As the November midterm elections approach, high inflation, especially high oil prices, continue to cause dissatisfaction among voters, the Biden administration began to take action one after another. Reuters html reported on the 220th that Biden announced the release of 15 million barrels of strategic oil reserves that week. In his speech, he acknowledged that high oil prices have caused “suffering American families.” At the same time, Biden will target American energy companies and call on them to increase production capacity. This speech was immediately opposed by American Petroleum Association . Sommers, chairman and CEO of the American Petroleum Association, responded to Biden's claim that the move is putting the United States in a very dangerous situation. According to Bloomberg, the White House has asked the U.S. Department of Energy to analyze the possible impact of banning U.S. gasoline and diesel exports such as refining products. Middle East media said that Biden's plan cannot curb oil prices. Banning oil exports will only hurt the United States itself and will not harm OPEC countries.
15 million barrels are not enough for a day
Reuters said that the Biden administration has successively released strategic crude oil reserves since May 2022 to calm oil prices, and the total release scale reached a record 180 million barrels. After releasing the above 15 million barrels of strategic crude oil reserves, this round of release plans has been completed. Biden also said the administration will work hard to increase U.S. oil production without delaying the transition to clean energy. When oil prices fall to $70 a barrel, the U.S. government will buy back oil to supplement its strategic oil reserves. As of the 21st, the US WTI crude oil price futures closed at US$85 per barrel.
A strategic oil reserve warehouse in Texas, USA
Biden's latest energy policy has been criticized by many lawmakers. For a long time, the Republican Party advocated increasing domestic oil extraction in the United States, while the Biden administration advocated green energy and controlled oil extraction. "Releasing a large amount of strategic oil reserves is a short-sighted and dangerous choice, endangering the US's energy security at a critical moment of global uncertainty," said Sen. Jerry Moran, Republican of Kansas, said, "I call on Biden to release the US's energy production capacity instead." Sen. John Barrasso, from Wyoming, said on social media: " strategic oil reserves were established to deal with the national energy crisis rather than the Democratic election crisis. Biden's dismal support rate is not a legitimate reason to continue to plunder our country's oil reserves."
"Oil prices will not drop as a result." Some netizens believe that Biden's statement is a "100% voting gimmick." Some Americans also said that 15 million barrels of oil are not even enough for Americans to use for a day. According to the US CNBC website, the United States consumes an average of about 20 million barrels of oil per day.
United States Institute of the Chinese Academy of Social Sciences researcher Lu Xiang told the reporter of "Global Times " on the 23rd that the highest inflation in the United States has been running at a high level for several months and it is difficult to form a turning point. In this case, it is difficult to achieve the effect of stabilizing prices by releasing strategic oil reserves. The Biden administration knows it is impossible to do it, but in fact it is seeking political interests in the coming midterm elections in a political standpoint. "The Biden administration has no more effective way to reverse inflation except for a significant hiccup of and hiccups." Lu Xiang believes that Biden needs to make such a political attitude to win the hearts of the people. Although it is not very effective, it is still unwilling to give up its efforts.
Consider restricting oil exports
The so-called strategic oil reserves are one of the effective ways to deal with the impact of short-term oil supply (massive reduction or interruption), serving national energy security and ensuring the continuous supply of crude oil. It also has the function of curbing abnormal fluctuations in domestic oil prices.
The International Energy Agency requires member countries to cover 90 days of net imports, and the United States must hold at least about 315 million barrels of oil reserves. Data released by the U.S. Energy Information Administration as of October 14 show that the U.S. strategic oil reserve inventory has dropped to 405.1 million barrels, only about 22 days of consumption in the U.S., the lowest value in the past 38 years. Under the current release plan, U.S. oil reserves will continue to decline. This will put a severe test on the United States' ability to deal with energy security in emergencies.Many American media believe that under this situation, Biden's further release of oil reserves is a politically self-interest consideration.
Egypt The Financial News reported that the United States is approaching its policy of banning oil exports. Industry insiders predict that Biden may implement this policy before the November midterm elections. This approach is obviously "too radical" and has been widely opposed by the energy industry, who believe that this move will have many negative impacts and impacts. According to reports, two people close to the Biden administration revealed that the White House is currently considering "restricting fuel exports to keep more gasoline and diesel in the United States." However, the idea of temporary export controls has also caused disagreement within the U.S. government. Biden's senior energy adviser advocates for support for new export controls, while U.S. energy sector officials and oil industry insiders expressed concerns. Many experts said, "Restricting fuel exports may lead to rising prices in some parts of the United States, especially in the northeastern regions that rely on imports."
Saudi The Economic News website analyzed that the United States' further release of oil reserves and the implementation of policies such as banning oil exports has nothing to do with OPEC and "OPEC+". "The latter will not be affected. On the contrary, it can alleviate the competitive pressure of OPEC and maintain the stability of oil prices and a favorable situation for OPEC and "OPEC+".
"both cruel and contradictory"
Whether it is continuing to release strategic oil reserves or considering the introduction of an oil export ban, the US's energy policy is arousing more and more doubts and criticisms. The Washington Observer criticized Biden's move as a way to save the Democratic Party's political destiny and did not hesitate to empty the US strategic reserves. Forbes magazine article questioned that Biden reduced the US strategic crude oil reserves by more than 200 million barrels in less than a year for political purposes, which is extremely dangerous. "American Observer Network" published an article criticizing that in the context of the Russian-Ukrainian conflict, the US's European allies have been burdened with a heavy burden, and the US's oil export ban is completely contrary to US foreign policy. This practice is "both cruel and contradictory."
U.S. energy industry insiders believe that banning oil exports will not only fail to stabilize domestic oil prices in the United States, but will further push up prices, which will trigger global market turmoil and harm US national interests. The industry pointed out that restricting exports will reduce industry inventory and dampen the enthusiasm of US domestic oil smelting. The resulting capacity setback will be transmitted to the market, leading to price increases and insufficient supply. At the same time, the international market that has lost the supply of US oil will also experience turmoil, which will lead to further rising international market prices.
Xiamen University China Energy Policy Research Institute Dean Lin Boqiang told the Global Times reporter that the scale of the oil reserves released by the United States is too small compared to the huge global market, which may have a short-term impact on market prices, but cannot influence the operating trend of global oil prices. "Historically, the United States has never been successful in releasing oil reserves to interfere with global oil prices."
htmlOn October 5, the 33rd ministerial meeting between OPEC and non-OPEC oil-producing countries was held in Vienna, Austria
Lin Boqiang believes that it is OPEC that plays a key role in global oil prices. On October 5, "OPEC+" announced a cut in production, and international oil prices rose for five consecutive times in the short term. Lin Boqiang believes that although the United States releases strategic oil reserves to a certain extent can hedge the expectations of oil prices rising, as the US strategic oil inventories drop rapidly, it will hinder the long-term continuous investment of the United States, and its policy of interfering in global oil prices will also be difficult to achieve long-term results. In addition, the Biden administration clearly knows that releasing reserves cannot achieve the expected goal, but still insists on this behavior. The main purpose is to form a goal of increasing supply and suppressing oil prices from the market psychology. But at present, this intervention measure that changes oil price operations by affecting market expectations is not very effective.
Source: Global Times
