By Aryan Rai
Boston University News Service
President Joe Biden announced actions to bring down rising gas prices last week in a White House press release. He said the Department of Energy would make 50 million barrels of oil available from the nation’s Strategic Petroleum Reserve, an effort to curb rising fuel prices as the global economy awakens after the pandemic shut down.
The oil industry is facing a unique disparity in supply and demand, triggering fuel cost spikes all over the globe and prompting major countries such as China, India, the United Kingdom, and the Republic of Korea to follow suit and utilize their oil reserves, too.
“The fact is, right now, energy prices at the pumps and at home are too high,” Jennifer Granholm, the secretary of energy, said at a White House press briefing last week. “This administration realizes people are seeing this every single day when they go to work, as they fill their cars with gas.”
The Department of Energy plans to release 50 million barrels in “two slugs of oil,” said Granholm. Thirty-two million barrels of oil will be released from the Strategic Petroleum Reserve (SPR) in the form of exchanges, which are expected to “be replenished to the Strategic Petroleum Reserve at a later date and with an additional premium.”
The other 18 million barrels are part of “congressionally mandated sales” that have now been pushed forward by several months to meet current demands. The release of the reserves will not happen all at once, but in phases.
“We are taking these steps because we have to meet the immediate need for affordable energy and protect families from further pain at the pump,” Granholm said.
She acknowledged that low-income families are being hurt the most, as “30% of their monthly income is spent on fuel and energy.” Granholm said that the government plans to use funds from the Low-Income Home Energy Assistance (LIHEA) and the American Rescue Plan “to shield families from the rising fuel prices.”
When asked about why the domestic production of oil has still not recuperated in a way that would lower prices, Granholm attributed the situation to the unproductiveness of domestic oil companies.
“The U.S companies have not returned to production,” she said. “Oil and gas companies have leases on 23 million acres of public land, on and offshore, over 9500 unused permits. They are not re-hiring people; they are not taking advantage of the rigs or the permits or the land.”
In response to whether rising prices will be a regular part of the post-pandemic reality, Granholm highlighted that “this is a once-in-a-century pandemic situation, an anomaly.”
With the news on the emergence of the latest COVID-19 mutation, labeled ‘Omicron’ and deemed a “variant of concern” by WHO, the markets are expected to continue fluctuating.
She also pointed out that the situation shows how the United States’ reliability on “volatile sources of energy or countries that may not have our best interests at heart hurts the American people.”
“This is the reason why we are looking to diversify and add more clean energy,” she said.
This prompted the question of whether the administration’s current demand to produce more oil conflicts with its long-term goal of clean energy.
“We are in a transition, and transitions do not happen overnight,” said Granholm. “We do not expect to flip a switch and go all clean. This is a short-term strategy to make sure people are not hurting.”
Jen Psaki, White House press secretary, said the United States has been in contact with the Organization of the Petroleum Exporting Countries Plus (OPEC Plus), an organization made up of 13 OPEC members and 10 oil-producing non-members that regulate global oil production and supply. The United States has been encouraging the members to increase production.
“OPEC Plus has promised to release 400,000 barrels; we hope they will abide by it,” said Psaki.
However, OPEC has lagged in achieving its expected quota, creating reservations about whether the commitment to provide additional supply will be fulfilled.
The focus will remain on next week’s OPEC Plus meeting, where this issue is expected to be addressed, and the United States administration is expected to push for increased production.
“We have been in close contact for months,” said Psaki. “We have conveyed and advocated for increased production but have also made it clear that we will take actions if needed as well.”
