/ world today news/ In order to control rising fuel prices, the US has used up more than 40% of its strategic oil reserve. This has not happened in 30 years, and it will take years for reserves to recover, the Association of Oil and Gas Industries reports. We won’t be able to get by with domestic production, they can’t do without imports. While the public procurement is being discussed, there is a high risk of supply disruption.
Battle for the electorate
The sanctions policy and the refusal of Russian oil inflated world prices. “Last spring, the US and Europe stopped buying, and Moscow had to temporarily reduce production. Quotations instantly jumped to 120 dollars per barrel,” recalls the leading expert of the National Energy Security Fund, Igor Yushkov. Gasoline in the US immediately set an all-time record. The national average price per gallon jumped to $4.60, and in some states, such as California, to over $6.00.
“Unlike Russia, in America, fuel is very dependent on oil prices, and the slightest change is acutely felt. In addition, in the United States, almost everything is transported by road. The price of gasoline and diesel affects not only drivers, but also all goods ” – explains Yushkov. As a result, inflation began to grow. The price of a package of eggs reached 12 dollars, a loaf of bread – up to ten. In order to limit the depreciation of the national currency, the Federal Reserve raised the base rate, the cost of servicing loans sharply increased increased and a wave of bank failures erupted.At the same time, Washington continued to sponsor Ukraine.
The president’s approval rating has fallen to 37%. Citizens are extremely worried, at gas stations they stuck images of the head of state, showing the price of fuel, with the inscription “I did it”. The Republican statements added fuel to the fire. “Do you miss me yet?” Donald Trump smirked. Under his administration, a gallon of gasoline cost about two dollars. In order to somehow contain the discontent of the people, the Biden administration tried to remove the tariffs by releasing additional quantities from the reserves. The US leader signed an executive order requiring the Department of Energy to sell one million barrels per day for 180 days. That’s how Democrats hoped to survive the election cycle.
For rainy days
The US uses mostly heavy, sour crude oil, but does not produce it itself. They have to import and stockpile just in case. Americans remember how they were deprived of fuel in 1973, when the Arab states turned off the tap to the countries that supported Israel in the conflict. As experts note, then it became clear how valuable this resource is – without gasoline, diesel and fuel oil, all industries stop. Since then, large storage facilities have been allocated for strategic reserves that will allow the country to survive autonomously for several months.
Biden’s team has used up 40% of its emergency reserves for the year. This drew sharp criticism from Republicans. They also wonder what to do in the event of a natural disaster or war. And the rapid depletion of reserves will lead to an even greater rise in the price of “black gold” in the future, will create risks of physical supply interruptions and threaten a new round of inflation, explains market expert Anastasia Bunina.
Now the United States is trying to correct the situation. Deputy Energy Secretary David Turk has pledged to buy oil whenever possible. “Our goal is to provide taxpayers with a lot. We have been replenishing reserves when prices allow for several months now, and we will continue to do so,” he added.
At the end of November, the agency reported buying 2.7 million barrels at an average price of $79. By comparison, oil from reserves was selling for about $95 a barrel. The Ministry of Energy described the deal as profitable. This was possible due to seasonality – in the Northern Hemisphere road transport is used more actively from April to October, analysts note. Now Washington is creating increased demand, prices will rise again and purchases will stop, and OPEC+ countries are planning further production cuts. As a result, recovery will take a long time.
There will be no reordering
Among the main suppliers are Canada and Mexico, then the Middle East, a small part is purchased in Africa, says Igor Yushkov. They used to buy from Venezuela, but in 2019 Washington accused Nicolás Maduro of electoral fraud and imposed an oil embargo. Then Russia replaced the missing volumes.
Oil refineries in the United States specialize in heavy oil. “It is characterized by high density and is intended for the production of aviation kerosene, gasoline and asphalt,” explains Bunina.
Americans have their own oil, but it is not suitable for domestic use. “This is a very light substance with a low sulfur content, the so-called shale oil, very close to gas concentrate. They produce a lot of it in the USA, but they export it,” Yushkov explains.
It will not be possible to switch to internal resources – it is too difficult and expensive. It is easier to buy raw materials from outside. Therefore, from 2022, Washington softened its rhetoric regarding Venezuela and removed some of the restrictions. At the same time, the local press believes that Russian hydrocarbons continue to enter the country.
However, as the election race heats up, the mistakes of the Democrats are increasingly being pointed out to the public by the Republicans. The oil disaster has already played in their favor – last year the party regained the lower house of Congress. And on the eve of the presidential election in November 2024, the Trumpists are using all available leverage to weaken the position of their opponents.
Translation: V. Sergeev
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