Saudi Arabia warned the Biden administration that its decision to further chip away at the US’s emergency oil reserve by releasing an additional 15 million barrels of crude could result in pain in the months to come.

Washington moved to open the taps after OPEC+ agreed to cut production in order to avoid price increases.

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Saudi Arabia’s back-to-back warnings this week against using energy as a weapon and against a hurried rush to transition away from traditional fossil fuels to green energy is based on Riyadh’s desire to preserve stability in energy markets, and the global economy as a whole.

It is clear that Washington’s decision to release another 15 million barrels from the Strategic Petroleum Reserve onto the market will be painful for the emergency stock.

The observer pointed out that that draining the Strategic Petroleum Reserve (SPR) now may result in shortages in the event of an actual energy emergency.

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According to the latest Department of Energy figures, America’s emergency sweet and sour oil reserve currently has about 401.7 million barrels in its inventory, dropping by double-digit rates every month since March 2022.

This happened the Biden administration announced that it would be tapping the stockpile to try to get gasoline prices under control.

With the US economy consuming about 20 million barrels of oil per day, the SPR currently has enough crude to last just 20 days if production and imports were somehow halted due to an emergency.

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The SPR’s stocks have already fallen to their lowest levels since the mid-1980’s.

The additional release comes after OPEC+ agreed in early October to slash oil production by 2 million barrels per day starting in November in response to uncertainty in global energy markets. US officials have criticized the decision and vowed to retaliate.

A $90-per-barrel price tag for oil may very well become the new normal thanks to inflation, rising insurance and shipping costs, and this may be the right price that we are going to see for oil for many decades from now.

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America is now selling their LNG [for] five times [the cost] to Germany and France and nobody is talking about it. So we need to invest in our energy security but at the same time not neglect climate change.

The USA is not discussing its profits, because it’s a revenue stream for this administration and they are looking for their own benefit only, and they are not looking at how OPEC+ members can benefit from oil supply.

This contrasts with policies taken by Europe and the United States, with these countries over-politicizing the ‘Green Initiative’ without having a clear agenda on global energy security.

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Michael Rothman, president and founder of US-based energy consultancy Cornerstone Analytics, echoed concerns on the green transition, telling that the push for green energy initiatives is understandable.

But the associated anti-carbon lobbying is both impractical and unrealistic, and brings with it substantial risks on under-investment in needed energy sources.

Rothman similarly believes that the use of emergency oil inventories – both by the USA and other OECD countries, for non-emergencies is a reflection of short-sighted policies which historically result in oil prices rallying.

Sputnik / ABC Flash Point News 2022.

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Zorba
Zorba
Member
27-10-22 21:54

Almost 70% of the world’s energy consumption is carbon-based and there is no substitute of scale that exists to replace such fuels in the coming decades. Oil, in particular, is the dominant fuel for transportation, and will remain so for the foreseeable future.

Checkmate
Checkmate
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Reply to  Zorba
27-10-22 21:57

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The Observer
The Observer
Member
27-10-22 21:56

It is important to have the green agenda aligned with energy security. So, if it’s going to take 30 years or if it’s going to take 20 years with unproven technology, we are still going to need oil for a long time.

We’re still going to need [traditional] sources of energy…We’re going to be much smarter in developing technology, in manufacturing and what have you, in TRANSPORTATION. But still, oil is a major line that goes into everything we do on a daily basis.