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Biden taps oil reserves - and makes energy companies jointly responsible for high gasoline prices

2021-11-24T06:40:29.213Z


The prices for gasoline are exploding, the polls are falling: In the fight against inflation, Joe Biden is now releasing parts of the strategic oil reserve. The US President is already promising lower prices - but are they coming?


Enlarge image

Price board at a gas station in San Francisco on Monday: Almost six dollars for a gallon

Photo:

Noah Berger / AP

In view of the high inflation, Joe Biden is under great pressure, especially when it comes to energy prices, and the support of the US president among the population has recently declined significantly.

In the fight against expensive gasoline, the US president is now tapping into the US’s strategic oil reserve - and daring to make a promise.

"Today we are starting a great effort to bring the price of oil down - an effort that will stretch across the globe and eventually reach your gas station on the corner," said Biden on Tuesday (local time) in Washington.

50 million barrels of oil are to be released accordingly.

According to the US government, it is a coordinated action with countries such as China, India, Japan, South Korea and Great Britain.

The oil price is only falling for a short time

Countries around the world are struggling with consumer demand exceeding supply in the wake of the pandemic, according to the White House.

Currently, a gallon of normal gasoline at the pump costs an average of $ 3.40, which is significantly more than a year ago, and prices in large cities are sometimes well over five dollars.

In view of this, the imbalance between demand and supply must be balanced, said Biden.

It is questionable whether Biden's plan will work in the long term.

Oil prices only fell briefly after the announcement.

The prices have since increased noticeably: On Tuesday, a barrel of North Sea Brent cost $ 81.76, $ 2.07 more than the day before.

The price of a barrel of American West Texas Intermediate rose by $ 1.50 to $ 78.25.

Are corporations indulging in higher margins?

However, in anticipation of the release, oil prices had already given way in the past few days before the announcement.

Important reasons for the sharp rise in prices around the world are increased demand after the Corona slump as well as bottlenecks in production and in global supply chains.

Overall, the inflation rate in the USA rose by 6.2 percent in October compared to the same month of the previous year, to the highest level since 1990.

The US President has now again criticized the corporations for the fact that in the event of falling wholesale prices, customers will not receive anything.

Even with lower oil prices, petrol at the pumps will not be cheaper, said Biden.

Apparently, the companies would not pass the drop in crude oil prices on to consumers, but instead reap the difference themselves.

That is unacceptable.

The US President had already announced that it would investigate whether oil companies are ripping consumers off.

Despite falling costs for companies, Americans paid significantly more at the petrol pumps, according to a government letter to the FTC trade commission.

Analysts and experts, however, do not consider the release of 50 million barrels to be far-reaching enough to keep prices down on a sustained basis.

Political opponents of Biden blamed his policy of combating climate change for the higher energy prices.

The President rejected this.

He referred to longer-term efforts to reduce dependence on oil "by switching to clean energy."

The US strategic oil reserve is an emergency supply designed to secure access to oil in the event of natural disasters or national security issues.

More than 600 million barrels of oil are currently stored at four locations in the states of Louisiana and Texas.

apr / Reuters / dpa

Source: spiegel

All business articles on 2021-11-24

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