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The U.S. administration has approved the release of another 13.4 million barrels of crude from the strategic petroleum reserve in a move first announced last November by the White House as an attempt to ease upward pressure on fuel prices.
Bloomberg reported the release will be distributed among seven companies, noting that this would be the second-largest SPR release ever, bringing the total released so far to 40 million barrels.
In November, the Department of Energy said it would make available releases of 50 million barrels from the SPR, of which 32 million barrels were to be in the form of an exchange over the next several months, releasing oil that must be returned to the SPR in the years ahead. Another 18 million barrels were to be an acceleration into the next several months of a sale of oil that Congress had previously authorized.
Before this latest release, the Department of Energy distributed about 10 million barrels of crude from the SPR in three releases.
“As with all exchanges, companies that receive SPR crude oil through the exchange agree to return the amount of crude oil received, as well as an additional amount, dependent upon the length of time in which they hold the oil,” the DoE said in late December.
Despite the SRP release effort, gas prices are not where the White House would want them to be. Over the past 12 months, prices at the pump have gained some 50 percent, per a recent CNBC report, and with inflation running hot, the chances of them declining in any substantial way anytime soon are quite slim.
Before the Biden administration resorted to the SPR release, the president tried calling on OPEC and its partners to boost production beyond what OPEC+ had already agreed to add to its combined total. The cartel refused, leaving the White House with few options besides a reserve release. Analysts warned at the time that the move would not have the desired effect for a variety of reasons.
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.
Dr Mamdouh G Salameh
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Visiting Professor of Energy Economics at ESCP Europe Business School, London