(Bloomberg) – The U.S. ordered another release of oil from emergency reserves—and urged European nations to do likewise—as the Trump administration grapples with fuel prices that are surging less than two months before the midterm elections.
The U.S. will offer up to 40 MMbbl from the Strategic Petroleum Reserve, according to a statement from the Department of Energy, in what will be the last of the nation’s 172-million-barrel contribution to the coordinated release of oil from reserves around the world since the start of the Iran war.
Energy Secretary Chris Wright took a swipe at some countries in Europe in the statement, saying they’ve lagged behind the U.S. and Japan when it comes to contributing to the effort, organized by the International Energy Agency.
“Several European member countries have released only a fraction of the crude oil and petroleum products they pledged,” Wright said. “We urge every member country to fulfill its commitments.”
Crude, gasoline, diesel and jet fuel prices have surged since military operations against Iran began on Feb. 28, intensifying pressure on President Donald Trump to address rising fuel costs ahead of November’s midterm elections, which could determine control of the House. Gasoline remains well above $4 a gallon and diesel fuel has surged past a record $6 a gallon.
Still, Energy Secretary Chris Wright has signaled another drawdown is unlikely.
The SPR is projected to fall to its lowest levelsince 1982once the latest release is completed. Federal law bars non-emergency drawdowns once inventories fall below 252.4 million barrels, while a1981 reportfrom the US Government Accountability Office advised against releases below 250 million barrels except in a “very severe emergency.”
The reserve’s operational minimum—the point at which it becomes difficult for the infrastructure to function—is around 70 MMbbl, according to ClearView Energy Partners, a Washington-based consulting firm.
The release was structured as an exchange, essentially a loan that companies repay with interest. The Energy Department has said that will ultimatelyreturn about 200 MMbbl to the reserve over the next year, roughly 20% more than was released.
Bids for the latest SPR releases are due by 11:00 a.m. central time on October 6, according to a statement from the Department of Energy.
About The Author
