WASHINGTON: Biden administration is considering tapping the US Strategic Petroleum Reserve (SPR) to cool oil prices in conjunction with other major consumers such as China and Japan.
The measures do not have a long term impact on US oil price dampening that reached a seven-year high above $ 85 per barrel in late October, analysts said.
Removing the government can allow Biden to deflect criticism ahead of the 2022 midterm elections that he has done little to counter rising prices.
With the move together with other major consumers such as China and Japan, it can also allow Biden said he acted after Saudi Arabia and Russia, members of the OPEC production +, rejecting US calls to pump more oil to the global market.
Here are the issues surrounding the use of the SPR.
WHY ARE MADE SPR? United States created the SPR in 1975 after the Arab oil embargo soaring gasoline prices and damage the US economy.
The President has tapped the stockpile to calm oil markets during war or when the cyclone hit oil infrastructure along the US Gulf of Mexico.
HOW MANY ARE SPR OIL RESISTANT? Reserves currently has about 606 million barrels in dozens of caves in four heavily guarded locations in Louisiana and Texas coast.
That’s enough oil to satisfy US demand for more than a month.
The country also has reserves of heating oil and a small gasoline in the US Northeast.
WHAT OTHER COUNTRIES HAVE A STRATEGIC RESERVE? In addition to the United States, 29 other member countries in the International Energy Agency (IEA), including the UK, Germany, Japan and Australia, which are required for oil continues in the emergency reserves equivalent to 90 days net oil imports.
Japan has one of the largest reserves after China and the United States.
China, associate members of the IEA and the second oil consumer in the world, made its SPR 15 years ago and held the first auction of oil reserves in September.
Another association member IEA, India, the third largest oil importer and consumer, as well as to maintain a reserve.
Overall, OECD government held more than 1.5 billion barrels of crude oil as of September, according to the IEA.
It is about 15 days of global demand before a pandemic.
CAN THEY RELEASE THE OIL ALL AT ONCE? In addition to the US.
president to coordinate the release of SPR with the withdrawal of reserves by other IEA members at the same time.
A potential release that involves China and India will be the first instance in which the US coordinated release includes two countries.
How SPR GET INTO THE OIL? Because of its location close to major US refining or petrochemical center, SPR can ship as much as 4.4 million barrels per day.
It can take just 13 days of the president’s decision to first oil to enter the US market, according to the Energy Department.
Under the sale, the Department of Energy is usually holding an online auction where energy companies bid on oil.
Under the swap, the oil company took the raw but asked for it back, plus interest.
The US president has authorized an emergency sale of SPR three times, the last in 2011 during the war in OPEC member Libya.
Sales take place during the Gulf War in 1991 and after Hurricane Katrina in 2005.
The oil swaps have occurred more frequently, with the last exchange was held in September after Hurricane Ida.
WHAT IS THE ROLE IN THE NATIONAL SPRs IEA? IEA helps coordinate the release of members, provide data on the level and play another role.
There are usually three ways to maintain the level of SPR to meet the requirements of 90 days, according to the IEA website: commercial stocks held by refiners, whose shares are owned by governments and agencies, with countries choosing balanced to maintain.
Stockholding structure is a peer-reviewed every five years among members.
Steps to restrain demand or supply assistance can also be taken, the IEA said.
This may include calling for voluntary fuel efficiency, fuel switching, such as oil to gas for power generation or “production surge” to quickly tap underground reserves.
Relaxed environmental standards can also help create a more flexible supply, the IEA said.