WASHINGTON: The Biden government is considering a strategic strategic Petroleum Reserve (SPR) to cool oil prices along with other large consumers such as China and Japan.
Such a step might not have a long-term impact on reducing US oil prices which reached a height of seven years above $ 85 per barrel at the end of October, analysts said.
Releasing oil can allow Biden administration to parry criticism ahead of the midterm mid-2022 election that has been done a little to fight price increases.
By moving together with other large consumers such as China and Japan, he can also allow Biden to say he took action after Saudi Arabia and Russia, members of the OPEC + production group, rejected US calls to the global market.
Here are the surrounding problems using SPR.
Why is the SPR made? The United States created a SPR in 1975 after the Arab oil embargo surged gasoline prices and damaged the US economy.
The President has knocked the stockpile to calm the oil market during the war or when the storm reached oil infrastructure along the US Mexican Bay.
How much oil is held by SPR? The current reserve holds around 606 million barrels in dozens of caves in four heavy guarded locations in Louisiana and Texas Beach.
It’s enough oil to meet the request A.S.
For more than a month.
This country also maintains small heating oil and gasoline reserves in the northeast.
Do other countries have strategic reserves? In addition to the United States, 29 other member countries in the International Energy Agency (IEA), including Britain, Germany, Japan and Australia, are required to hold oil in emergency reserves equivalent to 90 days of oil import.
Japan has one of the biggest reserves after China and the United States.
China, a member of the second leading IEA Association and Oil consumer in the world, created a SPR 15 years ago and held its first oil reserves in September.
Another member of the IEA Association, India, Importer and the third largest oil consumer, also maintains reserves.
Overall, the OECD government holds more than 1.5 billion barrels of crude oil in September, according to IEA.
It’s about 15 days global demand before the pandemic.
Can these countries release oil at once? U.S.
The President can coordinate the separation of SPR with Drawdowns in reserves by other IEA members simultaneously.
The release potential involving China and India will be the first example of which the US coordinates the release that includes the two countries.
How does the SPR get oil to the market? Because the location is near the Big U purification or petrochemical center, the SPR can send as many as 4.4 million barrels per day.
Only need 13 days from the President’s decision for the first oil to enter the M.S.
market, according to the Department of Energy.
Under sales, the Department of Energy usually holds an online auction where the energy company bid oil.
Under Swap, the oil company takes crude oil but must return it, plus flowers.
US.
The President has official emergency sales from the SPR three times, last in 2011 during the war at Libyan OPEC members.
Sales also took place during the Gulf War in 1991 and after Hurricane Katrina in 2005.
The oil swap has occurred more often, with the last exchange held in September after the Ida storm.
What is the Role of IEA in the National SPR? IEA helps coordinate the release of members, provide data at the level and play another role.
Usually there are three ways to maintain the SPR level to meet the requirements of 90 days, according to the IEA website: Commercial shares held by distillers, held by the government and institutional shares, with countries that choose balance to be maintained.
Pholdinging peer-reviewed structure every five years among members.
Steps to withstand requests or help supplies can also be taken, IEA said.
This may include calls for voluntary fuel savings, fuel switching such as oil to gas for power plants or “production surge” to quickly knock on underground reserves.
Relax environmental standards can also help make supplies more flexible, IEA said.