United States President Joe Biden attempted to address rising oil prices in the country by announcing the release of 50 million barrels of oil from the nation's emergency reserve, the White House announced on Tuesday.
Over the next several months, the U.S. federal government will release 32 million barrels of oil from the Strategic Petroleum Reserve and will be replaced in the years after. Congress authorized 18 million more barrels of oil for sale to be released in the coming months.
Releasing 50 Million Oil Barrels
In a statement, the White House said that American consumers were struggling amid the rising oil gas prices along with the increasing cost of home heating electricity. The document read that businesses in the country were also feeling the effects due to the lack of oil supply that has not been able to keep up with demand as the global economy recovers from the coronavirus pandemic.
The White House's statement added that the rising oil gas prices were the reason why President Biden is using every tool he can to lower the costs and address the lack of supply. After months of diplomatic negotiations, USA Today reported, the United States will release the oil similar to other major-energy consuming countries such as China, India, Japan, South Korea, and the United Kingdom.
Despite Biden's pressure on 14-nation OPEC and Russia to distribute more oil supply into the global market, it has had little effect. While the primary cause of concern for the price hike is the coronavirus pandemic, Biden's administration also blamed energy companies for alleged anti-competitive behavior.
Last week, the Democratic president requested that the Federal Trade Commission investigate whether or not "illegal conduct" was causing the price of oil to rise in the United States. In October, American drivers paid an average of $3.29 per gallon, which was the highest price recorded since September 2014.
Rising Oil Gas Prices
On Tuesday, Energy Secretary Jennifer Granholm touted the action to release barrels from the Strategic Petroleum Reserve. The official said that the oil supply could not keep up with global demand, which forced families and businesses to pay higher prices. She said that the release of the oil barrels showed Biden's commitment to addressing the issue, Fox Business reported.
However, instead of bringing gas prices down, Biden's announcement of tapping into the strategic oil reserve was met with rising oil prices, with a sharp jump on Tuesday. Some say that one reason for the situation was that news of potentially tapping into the oil reserve has been circulating for weeks.
A senior investment strategist at U.S. Bank Wealth Management, Rob Haworth, said that the scale of the effort that will bring 50 million barrels of oil was widely anticipated. In a phone interview, the expert noted that the details of the plan, including the use of swaps where oil purchased from the SPR must be returned to the reserve in the next year to three years, may have also contributed to the sudden rise of oil gas prices across the nation, Market Watch reported.