President Joe Biden orders release of 50 million barrels of oil from strategic reserves, saying gas prices will fall for consumers but it will take time.
US President Joe Biden has ordered 50 million barrels of oil released from America's strategic reserve to help bring down energy costs.
Tuesday's move is aimed at global energy markets, but also at helping Americans cope with higher inflation and rising prices ahead of Thanksgiving and winter holiday travel.
"While our combined actions will not solve the problems of high gas prices overnight, it will make a difference," President Joe Biden promised in remarks.
"This coordinated action will help us deal with a lack of supply, which in turn helps ease prices," he said.
Gasoline prices are at about $3,40 a gallon, more than 50 percent higher than a year ago, according to the American Automobile Association.
The government will begin to move barrels into the market in mid- to late December.
Will President Biden's order to release 50M barrels from US gas reserves help tackle energy prices? TRT World's Jon Brain explains pic.twitter.com/3FtZ2yKoZ9— TRT World Now (@TRTWorldNow) November 23, 2021
Coordinated release from global strategic reserves
Oil prices had dropped in the days ahead of the announced withdrawals, a sign that investors were anticipating the moves that could bring a combined 70 million to 80 million barrels of oil onto global markets.
But in Tuesday morning trading, prices shot up nearly 2 percent instead of falling.
Shortly after the US announcement, India said it would release 5 million barrels from its strategic reserves which this followed by the UK with 1,5 million barrels from their stockpiles.
Japan and South Korea are also participating.
US officials say it’s the biggest coordinated release from global strategic reserves.
Gulf states to keep prices high
The actions by the US and others also risk counter moves by Gulf nations, especially Saudi Arabia, and by Russia.
Saudi Arabia and other Gulf countries have made clear they intend to control supply to keep prices high for the time being.
Republican lawmakers have criticised Biden's decision.
Biden has scrambled to reshape much of his economic agenda around the issue of inflation, saying that his recently passed $1 trillion infrastructure package will reduce price pressures by making it more efficient and cheaper to transport goods.
The consumer price index soared 6.2 percent from a year ago — the biggest 12-month jump since 1990.
The Strategic Petroleum Reserve –– maintained by the Energy Department –– is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues, and other events.
There are roughly 605 million barrels of petroleum in the reserve.