The United States and five other countries said Tuesday they plan to tap their strategic oil reserves for refining into gasoline and other energy products in a coordinated effort to cut rising costs that their consumers are paying.
The White House said that over the coming months through April 2022 the U.S. would make 50 million barrels of oil available for sale to refiners from its Strategic Petroleum Reserve that currently holds 621 million barrels of oil in four salt caverns along the Gulf of Mexico coastline.
The U.S. oil release by itself - and spread out over several months -- may not make much difference in the cost of gasoline that American motorists are now paying - a national average of $3.40 a gallon (3.8 liters), which is the highest figure since 2014.
But an accurate possible cost reduction could not immediately be calculated because it was not known how much oil the other five countries - China, Japan, South Korea, India and Britain - plan to release from their reserves.
Also, key oil producers in the Mideast, led by the 13-member Organization of the Petroleum Exporting Countries, could cut their own production to offset a flood of new oil on the world market from the six countries. Such an offsetting cut in the amount of oil on the world market could keep oil more or less at its current global Brent benchmark crude price of about $80 a barrel.
The higher cost of gasoline and home heating for the upcoming winter months in the U.S. has contributed to the biggest inflation surge in consumer prices in the U.S. in 31 years - 6.2% at an annualized rate in October.
The higher energy and food costs have also led to sharply declining voter approval ratings for U.S. President Joe Biden 10 months into his four-year White House term and less than a year before congressional elections across the country. The high inflation rate is a distinct political worry for the Democratic president and his political allies in Congress as they try hold on to their narrow control of both the Senate and House of Representatives.
In making the oil release announcement, the White House said, 'American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic.'
'That's why President Biden is using every tool available to him to work to lower prices and address the lack of supply,' the statement said. 'The president stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic.'
The Biden administration is also looking at potential price manipulation in oil and gas markets with a Federal Trade Commission investigation.
The coordinated international release of oil would be the first one since 2011, when the U.S. and 27 other countries replaced about 140 million barrels in output lost as a result of three months of conflict in Libya.
Under the U.S. oil release plan, the U.S., starting next month, will trade 32 million barrels of oil with buyers who will agree to send the same amount back to the government sometime between 2022 and 2024, to replenish the reserve.
The other 18 million barrels are being released as part of a previously authorized sale from the reserve, which the Energy Department is now moving to do earlier than first planned.