U.S. President Joe Biden on Tuesday said he had ordered 50 million barrels of oil released from the strategic reserve to bring down energy costs, in coordination with other countries including China.
The move is an effort to bring down rising gas prices. Gasoline prices nationwide are averaging about $3.40 a gallon, more than double their price a year ago, according to the American Automobile Association.
The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other events.
Maintained by the Energy Department, the reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf Coasts. There are roughly 605 million barrels of sweet and sour petroleum in the reserve.
The Biden administration has argued that the supply of oil has not kept pace with demand as the global economy emerged from the pandemic, and the reserve is the right tool to help ease the problem.
The decision comes after weeks of diplomatic negotiations and the release will be taken in parallel other nations including, India, Japan, the Republic of Korea and the United Kingdom, major energy consumers.
The U.S. Department of Energy will make the oil available from the Strategic Petroleum Reserve in two ways; 32 million barrels will be released in the next few months and will return to the reserve in the years ahead, the White House said.
Another 18 barrels will be part of a sale of oil that Congress had previously authorized.
White House Press Secretary Jen Psaki said Monday evening that the White House would also keep tabs on the oil companies, too.
“We will continue to press oil companies who have made record profits and are overseeing what we consider to be price gouging out there when there’s a supply of oil or the price of oil is coming down and the price of gas is not coming down,” Psaki said.
“It does not take an economic expert to know that’s a problem.”
The WTI grade crude sells for $76 today and Brent crude $79.