US to release 50 million barrels of oil : Fighting gas prices
Republican lawmakers have hammered the administration for inflation hitting a 31-year high in October.
The consumer price index soared 6.2% from a year ago the biggest 12-month jump since 1990.
Senate Republican Leader Mitch McConnell tore into the White House in a floor speech last week, saying the victims of higher prices were middle class Americans.
The three biggest drivers of the staggering 6.2% inflation rate we logged last month were housing, transportation, and food,” the Kentucky senator said.
Those aren’t luxuries, they’re essentials, and they take up a much bigger share of families’ budgets from the middle class on down.”
The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other events.
Maintained by the Energy Department, the reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf Coasts. There are roughly 605 million barrels of sweet and sour petroleum in the reserve.
“As we come out of an unprecedented global economic shutdown, oil supply has not kept up with demand, forcing working families and businesses to pay the price,” Energy Secretary Jennifer Granholm said in a statement.
This action underscores the president’s commitment to using the tools available to bring down costs for working families and to continue our economic recovery.
Oil prices were up almost 2 percent in late-morning trading.
Shortly after the US announcement, India said it would release 5 million barrels from its strategic reserves. And the British government confirmed it will release up to 1.5 million barrels from its stockpile.
Prime Minister Boris Johnson’s spokesman, Max Blain, said it was “a sensible and measured step to support global markets” during the pandemic recovery. Blain added that British companies will be authorised but not compelled to participate in the release.
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.
As word spread in recent days of a coming joint release from US and other countries’ reserves, there were warnings from OPEC interests that those countries may respond in turn, reneging on promises to increase supplies in coming months.
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.
President Joe Biden ordered 50 million barrels of oil released from America’s strategic reserve to help bring down energy costs, in coordination with other major energy consuming nations, including India, the United Kingdom and China.
The US action is aimed at global energy markets, but also at US voters who are coping with higher inflation and rising prices ahead of Thanksgiving and winter holiday travel. Gasoline prices are at about $3.40 a gallon, more than 50% 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.
But the action is unlikely to immediately bring down gas prices significantly as families begin traveling for the holidays.
Gasoline usually responds at a lag to changes in oil prices, and administration officials suggested this is one of several steps toward ultimately bringing down costs.
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