March 30, 2023

Brighton Journal

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Biden ordered the release of huge quantities of oil in an attempt to curb gas prices

Biden ordered the release of huge quantities of oil in an attempt to curb gas prices

President Biden announced Thursday that he is ordering the release of the Strategic Petroleum Reserve of an average of 1 million barrels per day for the next six months.

why does it matter: The historic size of the release underscores the extent to which the Russian war has wreaked havoc on energy markets — and how the White House hopes to limit the political fallout from rising gas prices.

News leadership: The release is expected to “support global supplies,” according to senior White House administration officials, who also said it would lower gas prices.

  • “This record release will provide a historic amount of supply to serve as a bridge through the end of the year when domestic production will rise,” the White House said.
  • Biden also authorized the use of the Defense Production Act to support the production and processing of minerals and materials used in large capacity batteries, including lithium, nickel, cobalt and graphite.
  • Biden also urged Congress on Thursday to impose fees on oil and gas companies if they sit on wells that do not produce oil and lease contracts they have not developed, according to the White House.

what are they saying: Research firm ClearView Energy Partners said in a note.

Between the lines: Oil prices fell sharply on Wednesday night after BloombergAnd the Reuters Other reports cited Biden’s expected announcement, with WTI down more than 4% to $104.46, and Brent seeing a similar drop.

What we are watching: The impact of the plan on the tight oil market, and potential new releases from other countries coordinated through the International Energy Agency.

  • The implications are hard to draw because international efforts to isolate Russia could lead to severe results He refuses in its exports in excess of the reported daily volume of SPR issuance.
  • Goldman Sachs said in a note that the reported plan would ease oil’s “structural deficit” but would not solve it and help the market rebalance.
  • Goldman Sachs noted that “this would reduce the amount of necessary demand destruction caused by price, which is the only oil rebalancing mechanism currently available in a world without buffers and supply elasticity.”
  • “However, this will remain a statement of oil stocks and will not be a continuous source of supply in the coming years,” he added.
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catch up quickly: It is the latest attempt by the Biden administration to try to tame prices via the Strategic Petroleum Reserve.

  • In November, the White House announced the release of 50 million barrels, with another 30 million in early March, along with 30 million from other countries.

power circuit, which manages the reserve, and says it holds more than 568 million barrels of oil.

Editor’s Note: This article has been updated with new details all the time.