The U.S. and its International Energy Agency partners have decided to release 60 million barrels of oil into the world market during the next 30 days to offset the disruption in the oil supply from unrest in the Middle East. Department of Energy Secretary Steven Chu made the announcement Thursday. Thirty-million barrels will come from the Strategic Petroleum Reserve, which currently is at 727 million barrels. With problems in Libya nearly 1.5 million barrels of oil is lost per day keeping prices higher than they were before issues in Libya arose. Chu says the DOE will continue monitoring the situation and be ready to take additional steps if necessary.
With the decision to release oil from the Strategic Petroleum Reserve underscoring the continued volatility and uncertainty in the world oil market, the Renewable Fuels Association says the release could have been avoided. RFA President and CEO Bob Dinneen says American ethanol producers could supply the 1.25 billion gallons of ethanol equivalent to the 30 million barrels being released. In fact, a study by the Center for Agricultural and Rural Development found 13.2 billion gallons of ethanol available in 2010 kept gas prices an average of 89 cents lower than they would have been otherwise.
Dinneen says while releasing oil supplies may be necessary, this move needs to be coupled with a renewed commitment to the increased production and uses of domestic renewable alternatives like ethanol. Ethanol's impact has grabbed the attention of OPEC nations and RFA emphasizes the need for greater efforts to increase renewable fuels production and use as alternatives to imported oil. RFA says supplies taken from the SPR are gone forever and can only be replaced with purchases of more oil while feedstocks used for renewable fuels are regenerated each year.