US plans to release emergency oil reserves to contain soaring fuel prices

US Energy Secretary Jennifer Granholm has raised the possibility of releasing crude oil from the government’s Strategic Petroleum Reserve, saying “all the tools are on the table” as the Biden administration faces a politically perilous surge in the price of gasoline.

With an average gasoline pump price hovering at $ 3.19 per gallon – the highest in seven years – the White House fears rising fuel costs could hurt its political outlook ahead of the mid-election. term of office next year.

“It is a tool that is under consideration,” Granholm said of a release of crude supplies from the National Strategic Oil Reserve, which analysts say could calm oil markets and lower oil prices. price.

Granholm also did not rule out a ban on crude oil exports. “It is a tool that we have not used, but it is also a tool”, she declared Wednesday during the FT summit on energy transition strategies.

The Strategic Petroleum Reserve, located near the Gulf of Mexico, is the largest emergency stockpile of crude oil in the world. Managed by the US Department of Energy, the reserve contained 617.8 million barrels of oil last week, about a month of demand for petroleum products in the United States.

The last big release came in 2011, when the Obama administration worked with other members of the International Energy Agency to tap emergency stocks to reduce the price spike. Congress also authorized periodic sales to increase government revenue.

U.S. crude oil exports have been unlimited since Congress lifted federal restrictions in 2015.

The price of US crude stood at around $ 77.60 a barrel on Wednesday afternoon, reaching its highest level since 2014. It rose alongside the prices of other commodities, raising fears that energy inflation could block a post-pandemic global economic recovery.

On Monday, oil producer group Opec + ignored calls from the U.S. government to ramp up production faster than the group had previously expected. Instead, it stuck to its intention of bringing an additional 400,000 barrels per day to market in November, as part of a gradual unwinding of historic supply cuts from last year.

The OPEC + decision was a blow to the White House, which had called for faster increases. Jake Sullivan, Biden’s national security adviser, raised the issue during a recent visit to Saudi Arabia, the backbone of Opec.

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“SPR [releases] came to the table a nanosecond after Jake Sullivan was pushed back to Riyadh and the administration realized that shale producers would not be able to ramp up production fast enough, ”said Bob McNally, director of Rapidan Energy Group and former advisor to George W Bush White. Housing.

Granholm said the United States was disappointed and that “everyone was hoping that there would be an additional supply available so that the prices were not increased”.

She also said the United States was doing “all it can” to address the natural gas shortages that have driven up prices in Europe and Asia, including reviewing accusations of “market manipulation” by the United States. Russia.

In the UK, record gas prices rocked bond markets this week as traders assessed the economic damage to the UK economy from soaring fuel prices.

In Asia, a bidding war with European buyers sent liquefied natural gas cargo prices to the spot market on Wednesday at over $ 50 per million British thermal units, a historic and dramatic reversal from prices. May record of last year. .