oil reserves
High fuel prices: USA want to sell large amounts of oil
Gasoline prices have also risen in the United States. Photo: Xinhua/dpa
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The US is turning on the oil tap. President Biden wants to release around 180 million barrels of crude oil. This is intended to counteract the price increase resulting from the war in Ukraine.
In view of the high petrol prices as a result of the Ukraine war, the US government wants to sell massive amounts of crude oil from its strategic reserve in order to depress the market price.
The government will release an average of one million barrels of crude oil per day for the next six months, the White House said. That would correspond to a volume of around 180 million barrels (159 liters each), which would be around 29 billion liters. It was the “largest release of oil reserves in history,” it said.
The release will begin “very soon,” said a government official. Oil prices fell sharply after the announced release. A barrel of North Sea Brent recently cost $108.21. That was $5.24 less than the day before.
At the same time, the US government announced new measures to boost domestic oil production. “This record release will provide a historic supply level that will serve as a bridge through the year until domestic production ramps up,” the White House said. The release from the oil reserve had been agreed with international partners. The White House expects domestic production to increase by around a million barrels a day by the end of the year.
Biden under pressure
In view of the high inflation rate in the USA and the sharp rise in gasoline prices, Biden is under increasing pressure – and this is about seven months before the important congressional elections in which his Democrats want to defend their majority.
The White House now blames Russian President Vladimir Putin directly for the rise in gasoline prices. “Americans are seeing rising prices at the gas station because of Putin’s price hike,” the White House said. Since the beginning of the year, the price per gallon (almost 3.8 liters) has risen by around one US dollar to the current average of 4.20 dollars (3.80 euros). Biden is determined to “do everything in his power to help America’s families who are now having to pay more,” it said.
Biden said there is no precise answer as to how much the price of gasoline will fall given the global oil market. However, he assumes that he will fall in the coming weeks, “and he could fall significantly”. There could be a reduction of 10 cents to 35 cents per gallon, the president estimated.
The strategic petroleum reserve is an emergency stockpile intended to provide access to petroleum in the event of natural disasters or national security crises. The reserve is managed by the Department of Energy and has a maximum capacity of 727 million barrels. Most recently, the USA announced in early March that it would release around 30 million barrels from the reserve in consultation with the International Energy Agency (IEA). It was said that there should now be additional oil releases from the partners.
After the start of the war in Ukraine, the US banned imports of Russian crude oil and petroleum products, which reduced supply and pushed prices up further. In November, the government had already announced the release of 50 million barrels from the reserve in view of the high inflation rate and high demand with global supply hardly increasing in order to lower fuel prices.
Large consumer countries such as the USA, China and EU countries are particularly interested in low oil prices. Large producing countries such as Saudi Arabia or Russia, on the other hand, have a vital interest in higher oil prices.
OPEC+ sticks to cautious funding strategy
The oil alliance Opec+, which is dominated by the two producers, also declared on Thursday that production should only be increased moderately. Production will be expanded by a further 432,000 barrels a day in May, the 20 states in the oil cartel said. Thus, despite the war, Verbund is maintaining the increase in funding at the level of the past few months.
They justified their step by saying that geopolitical reasons and no increased demand were responsible for the recent high oil price. This means that hardly any effects on the price of heating oil and petrol are to be expected.
The White House also announced that Biden wants to accelerate his plan to make the United States independent of foreign energy sources. In order to speed up the construction of batteries, Biden also wants to apply a law that would speed up and prioritize the production and processing of the necessary raw materials such as lithium, nickel and cobalt in the USA.
The wartime law – which was last used during the pandemic, for example to secure raw materials for vaccine production – could also be used in other areas to guarantee security of supply, it said.