biden claims some companies remain too afraid of their investors.
“The bottom line is if we want lower gas prices, we need to have more oil supply right now. For US oil companies that are recording their largest oil profits in years, they have a choice,” Biden said.
These companies can put those profits to use by producing more oil. This can help pass on some of the savings to Americans. Or, they can do nothing and “ship those profits to the investors while American families struggle to make ends meet.”
Department of Energy To Restock SPR Using Revenues From Released Oil
The Department of Energy will use revenues from the sale of the released SPR oil to restock reserves when prices go down.
The country is currently coordinating with allies and global partners to eventually release more than 1 million barrels a day. Incidentally, Biden’s decision marks the SPR’s largest release in history.
Watch the Breaking News Now video reporting that President Joe Biden blasts US oil companies in announcing the plan to combat gas prices:
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