Coming hot off the heels of the news of OPEC Plus slashing oil production by two million barrels of oil per day, Joseph Biden announced that he will once again be tapping into the Strategic Petroleum Reserve to help alleviate prices.
The Strategic Petroleum Reserve is a well of crude oil near the Gulf of Mexico where the United States government keeps storage of oil. Not a claim to oil like what is commonly traded on commodity markets, but the actual black gold used to fuel all sorts of machines Americans use in their daily lives. It has a maximum capacity of 714 million barrels and has approximately 400 million barrels remaining.
In April, Biden authorized the administration of 180 million barrels over the course of six months. Provided that the rate is the same here, the current release of 15 million barrels will happen during a little over two weeks.
The Biden Administration hopes that doing this will help alleviate fuel prices, which have been all over the place since the start of 2022. Potentially, the United States has a chance to make a profit buying oil when it is lower and selling it when it is higher, as Donald Trump tried to do in 2020.
The remaining capacity of the Strategic Oil Reserve, if drained at current rates, would last a little over a year.
If history rhymes, we will see prices drop by roughly forty cents per gallon of gasoline or diesel for two weeks, as with what happened during the previous release of Strategic Petroleum Reserve fuel. As it takes thirteen days to drain and sell the oil, the crude oil will hit the market around Halloween.
This, however, is but a bandage that does not alleviate the underlying problem. Ultimately, there are only three ways that we will see prices return to something reasonable. Either international relations with currently-used oil exporters relax, the United States forms new alliances with other countries such as Venezuela, or the United States starts tapping from its own soil, of which there is estimated to be 47 billion gallons.
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