The White House disclosed on October 18 that President Joseph Biden is scheduled to announce the latest measures to calm domestic oil prices on the 19th, including releasing 15 million barrels of crude oil reserves as planned for auction, and promising to add "not enough". However, this release is not as good as the daily consumption of the United States, and it may not be effective immediately to stabilize domestic oil prices.
Biden will also once again urge domestic oil companies to increase production and maintain "appropriate" pricing to alleviate the soaring oil prices and strive to earn back some "scores" for the Democrats less than a month before the November 8 midterm elections. However, given the general downturn in the global economy of , it is difficult for the US local oil production to increase significantly in the short term.
cups of water drops, "release oil" is difficult to show effect
According to the White House officials who did not want to be named to the media on the 18th, Biden is scheduled to officially announce the release of 15 million barrels of crude oil from the US national strategic oil reserves to enter the market, as one of the measures to deal with the recent decision of major oil-producing countries to significantly reduce crude oil production from November.
The 15 million barrels of crude oil are the last batch of Biden's plan to release 180 million barrels of strategic oil reserves in March. After Russia launched a special military operation against Ukraine in late February, Western economies such as the United States and European Union imposed severe economic sanctions on Russia, resulting in tight supply of energy such as oil and natural gas and rising prices worldwide. However, the U.S. move to release oil reserves has failed to effectively stabilize the rising trend of oil prices.
According to Reuters , the Biden administration originally planned to end the auction process of 180 million barrels of reserve oil in November, but the sales speed was lower than expected. 15 million barrels remained after the summer and could be delivered in December after being auctioned. A senior official said the government will be ready to release more reserve oil “once the situation requires it.”
The Organization of Petroleum Exporting Countries ( OPEC ) and non-OPEC major oil producers decided earlier this month to reduce monthly crude oil production by 2 million barrels per day from August production starting from November, which aroused dissatisfaction from the US side. The Biden administration is worried that this move will further boost domestic oil prices in the United States, which will not help appease voters who are dissatisfied with the increased burden of living, and may harm the Democratic election situation. For this reason, the United States puts pressure on its Middle East ally and OPEC leader Saudi Arabia , hoping to postpone the one-month decision to implement the production cut, but failed to do so.
Reuters commented that Biden vowed to weaken the oil industry when he took office, trying to promote the United States to quickly achieve energy transformation and no longer rely on fossil fuels. However, the situation in Ukraine and high inflation have reshaped his position and are now trying to use federal power to balance the US oil market.
, however, according to data from the U.S. Energy Information Administration, 15 million barrels of crude oil are even less than the US market's daily use.
supplements reserves, "price reduction" is the premise
Biden will also announce plans to supplement strategic oil reserves, but the government can only purchase at a benchmark price ranging from $67 to $72 per barrel or less. The US oil market uses the West Texas Intermediate Base crude oil futures price listed on the New York Mercantile Exchange as the pricing benchmark.
White House officials said that Biden hopes this pricing plan sends a signal to consumers and oil producers. "He calls on private American companies to do two things: one is to receive this signal, increase production and increase investment; the other is to ensure that while earning profits and benefiting from such markets, he can continue to offer consumers a suitable price."
In recent weeks, U.S. oil companies have been increasingly worried that the Biden administration may take "hard" measures to ban or restrict gasoline or diesel exports to supplement shrinking oil stocks. They called on the government to explicitly exclude this policy option, but the White House did not let it go. At present, the United States has about 400 million barrels left in its strategic reserves, the lowest level since 1984.
AP pointed out that the high gasoline price puts Biden and the Democratic Party at political risks. According to a clear view of the US energy research institute Energy Partners, in the November midterm elections, the election situation between Nevada and Pennsylvania may become the key to changing the current Democratic and Republican situation in the Senate, and these two states are exactly "sensitive" to energy prices.Analysis shows that in the past month, the increase in gasoline prices in 18 states has exceeded the national average, which is related to 29 House of Representatives seats at risk of "changing cards".
The Associated Press reported that due to the weak global economic growth, it is difficult for the U.S. oil supply to increase significantly. It has not yet recovered to the level of about 13 million barrels of daily output before the outbreak of the new crown epidemic, which is still about 1 million barrels away. The U.S. government lowered its forecast data for next year's domestic oil production last week, down 270,000 barrels per day from the forecast in September; global oil production will also drop 600,000 barrels per day from the forecast in September.
The Associated Press reported that US oil companies hope that the government will open up more federal oilfield mining rights, approve construction projects of oil pipelines, and re-lower tax rates. Biden chose to take measures such as releasing oil reserves and putting pressure on "OPEC+" oil-producing countries to increase production, and the price suppression effect is not obvious.
Analysis shows that in the past month, the increase in gasoline prices in 18 states has exceeded the national average, which is related to 29 House of Representatives seats at risk of "changing cards".The Associated Press reported that due to the weak global economic growth, it is difficult for the U.S. oil supply to increase significantly. It has not yet recovered to the level of about 13 million barrels of daily output before the outbreak of the new crown epidemic, which is still about 1 million barrels away. The U.S. government lowered its forecast data for next year's domestic oil production last week, down 270,000 barrels per day from the forecast in September; global oil production will also drop 600,000 barrels per day from the forecast in September.
The Associated Press reported that US oil companies hope that the government will open up more federal oilfield mining rights, approve construction projects of oil pipelines, and re-lower tax rates. Biden chose to take measures such as releasing oil reserves and putting pressure on "OPEC+" oil-producing countries to increase production, and the price suppression effect is not obvious.
