Jakarta, CNBC Indonesia – The government of the President of the United States (US) Joe Biden has officially announced that it will release the Strategic Petroleum Reserve (SPR) to cool the energy crisis, especially rising oil prices. Millions of barrels will be released, in coordination with China, India, South Korea (South Korea), Japan and Britain.
This comes after OPEC and its allies rejected requests by Washington and other consuming countries to increase production due to rising demand. This is not without reason amid the pressures Biden is facing domestically due to high vehicle fuel prices, especially gas and gasoline, and the prices of other consumer goods amid the recovery from the Covid-19 pandemic.
“I said earlier that we would take action on this matter. That’s exactly what we did,” Biden said in remarks broadcast from the White House.
“It will take time, but soon you will see gas prices drop where you fill your tank. And, in the long term we will reduce our dependence on oil as we move to clean energy,” he said.
Citing Reuters, under the plan, the US will release 50 million barrels. This equates to about two and a half days of US demand. India said it would release 5 million barrels. The UK will allow the voluntary release of 1.5 million barrels of oil from privately held reserves.
Details of the amount and timing of the release of oil from South Korea, Japan and China were not announced. Seoul only said it would decide after discussions with the US and other allies. Meanwhile, Tokyo will detail its plans this Wednesday.
The SPR itself is a concept created in 1970, after the Arab Oil Embargo to ensure the US has sufficient supplies to deal with emergencies. It can be in the form of a sale, a loan or both.
The US Department of Energy usually holds auctions online for oil offerings by energy companies. In addition, the energy agency also accepts the SWAP system, in which the interested party takes crude oil but must return it at the promised time, plus interest.
“It’s not big enough to lower prices in any meaningful way and might even backfire if it prompts OPEC+ (and allies) to slow the pace of its production increases,” said Caroline Bain, chief commodities economist at Capital Economics Ltd.
“‘Etapping’ the SPR isn’t going to solve the problem. We’re running into higher prices because the administration and Democrats in Congress are waging a war on American energy,” said Senator John Barrass, Biden’s opposition in Congress.
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Crude oil prices recently hit a seven-year high, and consumers are feeling the pain of rising fuel costs. Retail gasoline prices are up more than 60% in the US, the fastest rate of increase since 2000.
Mostly because of the mobility that is back up. This is in line with the opening of restrictions caused by the Covid-19 pandemic due to the control of the virus with the corona vaccination.
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