BIDEN SAYS GAS PRICES WILL DROP SOON
President Joe Biden announced that “before long” we will see a fall in gas prices. He made this announcement after tapping the oil reserves of the U.S. so that price pressure could be eased.
The White House released a statement with the details of their efforts to lower gas prices. “Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply,” the statement said.
Biden promised to release fifty million barrels of fuel reserve. This move was per many governments like Japan, South Korea, the United Kingdom, India, China, etc. This effort is the collective coordination of governments across the globe to strive to reduce oil prices.
This unprecedented effort was a reaction to OPEC (Organization of the Petroleum Exporting Countries) and its allies balking at raising production. Through this effort, the government tries to ease the stronghold of OPEC on the supply of oil.
However, the prices of oil did not fall immediately. A decline was witnessed some days later. This decline in prices was a response to the coronavirus variant omicron news. The new virus triggered the selling off of oil at the market at a reduction. U.S. benchmark, West Texas Intermediate crude oil prices closed at a record drop since April 2020, which accounted for a 13% decrease.
The speculated spread of the new coronavirus variant has compelled OPEC and its allies to release crude oil into the market from the SPR (Strategic Petroleum reserve). They are also inclined to discontinue the preplanned oil production for January 2022.
There is pressure on the Biden government to reduce gas prices and control the increasing inflation in the country. The post-pandemic economy is experiencing a hike in prices. Following the record decline in the oil price since April 2020, Biden’s announcement gained one dollar per barrel since Tuesday. The statement of SPR affected the market, but the crude oil has to be brought back by the refiners eventually.
