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US to release 50 million barrels of crude oil from reserve to lower gas pricesExBulletin

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The Biden administration is tapping into the country’s emergency oil reserves in a bid to bring down high gas prices. But it is not known how successful this strategy will be.

AILSA CHANG, HOST:

Today, President Biden said the United States will release 50 million barrels of crude oil from the country’s oil reserve. It is a response to rising gasoline prices, which have added to the inflation that Americans are experiencing.

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PRESIDENT JOE BIDEN: Today we are launching a major effort to moderate the price of oil; an effort that will span the globe within reach and eventually reach your local gas station, God willing.

CHANG: This is part of a coordinated effort involving other countries as well. And NPR’s Jeff Brady is joining us now with more details.

Hi, Jeff.

JEFF BRADY, BYLINE: Hello.

CHANG: So first, can we take a step back for a moment. Can you just remind us – why have gas prices gone up so much in the past year?

BRADY: A big factor is the coronavirus pandemic. You know, a lot of us have stopped traveling. And now that people are getting vaccinated and feeling comfortable going out again, the demand for gas is on the rise, but the supply has just not kept pace. A year ago, the national average price of regular gasoline was $ 2.10 per gallon. And now it’s $ 3.40; more than 50% higher. Democrats are worried with the midterm elections approaching next year, so the administration wants to be seen as responding to a problem that is …

CHANG: Yeah.

BRADY: … Costs Americans a lot of money.

CHANG: So can you explain – what exactly is the White House doing here?

BRADY: He’s working with several other countries to coordinate the releases of their reserves, including China, Japan, and the UK. Here in the United States, 50 million barrels of crude oil will be released from the Strategic Oil Reserve, which was created after oil shortages in the 1970s. But it was not really created for situations like this. -this. It’s more intended for when, like, another country cuts oil for political reasons rather than for price increases.

Yet most of this oil will be released as part of a trade-in program. This means that it will come out on the market and then the oil companies will replace it later. The Department of Energy will also sell 18 million barrels already approved by Congress. The administration is moving that sale date to try to bring the prices down now.

CHANG: So interesting. So what do you think? Do you think this will actually work to reduce gas prices?

BRADY: That should help a bit. But, boy, today oil and gas futures prices were on the rise. You know, a lot of traders – they expected an even bigger exit from the reserve. But the last few weeks, just, you know, the rumor of an announcement like this was that it was coming. It brought down some crude prices before today.

At the pump, however, gasoline prices just haven’t moved much. It may take a while for all of this oil to flow through the system. But there is another problem here with the refineries. Tom Kloza – he is in the oil price information service and says the country has lost some of its refining capacity this year.

TOM KLOZA: And it’s not the fault of any president. It is not the fault of Congress. The refineries we lost on the west coast and on the Gulf coast – most recently we lost a refinery to Hurricane Ida.

BRADY: And Kloza says the refining capacity – it should increase at the end of next year. He predicts that the White House announcement will push prices down a bit as oil prices are the main driver of gas prices. The administration says that’s the plan here; to use this oil reserves as a kind of bridge until the prices go down in the future.

CHANGE: Right. Well, if there are potential issues with this approach, is there anything else the administration can do to bring gas prices down sooner?

BRADY: Last week, the president asked the Federal Trade Commission to look for illegal behavior that could keep gas prices artificially high. There is no evidence that this is happening now. And past investigations like this just haven’t found any wrongdoing.

Biden also called on OPEC members like Saudi Arabia and other oil-producing countries to increase production, but those countries have said they intend to keep prices higher. The latter action could increase tensions with these countries. They had planned to increase production next month, but with today’s announcement, they could choose to cut production to keep prices where they want.

CHANG: It’s Jeff Brady from NPR.

Thanks a lot Jeff.

BRADY: Thanks.

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