In largest-ever release from US strategic petroleum reserves, President Joe Biden ordered releasing 1 million barrels of oil per day for the next six months in an attempt to keep oil prices under control.
Biden's order has come in the midst of a surge in crude oil's prices because of the Russian invasion of Ukraine. Prices of gas have also surged and the soaring cost of fuel has become a major political issue around the world, including in the US which will hold mid-term elections in November.
Biden said on Thursday, "I’m authorising the release of 1 million barrels per day for the next six months -- over 180 million barrels from the Strategic Petroleum Reserve. This is a wartime bridge to increase oil supply until production ramps up later this year. And it is by far the largest release from our national reserve in our history."
The revenue generated from selling the oil would be used to restock the Strategic Petroleum Reserve when prices are lower so that the country is ready for future emergencies, Biden said.
The Strategic Petroleum Reserve is a stockpile of crude oil that the US maintains in case of emergency. It was established after the oil crisis of the 1970s. The oil is stored in underground salt caverns in Texas and Louisiana.
Biden said he has been talking to other allies and partners around the world.
He added, "Already, we have commitments from other countries to release tens of millions of additional barrels into the market. Together, our combined efforts will supply well over a million barrels a day - nations coming together to deny Putin the ability to weaponise his energy resources against American families and families and democracies around the world."
Biden also announced plans about declaring real American energy independence in the long term so that the US never has to deal with this problem again.
He said, “Ultimately, we and the whole world need to reduce our dependence on fossil fuels altogether. We need to choose long-term security over energy and climate vulnerability. We need to double down on our commitment to clean energy and tackling the climate crisis with our partners and allies around the world."
Meanwhile, National Economic Council Director Brian Deese told reporters that there are currently 568 million barrels in the reserve, which is in storage at four locations across southern Louisiana and Texas.
The underground salt caverns currently hold less than one month's worth of oil at current US consumption levels.
Deese said, “The President authorised this reserve under his extraordinary emergency powers associated with supply disruptions, which we have seen in the market are associated with Putin's unjustified actions and the reaction from the United States and allies in the world in no longer purchasing Russian oil."
According to him, the duration of six months was designed and calibrated to operate a medium-term bridge to the period where they anticipate and expect US production to come back online.
He said, “The most estimates based on commitments by companies are that we will see an additional million barrels a day from US industry by about the end of the third quarter of this year. So, the time period operates as a bridge until then."
The United States, he added, has been in touch with several countries, including India, on the release of strategic reserves.
He said, “Our conversations with all countries that have reserves are similar in encouraging them to participate and to contribute, consistent with their available stocks and their circumstances.
"We have seen to date a quite extraordinary willingness to participate, including the International Energy Agency (IEA) and non-IEA members, to participate in those coordinated releases, including the Indian government to date. So, the work of diplomacy and engagement with our allies and partners is aimed to make sure that that continues."
Biden also signed an executive order authorising the Defense Production Act for usage for the critical materials that go into large-capacity batteries. Biden took this action under Title 3 of the Defense Production Act, which provides for prioritising and subsidising the production domestically of key inputs that are critical to national defence.
This follows a study by the Secretary of Defense Lloyd Austin which identified that large-capacity batteries are critical to the national defence and the components that go into them, including lithium and nickel, cobalt, graphite, manganese.
He said, “My guess is that's the first time in the White House briefing room someone has said 'manganese.' These are critical minerals. And we are currently vulnerable to unreliable supply chains, which affects our national security. It also affects our economic security as well."
With PTI inputs