On Tuesday, the Biden Administration announced that the United States will release millions of barrels of oil from the nation’s Strategic Petroleum Reserves in an attempt to lower costs at the pump ahead of the busy travel holiday.
The White House says that lingering production problems triggered by the pandemic are forcing Americans to shell out more money to fuel their vehicles and heat their homes.
In an effort to provide relief, 50 million barrels from the Strategic Petroleum Reserve will be released for use in two ways, according to a White House statement:
- 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead. The exchange is a tool matched to today’s specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the Strategic Petroleum Reserve over time to meet future needs.
- 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized.
Additionally, the White House has coordinated with other major energy-consuming nations including China, India, Japan, Republic of Korea, and the United Kingdom to release oil stockpiles to drive down the global price of fuel.
“This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent,” the White House said.
Last week, the Biden Administration issued a call for an investigation into whether possible misconduct by oil companies is causing fuel prices to increase. “Even as the President is helping to lead the world in addressing oil supply imbalances, he is also focused on how consolidation in the oil and gas sector may be resulting in anti-competitive practices that keep American consumers from benefitting when oil prices fall. There is mounting evidence that declines in oil prices are not translating into lower prices at the pump,” the White House said in a news release.
Increasing diesel fuel costs and supply issues have been a major pain point for the trucking industry in 2021, with some truck stops rationing or even running out of diesel.
A month-long shutdown of two refineries is expected to result in diesel fuel supply problems for the rest of the year in several states, including Ohio, Kentucky, West Virginia, and Indiana.