Joe Biden: U.S. To Cushion Impact Of High Prices Of Oil By Releasing 18 million bbls From Reserve

The U.S. Department of Energy said on Friday it will sell 18 million barrels of crude oil from its strategic petroleum reserve (SPR) on Dec. 17, as part of a previous plan to try to reduce gasoline prices. The Biden administration announced last month it would release about 50 million barrels from its reserves in conjunction with other consumer countries including China, India and South Korea to combat the rising cost of fuel.

The White House has been trying to deal with Americans' worries about high fuel costs and inflation as drivers emerge from the pandemic, even though the president has few tools to deal with the price of crude, a global market influenced by numerous factors.

“The President rightly believes Americans deserve relief now and has authorized the use of the SPR to respond to market imbalances and reduce costs for consumers," said  Energy Secretary Jennifer Granholm.

Oil prices rose to seven-year highs of more than $86 a barrel in late October on surging fuel demand worldwide, but have dropped by nearly 13% since, in part due to the U.S. announcement and the emergence of the Omicron variant of coronavirus that has dented travel around the world. The Brent benchmark ended at $75.15 a barrel on Friday.

The 18 million barrels to be sold had already been approved by Congress in previous years. The remaining barrels will be issued in the coming months through exchanges, which will have to be returned to the SPR with interest.

The first exchange of 4.8 million barrels will be with Exxon Mobil Corp (XOM.N), the largest U.S. oil company, the department said."As DOE moves forward with the sale, exchange requests will continue to be accepted from interested parties and approved as appropriate to address supply disruptions," the department said. U.S. retail gas prices are averaging $3.33 a gallon, the lowest since mid-October, according to the American Automobile Association. Prices peaked at $3.42 a gallon early in November.

The United States holds roughly 600 million barrels of crude oil in giant caverns in Texas and Louisiana. Its current inventory is at its lowest since 2003.

SOURCE: REUTERS
IMAGE SOURCE: PIXABAY