President Joe Biden released 50 million barrels of oil from the U.S. strategic reserve to help reduce energy costs as Americans begin traveling for the holidays, according to AP News.
The announcement was made in coordination with several other nations to help ease fuel prices and offset rising inflation. The Biden Administration is hoping that by putting more oil on the market, prices will begin to fall. The president, in an unprecedented show of cooperation, has gotten India, China, Japan, South Korea and the UK to release part of their oil reserves, adding a potential 70 to 80 million barrels of oil to the marketplace.
“It’s kind of a coalition of oil importers,” Claudio Galimberti, senior vice president for oil markets at Rystad Energy, said. "But can they really supplant, or can they really represent a rival to, OPEC-plus? The answer is, absolutely not." That’s because the group of importers are using their strategic petroleum reserves, which are limited. On the other hand, OPEC and its allies have oil reserves that can last for decades. "So there is no comparison between the two,” Galimberti said.
America’s Strategic Petroleum Reserve, according to the Associated Press, holds about 605 million barrels of oil in underground salt caverns in Texas and Louisiana. It was created for emergency situations following the 1970s. If 1 million barrels of the stored crude oil is released per day, which the government has done in the past, it will take about two months to reach the 50 million goal.
It’s uncertain how the release of the stored oil will affect prices at the gas pump. Several factors determine the price of gasoline. OPEC is meeting soon to determine whether it will increase or hold back the production of its crude oil.