The 50 million barrels of oil that President Joe Biden said the country would release from its strategic oil reserve would be the largest release in U.S. history and almost twice as much as the previous largest release.
The release, announced by Biden on Tuesday, represents about 8% of the 621 million barrels in reserve, according to data from the Department of Energy.
Prior to 2017, there had only been three emergency sales from the reserve, spurred by disruptions like the Gulf War in 1991, Hurricane Katrina in 2005, and the Libyan Civil War in 2011.
Since then, Congress has written sales mandates in recent budgets, in part to modernize the reserve system itself. And the swaps – in which the government essentially lends oil to companies, which then have to repay the same amount plus interest – were used to offset the disruption caused by Hurricane Harvey in 2017, as well as Hurricanes Isaac, Gustav and Ike.
While the amount Biden is releasing is unprecedented, methods of pulling oil have become more common as lawmakers use reserves to balance the budget – and offset disruption caused by hurricanes.
This decision drew criticism. Dan Brouillette, who was Energy Secretary during the Trump administration, told CNBC on Wednesday: “This is not a supply emergency, and the only emergency I can … see in this case is a political emergency. . ”
Senator Joe Manchin, DW.Va., says liberation was “an important political band-aid” for rising gas prices, but that it does not address “the self-inflicted wound that short-sighted energy policy has on our nation.”
The 50 million barrels will be released in two ways: 32 million barrels will be traded, while the remaining 18 million barrels will come from a sale approved by Congress in Budget 2018, which provided 15% of the reserve for a sale. future. In 2017, President Donald Trump wanted to sell half of the reserves to support the budget.
U.S. refineries typically produce about 19 to 20 gallons of motor gasoline and 11 to 12 gallons of ultra low sulfur distilled fuel oil (diesel) from a 42 gallon barrel of crude oil, according to the U.S. Agency. energy information.
Trade and sales were rare.
The first sale was a test sale of 5 million barrels in 1985, and the second in 1990, when President George HW Bush sold 5 million barrels to test the readiness of the system.
The following year, he authorized the first emergency sale of 17.3 million barrels of reserve oil after the launch of Operation Desert Storm. The reserve was created in direct response to the oil crisis of the 1970s following the Arab-Israeli war.
In 1996, a pipeline blockage resulted in the first trade of nearly a million barrels. Since then, the exchanges have been used more to combat disruptions, such as hurricanes.