US Energy Department to release 50 million barrels of Oil to tackle rising price

As demand for petroleum continues to rise across US, President Joe Biden has said that he will release oil from barrels to mitigate its astronomical prices. The decision was announced by the White House which said that 50 million barrels of oil will be released from the Strategic Petroleum Reserve by the Energy Department. The move, as per Biden, aims to lower fuel prices for millions of Americans as well as bridge the gap between demand and supply of oil and gas. 

“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,” the White House stated. 

“As a result of President Biden’s leadership and our diplomatic efforts, this release will be taken in parallel with other major energy-consuming nations including China, India, Japan, Republic of Korea and the United Kingdom,” it added further explaining the decision.

The oil will be released in two ways 

According to the plan, the oil will be released in two ways. 32 million barrels will be exchanged over several next months making it possible for its return to Strategic Petroleum Reserve in years ahead. Additionally, 18 million barrels “will be acceleration into the next several months of a sale of oil that Congress has previously authorized”. Regardless, it said that the administration will monitor that gas stations do not misuse the decreased prices.

"There is mounting evidence that declines in oil prices are not translating into lower prices at the pump. Last week, the President asked the Federal Trade Commission to examine what is going on in oil and gas markets and to consider “whether illegal conduct is costing families at the pump," White House. 

Why is the world hit by power crunch ?

The world has been hit by an unprecedented power crunch as energy demand in a post-pandemic world begins to witness a broad-based rebound. The demand-supply mismatch has hiked energy prices across the globe, threatening to stall the revival wheels of the economy. Analysts have attributed the rise in global energy prices to several factors. The primary cause is considered to be the bounce-back of consumer demand as economic activity returns to normal after the COVID pandemic. Analysts suggest that energy production has failed to resurrect as quickly, in comparison to the revival of economic activity. Over the last month, this build-up power crisis has worsened and has resulted in supply chain disruptions. 

Image: AP