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President Joe Biden is reportedly preparing for what would be the largest ever release of crude oil from the strategic petroleum reserve, totaling some 180 million barrels, according to unnamed sources quoted by Reuters.
According to the AP, who also spoke to two sources wishing to remain unnamed, the White House was preparing to release up to 1 million barrels of crude daily to rein in retail fuel prices.
The specific period of the release has yet to be agreed, but it could be a few months, the AP source said.
Gasoline prices have spiked above $4 per gallon in much of the United States, hitting a fresh high of over $6 per gallon in Los Angeles earlier this month. President Biden recently blamed the gas price rise on Russia’s President Putin, calling it “Putin’s price hike”, although prices were climbing at U.S. gas stations long before the war in Ukraine began.
In fact, the first time this White House resorted to an SPR release was last November, when the White House announced it would sell or lease 50 million barrels of oil from the strategic petroleum reserve to try and alleviate pain at the pump.
At the time, analysts warned that the SPR release would not have the desired effect for various reasons, such as the type of crude to be released versus the types of crude used by refiners to produce fuels. Also, they said, traders had already priced in the release, and it would not affect benchmark oil prices on which fuel prices are based.
These analysts turned out to be right, but the federal government went ahead with its release, which by January had totaled some 40 million barrels without much affecting oil or gasoline price movements.
A more recent announcement by the International Energy Agency for the release of 60 million barrels from national oil reserves also failed to have the desired effect on prices, suggesting such releases might not be the step that works in an environment of tight supply made tighter by Western sanctions on Russia.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.