50 million extra barrels of oil rolling out over next few months
Amid record-high gas prices, the U.S. is tapping into its strategic reserves in hopes adding more supply brings costs at the pump down.
“Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply,” the White House said in a statement.
The release will take place over the next several months, with 18 million barrels being accelerated as part of a sale Congress has already authorized. The other 32 million barrels from the strategic reserves will be an exchange, with the government planning to replenish the stockpile with oil purchased at lower prices than today’s rate.
The Wall Street Journal reported corporations have been taking advantage of inflation to raise prices higher then blame it on outside factors. The White House extended that accusation to oil producers, saying, “There is mounting evidence that declines in oil prices are not translating into lower prices at the pump. Last week, the President asked the Federal Trade Commission to examine what is going on in oil and gas markets and to consider ‘whether illegal conduct is costing families at the pump.’”
As for when the release of strategic reserves might have an effect, it won’t be in time for holiday travel, as the extra barrels will come into the market in mid- to late December. India announced it would release 5 million barrels from its reserves, and the U.K. 1.5 million. There is the possibility that OPEC could counter by not offering as many barrels as it has agreed to over the next couple months. Keeping the oil supply low would keep prices high, possibly enough to completely counteract the tapping of strategic reserves.