July 13, 2024

Brighton Journal

Complete News World

Biden announces historic liberalization of oil reserves, along with other steps to lower gas prices

Biden announces historic liberalization of oil reserves, along with other steps to lower gas prices

These steps are an attempt to lower gas prices while placing the burden on oil companies to increase supply. The dramatic move, which Biden was due to announce from the White House later Thursday, confronts what has become a looming political problem months before the midterm elections.

“After consulting with allies and partners, the president will announce the largest oil-reserve liberalization in history, putting an additional 1 million barrels on the market per day on average – every day – for the next six months,” the White House said. . “The scale of this release is unprecedented: the world has never had oil reserves at a rate of one million per day for this length of time. This record release will provide a historic amount of supply to serve as a bridge to the end of the year when domestic production is rising.”

The volume of discharge will reach 180 million barrels of oil. White House officials said it would act as a “bridge” with the surge in US and global oil production after the coronavirus pandemic. The decision was made in coordination with US allies abroad, including in Europe, although officials declined to say whether other countries would also release barrels from their reserves.

The official said the United States will restock the barrels in reserve when oil prices fall, which could help stimulate production further in the future.

However, officials declined to say how quickly or how much gas prices would drop as a result of the release. They said they did not address the focus on “short-term spot price movements” in the oil market. Instead, they said their goal is to address the supply shortage due to Russian oil being taken out of the market, adding that it would translate into providing relief to American consumers.

Biden earlier in the month Announced a coordinated release of oil from the reserves jointly with other countries. It also released about 50 million barrels In Novemberwhich he said at the time was the largest reserve issuance in US history.

Neither of the two moves had a significant impact on gas prices, which continued to rise as global restrictions on Russia’s energy exports caused prices to rise.

See also  Asia markets UBS and Credit Suisse; China, home loan rates

The United States consumes about 20 million barrels of oil per day, with global consumption hovering around 100 million barrels. Biden’s planned releases will put more oil on the global market, potentially lowering costs.

The president also called on Congress to “make companies pay fees on wells from leases they haven’t used in years and on acres of public land they hoard without producing.” For months, the Biden administration publicly opposed the idea that regulations were preventing oil producers from more domestic production, citing millions of acres of land with approved permits for oil and gas production.

“Companies that produce from leased acres and from existing wells will not face higher fees,” a White House fact sheet said, but companies that continue to sit on unproductive acres will have to choose whether to start production or pay per-acre fees. disabled and unused.

Biden will also issue a directive to invoke the Defense Production Act to stimulate domestic production of critical minerals needed to make batteries for electric vehicles and long-term energy storage.

Moving from the White House adds important minerals such as lithium, nickel, graphite, cobalt, and manganese to the list of items covered by the 1950 Defense Production Act, a Korean War-era law that allows the president to use emergency power to make large orders for a certain type of product or expand production capacity and supply. It would allow the administration to support the production and processing of these critical minerals needed for the clean energy transition.

The Department of Defense will implement this authority, according to the White House, and will do so in consultation with tribal communities and using strong environmental, labor, and societal standards.

See also  Crypto.com Accidentally Sends Women $7.2M Instead of $68 Refund

Biden addresses a major political problem

Exploitation of the reserve — the 600 million barrels of crude oil stored in underground salt caverns in Louisiana and Texas — generally contains only Limited impact on gas prices because of how much oil can be released at one time, but it would be a political signal that Biden continues to face the problem.
In the wake of the Russian invasion of Ukraine, the price of regular gasoline in the United States rose, reaching a A record high of $4.33 gallons earlier in March.

However, the current cost increases began months ago, as demand for oil increased while the coronavirus pandemic waned. The White House has expressed frustration that oil companies are not bringing production back to pre-pandemic levels, focusing instead on paying dividends to investors.

There was an internal debate among administration officials about how harshly they would pursue oil and gas companies for not ramping up production. Biden has rebuked them in previous statements, but some officials believe a violent crackdown on businesses may backfire.

The Russian invasion of Ukraine presented Biden with another card. In comments earlier this month, Biden sought to blame the price hike on the Russian president: “Make no mistake: the current rise in gas prices is very much Vladimir Putin’s fault.” He has repeated the phrase “Putin’s price hike” since then.

Rulers across the United States They are trying to reduce gas prices at the state level.
Last week, California Democratic Governor Gavin Newsom floated $9 billion suggestion To distribute $400 discount cards to state drivers to help mitigate the impact of the state’s highest gas prices. In Georgia, Republican Governor Brian Kemp – who is facing one of the toughest re-election races in the country – signed a law Project That would return $250 to $500 in tax for Georgians — a move many of his rivals have described as election year political policy.
As Democratic Governor Janet Mills faces a competitive re-election campaign in Maine, she has proposed some of the most generous exemptions for eligible taxpayers in her state — in the form of Checks $850 Reducing inflation and gas prices.

This story has been updated with background information.

Correction: An earlier version of this story incorrectly reported the release of the Strategic Petroleum Reserve last year. It was 50 million barrels.