In the gas-drinking America, steep charges at the pump are a political burden. The highest US gasoline prices since 2014 have lowered the approval rating for President Joe Biden to an all-time low and cast a shadow over the country’s economic recovery.
Desperate times call for a drastic jerk on the oil valves. The White House on Tuesday announced releases from the country’s emergency supply in an effort to curb spiraling energy prices. About 50 million barrels of oil will flow from the Strategic Petroleum Reserve in the coming months. Other major consumers, including China, India and the UK, will also contribute.
The move gives Biden much-needed evidence of action. But it will do little to help drivers in the near future.
Americans consume about 50 million barrels of oil in 2.5 days, so the reserve release is no more than a drop in the gas tank. This equates to increasing supply by 137,000 bpd for a year. Opec + countries produce more than 40 million barrels per day.
The US-led effort may backfire. Opec +, which had previously agreed to release an additional 400,000 barrels a day starting in December, could reconsider the move in retaliation. The strategic reserves that will be released will also have to be replenished at some point. As if on track, oil prices rose in the news on Tuesday.
Praying sets a bad precedent. The SPR is intended to be an emergency tool to cover temporary supply disruptions from natural disasters or major major oilfield accidents. It is not supposed to be exploited simply because businesses have under-invested in energy and the economy is strong.
The US has only used SPR reserves on three previous occasions. Two were related to wars. The third came in response to Hurricane Katrina. The only emergency Biden faces is a political one.
WTI prices peaked at $ 85.41 a barrel at the end of October. The price is currently around $ 78. Pandemic era levels moving around $ 40 will not repeat, no matter how convenient it may be for the president. Oil prices are part of the inflationary mystery with which he and ordinary Americans simply have to learn to live together.
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