WASHINGTON — On Tuesday, the White House announced that a group of countries agreed to release 60 million barrels of crude oil from their combined reserves; half will be contributed from the United States.
The President reiterated the news during his State of the Union Address that night.
"Tonight, I can announce the United States has worked with 30 other countries to release 60 million barrels of oil from reserves around the world," he said. "America will lead that effort, releasing 30 million barrels of our own Strategic Petroleum Reserve. And we stand ready to do more if necessary, united with our Allies."
The group releasing the oil is called the International Energy Agency.
Lots of people are talking about what the SPR is and what releasing 30 million barrels from it (for a total of 60 million worldwide) would accomplish.
What will releasing these oil reserves do? How much oil does the U.S. use per day?
Hirs said releasing the 60 international barrels will be used to replace small disruptions in the oil market. Lange explained it's a political statement against Russia.
Both agree the oil won't have a significant impact on the price of U.S. gasoline. The U.S. consumes between 15-20 million barrels of oil a day.
WHAT WE FOUND:
Our Verify researchers looked at data from the U.S. Energy and Information Administration and spoke with energy economists Ed Hirs and Ian Lange.
The barrels being released are filled with crude oil, according to the White House. Crude oil is refined into petroleum products like heating oil, kerosene, jet fuel and gasoline.
Ed Hirs says the U.S. consumes about 18-20 million barrels of oil a day.
That aligns with estimates from the EIA, which says that a 42-gallon barrel of crude oil yields about 45 gallons of petroleum products.
In 2020, EIA said the U.S. consumed 18.19 million barrels of petroleum on average per day, which is actually low because of COVID.
To put that in context—in theory, if we used the international reserve oil exclusively it would last about 3 days.
"But since the U.S. produces under 12 million barrels a day— about 11.5, if we took that 60, it would take us into next week," Hirs said.
He says the point of releasing the 60 million barrels was to replace some of the disruptions in oil, primarily from OPEC countries hit hard by COVID and from Russia maneuvering under strict sanctions overuse of the U.S. dollar; it’s not meant to alleviate gas prices.
Meanwhile, Ian Lange says the move is more about politics.
"I’d say the point is largely much more political in terms of showing that there is, you know, national response to these issues that we're trying to deal with...with the policy levers we have," Lange said.
The International Energy Agency said they hoped their announcement would 'send a unified and strong message to global oil markets.'
"The IEA Ministers noted with concern the energy security impacts of the egregious actions by Russia, and voiced support for sanctions imposed by the international community in response," they said in a statement. "The Ministers noted that Russia’s invasion comes against a backdrop of already tight global oil markets, heightened price volatility, commercial inventories that are at their lowest level since 2014, and a limited ability of producers to provide additional supply in the short term."
So how significant is releasing 30 million U.S. barrels? According to government estimates, the Strategic Petroleum Reserve had about 588.2 million barrels of oil and refined products.
So releasing 30 million barrels is equivalent to 5% of the oil the U.S. has reserved.
The International Energy Agency said its members, which includes the U.S., hold a stockpile of 1.5 million barrels.
"The announcement of an initial release of 60 million barrels, or 4% of those stockpiles, is equivalent to 2 million barrels a day for 30 days," IEA said. "The coordinated drawdown is the fourth in the history of the IEA, which was created in 1974. Previous collective actions were taken in 2011, 2005 and 1991."