Major economies coordinate to lower oil, fuel prices
Crude oil prices have soared by more than 20% in the last four months, and, in an effort to ease the upward trend, major economies such as the US, China, and Japan are coordinating a release of millions of barrels of oil.
For its part, the White House announced: "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 gas and oil prices for Americans and address the mismatch between demand exiting the pandemic and supply."
The White House's announcement also informed
that the initiative is being coordinated with other major energy-consuming nations such as "China, India, Japan, the Republic of Korea, and the United Kingdom." According to the statement, the coordinated response follows weeks of consultations with partner countries. "Over the last several weeks," the release mentioned, "as reports of this work became public, oil prices are down nearly 10 percent."
As underscored by a US Department of Energy press release, the higher prices are the result of oil supply failing to "increase at a pace necessary to meet demand. Today's decision is in response to the highest oil prices experienced in seven years and aims to ensure adequate supply as we exit the pandemic."
India, likewise, issued a statement on Tuesday, saying that it will release five million barrels of crude oil from its own Strategic Petroleum Reserves. "This release will happen in parallel and in consultation with other major global energy consumers," the statement added.
Reports are that other partnering, high energy-consuming economies will shortly publicize the details of their contribution to this global price-reduction effort.
The move by the major energy-consuming countries succeeds failed attempts at getting the members of the Organization of the Petroleum Exporting Countries (OPEC) and allies to increase the oil production and supply.
The oil supplied out of the Strategic Petroleum Reserve, which according to the US Energy Department has more than 604 million barrels as of November 19th, is expected to be returned by the participating companies "loan" over the next few years.
The Indian government's release had also informed of other measures that have been taken to ease the impact on consumers. "Honorable Prime Minister [Narendra] Modi has been consistently reviewing the high petroleum/diesel prices domestically," the release added. "In a bid to control inflationary pressures, Government of India had reduced the 'central excise duty' on petrol and diesel...on 3 November 2021. It was followed by a reduction in VAT on fuel by many state governments. These difficult steps, despite the high fiscal burden on the Government, were taken in order to provide relief to citizens."