As part of solutions to the rising price of oil and gas, the United States has announced the largest Strategic Petroleum Reserve release. The White House, in a statement, revealed that it will release 1 million barrels of oil per day for the next six months from the reserve.
“The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time. This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up”, the statement read.
According to an energy firm, ClearView Energy Partners, this development is the largest-ever SPR release by a factor of 3.6X.
Also, Goldman Sachs commodity analysts noted that the release by the US government would reduce the amount of necessary price-induced demand destruction, the sole oil rebalancing mechanism currently available.
“This would remain, however, a release of oil inventories, not a persistent source of supply for coming years. Such a release would therefore not resolve the structural supply deficit, years in the making”, they noted.
According to a report by the US Energy Information Administration (EIA), U.S. imports of petroleum products increased more than exports of petroleum products in 2021, resulting in a slight reduction in the net exports (exports minus imports) of U.S. petroleum product compared with 2020.
Investors King recalls that the US President, Joe Biden had earlier signed an Executive Order (E.O.) to ban the import of Russian oil, liquefied natural gas, and coal to the United States. This is in response to the ongoing war between Russia and Ukraine.
The US government also prohibited Americans from financing or enabling foreign companies that are making investment to produce energy in Russia.
“In the long run, the way to avoid high gas prices is to speed up – not slow down – our transition to a clean energy future. We cannot drill our way out of dependence on a global commodity controlled in part by foreign nations and their leaders, including Putin. The only way to eliminate Putin’s and every other producing country’s ability to use oil as an economic weapon, is to reduce our dependency on oil”, the White House had said in a Statement.
