Biden announces global effort to ease energy costs

US president orders 50 million barrels of oil to be released from nation's strategic petroleum reserve

US President Joe Biden on Tuesday announced that he has ordered 50 million barrels of oil to be released from the Strategic Petroleum Reserve to help bring down energy costs, in co-ordination with other major energy-consuming nations, including China, India and the UK.

"This co-ordinated action will help us deal with a lack of supply, which in turn helps ease prices the bottom line," Mr Biden said.

The move is aimed at global energy markets, but also at voters who are coping with higher inflation and rising prices before the Thanksgiving and winter holiday travel. Petrol prices are at about $3.40 a gallon, more than double their price a year ago, the American Automobile Association reported.

"This is a problem. Not just here in the United States but around the world," Mr Biden said.

The president pointed to rising prices in Japan and France, where petrol costs $5.50 and $7 per gallon, respectively.

Calling for patience, Mr Biden said recent calls he has made to policymakers and foreign leaders have set up the "building blocks" to ease prices at the pump.

"It will take time but before long, you should see the price of gas drop where you fill up your tank," he said.

Mr Biden has scrambled to reshape much of his economic agenda around the issue of inflation, saying that his recently passed $1 trillion infrastructure package will reduce price pressures by making it more efficient and cheaper to transport goods.

Republican members of Congress have criticised the administration for inflation hitting a 31-year high in October.

Senate Republican Leader Mitch McConnell tore into the administration over inflation in a floor speech last week, saying the victims of higher prices were middle-class Americans.

“The three biggest drivers of the staggering 6.2 per cent inflation rate we logged last month were housing, transport and food,” the Kentucky senator said.

“Those aren’t luxuries, they’re essentials, and they take up a much bigger share of families’ budgets from the middle class on down.”

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 US Energy Department, the reserves are stored in caverns created in salt domes along the Texas and Louisiana Gulf coasts. There are about 605 million barrels of sweet and sour petroleum in the reserve.

“As we come out of an unprecedented global economic shutdown, oil supply has not kept up with demand, forcing working families and businesses to pay the price,” Energy Secretary Jennifer Granholm said.

“This action underscores the president’s commitment to using the tools available to bring down costs for working families and to continue our economic recovery.”

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.

Americans used an average of 20.7 million barrels a day during September, according to the Energy Information Administration. That means that the release nearly equals about two and a half days of additional supply.

The decision comes after weeks of diplomatic negotiations and the release will be taken in parallel with other nations. Japan and South Korea are also participating.

The US 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 million barrels will be part of a sale of oil that Congress had previously authorised.

The Associated Press contributed to this report