the american president Joe Bidenbefore a inflation record undermining his popularity, he will draw more than ever on the immense reserves of Petroleum American in an attempt to stop the sky-high prices at the pump.
He ordered the extraction of 1 million barrels per day from the strategic oil reserves for six months, an “unprecedented” measure in US history, announced the White House Thursday. The prospect of this record American black gold spill was already driving prices down on Thursday in London and New York by around 5%.
Promote extraction on American soil
According to a statement from the US executive, this initiative should serve to “make the transition to production [américaine] increases at the end of the year. The US administration will use the proceeds from the sale of these reserves to replenish stocks “in the coming years.”
The White House, which the Republican opposition accuses of weighing down oil activity in the United States, promises to “do everything [qu’elle] can” to encourage extraction in American territory. Joe Biden, for example, now asks the Congress impose fines on companies that have the necessary permits and land, but do not operate them.
The specter of legislative elections
Still with the idea of strengthening US energy independence, the President will invoke the “Defense Production Law”, a text inherited from the Cold War which allows you to make economic decisions by decree, to encourage the development of green energies.
The 79-year-old Democratic president has been trying to the invasion of ukraine blame the Russian president for rising inflation Vladimir Putin, even though the price rise had started earlier. But this rhetoric doesn’t seem to be convincing Americans, as midterm elections loom in the fall that threaten to reduce Joe Biden to impotence for the remainder of his term.
Reserves exploited since the fall
His confidence index barely exceeds 40%, according to various surveys, a very low level. The United States Strategic Petroleum Reserves were created in 1975 to thwart oil blows. Buried in huge salt caverns up to 800 meters deep along the coast of the Gulf of Mexico, they can store up to 714 million barrels of black gold, but currently contain 568 million barrels.
The US administration has already been drawing continuously from these strategic reserves since the fall, when the rise in oil prices began: it announced in November that it wanted to release 50 million barrels, then again 30 million in early March.
Price increase of 6.4% year-on-year
According to the latest gauge of inflation, the PCE index released Thursday by the Commerce Department, consumer prices continued to rise in March in the United States, rising 6.4% in a year and 0.6% in a month. With mid-term legislative elections approaching, the White House has made the fight against this runaway price tag, unseen since the 1980s, one of its priorities.
Further tapping into strategic reserves can help, but “the market is currently awash with news that moves prices up or down,” recalls John Kilduff. The initiative of the Biden administration would have even more impact if “other countries also take a step forward,” underlines the specialist, who regrets that the members of OPEC + “do not move their little finger at the moment.”
OPEC refuses to help stabilize prices
The thirteen members of Organization of the Petroleum Exporting Countries (OPEC)led by Riyadh, and its ten allies led by Moscow (OPEC +), in fact they have agreed this Thursday a new opening of their black gold valves but very modest: around 432,000 barrels per day for the month of May.
The international community, however, had multiplied calls for them to pump more cheerfully and thus calm price volatility. On March 7, oil hit its all-time high price reached during the 2008 financial crisis, topping $130 a barrel before falling back to between $100 and $110 today. The price of gasoline at the pump in the United States surpassed its 2008 peak, well above $4 per gallon (3.78 liters).