President Joe Biden announced Tuesday he has ordered the release of 50 million barrels of oil from the US strategic reserves in a coordinated attempt with other countries to tamp down soaring fuel prices.
“This release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom,” the White House said.
A senior administration official told reporters this was “the first time we’ve done something like this in parallel with other” countries.
As the world emerges from the Covid-19 pandemic and subsequent lockdowns, oil production has not kept pace with rocketing demand, pushing prices up.
In the United States, an associated rise in gasoline prices is one of the main culprits in a surge of inflation.
Biden’s announcement comes as Americans prepare for the holiday season, when travel ramps up.
Average fuel prices at filling stations are $3.41 a gallon, the highest level since 2014, according to latest figures from the AAA motorists’ association. This represents an increase of $1.29 over gasoline prices a year ago.
The US reserves, held in underground depots in Texas and Louisiana, are the largest emergency supply of oil in the world.
A senior administration official said the releases would start in mid- to late December, and that further intervention was possible to steady the market, “responding to a once-in-a-century pandemic.”
“As the president has said, consumers are facing pain at the pump right now,” the official said.
“The president stands ready to take additional action if needed and is prepared to use his full authorities, working in coordination with the rest of the world, to maintain adequate supply as we exit the pandemic.”
As output rises, oil prices are already down nearly 10 percent in the last few weeks. But officials echoed Biden’s repeatedly stated concerns that despite easing of crude values, prices of gasoline for drivers have only gone up.
This has hurt ordinary Americans, while driving a sharp dive in Biden’s approval ratings.
“There is mounting evidence that declines in oil prices and the cost of other inputs into gasoline are not translating into lower prices at the pump,” said the senior official, who spoke on condition of anonymity.
The official said the government was looking into “anti-competitive practices” and will “examine whether illegal conduct is costing families at the pump.”
The approach is “two-pronged. First, making sure that, you know, the price of oil is coming down, reflecting the fact that we have to have supply matching demand, but also making sure that those savings are passed through to consumers,” he said.
“We expect the industry to be passing through the savings to consumers as quickly as possible.”