US President Joe Biden has ordered the release of up to one million barrels of oil per day from the United States’ strategic petroleum reserve, as it moves to lessen the impact of rising gas prices amid Russia’s invasion of Ukraine.
The US and other nations have barred imports of Russian oil and gas over the country’s ongoing invasion of its neighbour, while European countries have pledged to wean themselves off energy supplies from Moscow.
“Today I’m authorising the release of one million barrels per day for the next six months – over 180 million barrels,” Biden told reporters from the White House on Thursday afternoon.
“This is a wartime bridge to increase oil supply until production ramps up later this year. And it is by far the largest release from our national reserve in our history.”
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Al Jazeera’s Mike Hanna, reporting from Washington ahead of Biden’s news conference, said the US president is seeking to lessen the impact of the Ukraine war on American consumers, as the price of gas has surged in the country over the past year.
“This is having an immense political impact on President Biden, who is eyeing those midterm elections later this year,” Hanna said.
“This release of the stockpile could have the consequence of relieving gas prices within the United States, of adding to the global stockpile, of reducing the price of oil, which has been soaring in terms of the shortages that have occurred in the wake of Russia’s invasion of Ukraine.”
Biden also called on US oil producers to prioritise increasing production over profiting from the crisis in Ukraine. “If we want lower gas prices, we need to have more oil supply right now,” he told reporters.
“But some companies have been blind,” Biden added. “I say enough. Enough of lavishing excessive profits on investors with payouts and buybacks. The American people are watching, the world is watching. US oil companies made nearly $80 billion in profit last year.”
Gradual release
The Biden administration in November announced the release of 50 million barrels from the strategic reserve in coordination with other countries.
And after the war in Ukraine began in late February, the US and 30 other countries agreed to an additional release of 60 million barrels from reserves, with half of the total coming from the US.
The strategic petroleum reserve (SPR) is a complex of four sites with deep underground storage caverns created in salt domes along the Texas and Louisiana Gulf Coasts, the US Energy Department said on its website. The reserve currently holds about 586 million barrels.
Helima Croft, head of global commodity strategy at RBC Capital markets in New York, said in a note to clients on Thursday that the Biden administration’s move would be “the single-largest SPR release in history”.
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The Biden administration has been asking other oil-producing nations to increase output but OPEC+ is sticking to its agreed production limits for now, Croft said in the note.
“The leadership of the [United Arab Emirates] and Saudi Arabia seem reluctant at this stage to take additional action as they seek more fulsome security guarantees from Washington and have expressed concern about using the remaining spare capacity given the uncertainty around the true magnitude of Russian export disruptions,” Croft said.
Effect on prices
Clayton Allen, director at the Eurasia Group, said in a separate note to clients that “OPEC’s unwillingness to add volume to the market may limit the price impacts of this release” by the Biden administration.
“Continued geopolitical risk will keep upward pressure on prices and SPR volumes will not offset the full extent of supply dislocations,” Allen said. “The size and duration of this potential release will put tremendous pressure on SPR infrastructure and the terminals that will be used to move oil onto the market.”
Robert McNally, president of the Rapidan Energy Group, a Washington-based consultancy, told Al Jazeera that he believed the short-term impact of the release would knock crude prices down by as much as $5 a barrel.
“I don’t think it’s going to arrest the upward move in crude oil prices, because the volumes we’re talking about from the SPR – even if the Europeans and Japanese throw in some barrels tomorrow – are more than offset by disruption risk coming from Russia,” he said.
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“What they’re trying to do here is to is to reassure the market that there will be at least some offset to the prospective loss of Russian supply,” McNally added. “I don’t think it means we’re going back below $100 a barrel.”
Frank Macchiarola, senior vice president of the American Petroleum Institute in Washington, DC, told Al Jazeera in an email that while the SPR release “could provide some near-term relief, it is not a long-term solution to meeting growing demand for affordable and reliable energy”.
“Instead of managing from crisis to crisis, we should be focused on promoting policies that avoid them altogether through increased production of our nation’s domestic energy resources,” he said.
On that point, the White House said in a statement earlier on Thursday that Biden is calling on US lawmakers “to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing”.
It said the industry is sitting on more than 12 million acres (4.85 million hectares) of federal land with 9,000 permits, and would “have to choose whether to start producing or pay a fee for each idled well and unused acre”.
But environmentalists and others have cautioned that the war in Ukraine should not be used as a pretext to increase production to displace Russian energy supplies – and worsen the climate crisis. Instead, they are urging nations to move towards more renewable forms of energy.
Oil prices initially spiked on Friday due to unconfirmed reports of an Israeli missile strike on Iran.
Prices briefly reached above $90 per barrel before falling back as Iran denied the attack.
Iranian media reported activating their air defense systems, not an Israeli strike.
Oil prices gave up nearly all of early Friday’s gains after an Iranian official told Reuters that there hadn’t been a missile attack against Iran.
Oil surged by as much as $3 per barrel in Asian trade early on Friday after a U.S. official told ABC News today that Israel launched missile strikes against Iran in the early morning hours today. After briefly spiking to above $90 per barrel early on Friday in Asian trade, Brent fell back to $87.10 per barrel in the morning in Europe.
The news was later confirmed by Iranian media, which said the country’s air defense system took down three drones over the city of Isfahan, according to Al Jazeera. Flights to three cities including Tehran and Isfahan were suspended, Iranian media also reported.
Israel’s retaliation for Iran’s missile strikes last week was seen by most as a guarantee of escalation of the Middle East conflict since Iran had warned Tel Aviv that if it retaliates, so will Tehran in its turn and that retaliation would be on a greater scale than the missile strikes from last week. These developments were naturally seen as strongly bullish for oil prices.
However, hours after unconfirmed reports of an Israeli attack first emerged, Reuters quoted an Iranian official as saying that there was no missile strike carried out against Iran. The explosions that were heard in the large Iranian city of Isfahan were the result of the activation of the air defense systems of Iran, the official told Reuters.
Overall, Iran appears to downplay the event, with most official comments and news reports not mentioning Israel, Reuters notes.
The International Atomic Energy Agency (IAEA) said that “there is no damage to Iran’s nuclear sites,” confirming Iranian reports on the matter.
The Isfahan province is home to Iran’s nuclear site for uranium enrichment.
“Brent briefly soared back above $90 before reversing lower after Iranian media downplayed a retaliatory strike by Israel,” Saxo Bank said in a Friday note.
The $5 a barrel trading range in oil prices over the past week has been driven by traders attempting to “quantify the level of risk premium needed to reflect heightened tensions but with no impact on supply,” the bank said, adding “Expect prices to bid ahead of the weekend.”
At the time of writing Brent was trading at $87.34 and WTI at $83.14.
Premier David Eby is warning real estate investors and speculators that his government is tilting the rules toward families seeking homes as it tightens the rules on short-term rentals.
Eby said Thursday that the rule changes on May 1 will limit short-term rental units to within the principal home of a host, but the move isn’t a ban on platforms such as Airbnb if they aren’t used to create de facto hotels from B.C.’s housing stock.
“If there’s a major event [such as a] Taylor Swift concert, a FIFA-like event and somebody wants to rent out their primary residence and go away for the weekend to avoid the crush of the crowds, they can still do that,” Eby said.
The changes were announced by the government last spring, giving those who own short-term rentals a year to conform.
Eby said the changes will allow both the province and local governments to crack down on speculators.
“If you’re flipping homes, if you’re buying places to do short-term rental, if you’re buying a home to leave it vacant, we have consistently, publicly, repeatedly sent the message: Do not compete with families and individuals that are looking for a place to live with your investment dollars.”
Eby made his comments as the province announced new figures gathered in March that showed more than 19,000 entire homes being listed as short-term rentals.
Housing Minister Ravi Kahlon said the new rules also require short-term rental platforms such as Airbnb to share listed property data with the province and local governments.
He said they expect a significant amount of the homes listed on short-term sites to be back in the long-term rental pool.
“Our view is even if half of those units were to come back onto the market, that is substantial,” Kahlon said. “The cost that it takes to build new housing, when you can get even half of the 19,000 back on the market, that’ll make a substantial difference in our communities.”
He said previous efforts to limit short-term rentals are increasing housing supply in some places.
“We’re seeing, already, in many communities that action happening,” Kahlon said. “We have heard many stories of people finding rentals now because of opportunities when it comes to short-term rentals coming onto the market.”
The new principal residence requirement for short-term rentals will allow local governments to request that a platform remove listings that don’t display a valid business licence.
Valid short-term rental hosts will also be required to display a business licence number on their listings if a licence is required by local government.
The new rules will apply to more than 60 B.C. communities, and Kahlon said a compliance enforcement unit will be phased in to help municipalities deal with rule violations.
Much of the monitoring and enforcement, however, will be conducted online through a new rental data portal that will allow local governments to track and request removal of listings from platforms.
“With this new digital portal, local governments will be able to upload, within moments, listings that they believe are operating illegally within their community,” Kahlon said.
The platform will have five days to remove listings that aren’t following the rules, and if they don’t, they will be fined, he said, noting there’s an up-to-$10,000-a-day-per-listing fine for platforms that don’t co-operate.
“We believe that’s enough of a deterrent for the platforms to co-operate with local governments,” said Kahlon
A website launched Thursday for hosts will allow them to get information about their requirements from the province and their municipality, and their responsibility to notify anyone that’s booked.
“Hosts and platforms have a responsibility to notify anyone that’s booking of all the changes that have been coming,” said Kahlon. “They’ve been notified about this since September or October when the legislation has come in, and they’ve had plenty of time to set up their policies to do that.”
The rules do include some exceptions, including some strata hotels and motels operating before last December being exempt if certain criteria are met.
Eby said the overall message to property investors looking for short-term gains is clear: Build homes that people need and government will do all it can to help expedite the process.
“But if you are standing neck and neck with a family that’s looking for a place to live, and you’re trying to do a speculative investment, [while] they’re looking for a place to live, we are going to tilt the deck every single time towards that family,” Eby said. “And we’re gonna keep doing it.”
Eby also said a positive side-effect of short-term rental regulation has been the re-emergence of hotel construction, with 1,400 rooms “in the development pipeline” in Vancouver.
“Those investors in those hotel rooms weren’t able to make the decision to proceed,” Eby said, citing the previous competition from short-term rentals. “Very clearly, with these regulations in place, there will be visitors to stay in hotel rooms, there will be a market for hotel rooms and they’re making the decision to proceed. This is very good news.”
Victoria-based Property Rights B.C. has filed a lawsuit against the province and city of Victoria to fight the new regulatory system.
It maintains the province overstepped its authority and its lawsuit is focused on preserving the rights to own and operate short-term vacation rentals. The organization is also seeking a delay in enforcement.
Asked about the lawsuit, Eby said he can’t comment on a matter that’s before the courts, “but what I can say is we’re very confident in the legal authority of the province to regulate the housing sector in this way and we’ll make the arguments that are needed in court to address that.”
More communities initially exempt from the province’s new regulations have opted in, including Gabriola Island, Mill Bay/Malahat, Cobble Hill, Cowichan Station/Sahtlam/Glenora, Cowichan Lake South/Skutz Falls, Saltair/Gulf Islands and North Oyster/Diamond. Tofino previously announced it would opt in.
Municipalities with fewer than 10,000 people, resort communities and regional districts are exempt from a requirement restricting short-term rentals to principal residences and either a secondary suite or laneway home/garden suite.
On Thursday afternoon, En-Pro International posted on X that “gas prices spiked 14 cents overnight, the largest single day jump since early 2022.” (AP Photo/Jenny Kane) (The Associated Press)
Gas prices across Canada climbed an average of 9.4 cents per litre of regular fuel over the past seven days, the biggest weekly gain so far in 2024. Cities in Ontario and Quebec booked eye-watering 20 cent-plus gains, while prices were virtually flat for drivers in the Western and Maritime regions.
The average cost per litre of regular gasoline in cities nationwide rose to $1.806 from $1.712 between April 11 and April 18, according to data firm Kalibrate. Chicoutimi, Que. saw the biggest increase at 26.7 cents per litre, followed by Gatineau, Que., and North Bay, Ont. The Greater Toronto Area was hit with widespread gains above 15 cents per litre.
On Thursday afternoon, En-Pro International posted on X that “gas prices spiked 14 cents overnight, the largest single-day jump since early 2022.”
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“The steady build in U.S. crude inventories, combined with the reluctance of the Fed to lower interest rates, which would increase gasoline demand, should neutralize the impact of the conflict in the Middle East,” En-Pro chief petroleum analyst Roger McKnight wrote in a blog post.
“The refining industry will come back to normal levels by mid-June, so supply will balance demand, and prices should fall soon after the U.S. Memorial Day launch of summer.”
Rising gas prices was the top factor behind Statistics Canada’s slightly higher annual inflation reading for March. Year over year, the agency found gasoline prices increased 4.5 per cent last month, following a 0.8 per cent rise in February.
“Higher global prices for crude oil stemmed from supply concerns amid geopolitical conflict and continued voluntary production cuts, leading to higher prices at the pump,” StatCan said on Tuesday.
Follow Yahoo Finance Canada for more weekly gas price updates. Scroll below to find your nearest city.
(All figures in CAD cents)
LOCATION
April 11
April 18
Price change
Canada Average (V)
171.2
180.6
9.4
WHITEHORSE
189.9
189.9
0
VANCOUVER*
210.7
212.7
2
VICTORIA
206.2
206.9
0.7
PRINCE GEORGE
169.6
169.3
-0.3
KAMLOOPS
172.5
181
8.5
KELOWNA
174.6
175.8
1.2
FORT ST. JOHN
171.2
174.9
3.7
ABBOTSFORD
194.2
198.5
4.3
YELLOWKNIFE
161.9
161.9
0
CALGARY*
161.2
158.8
-2.4
RED DEER
159
159
0
EDMONTON
154.9
153.6
-1.3
LETHBRIDGE
161.9
161.9
0
LLOYDMINSTER
154.6
154.6
0
GRANDE PRAIRIE
156.9
158.7
1.8
REGINA*
158
157.3
-0.7
SASKATOON
157.4
156.9
-0.5
PRINCE ALBERT
154.6
155.8
1.2
MOOSE JAW
158.7
158.7
0
WINNIPEG *
141.4
141.6
0.2
BRANDON
142.5
143.3
0.8
CITY OF TORONTO*
163.7
179.3
15.6
BRAMPTON
164.3
179.6
15.3
ETOBICOKE
163.4
179
15.6
MISSISSAUGA
162.8
179.3
16.5
NORTH YORK
163.9
179.6
15.7
SCARBOROUGH
163.3
179.5
16.2
VAUGHAN/MARKHAM
163.5
179.2
15.7
OTTAWA
162.4
179
16.6
KINGSTON
162.3
179.3
17
PETERBOROUGH
160.1
172.2
12.1
WINDSOR
162.4
177.8
15.4
LONDON
163.5
177.4
13.9
SUDBURY
167.4
185.8
18.4
SAULT STE MARIE
160.2
174.3
14.1
THUNDER BAY
165.8
175.5
9.7
NORTH BAY
161.5
182.6
21.1
TIMMINS
169.7
183.6
13.9
HAMILTON
161.6
178
16.4
ST. CATHARINES
160.4
177.1
16.7
BARRIE
162.8
178.2
15.4
BRANTFORD
161.1
176.2
15.1
GUELPH
163.4
178.4
15
KITCHENER
163.1
179
15.9
OSHAWA
163.8
179.4
15.6
SARNIA
161.7
178.9
17.2
MONTRÉAL*
173.7
190.5
16.8
QUÉBEC
172.1
187.4
15.3
SHERBROOKE
169.5
185.3
15.8
GASPÉ
172.7
189.4
16.7
CHICOUTIMI
155.1
181.8
26.7
RIMOUSKI
169.4
189.4
20
TROIS RIVIÈRES
169.8
186.7
16.9
DRUMMONDVILLE
166.7
183.9
17.2
VAL D’OR
169.6
182.7
13.1
GATINEAU
152.7
175.9
23.2
SAINT JOHN*
175.1
179.1
4
FREDERICTON
176.6
181.7
5.1
MONCTON
176.8
181.9
5.1
BATHURST
176.8
182.3
5.5
EDMUNDSTON
175.2
175.8
0.6
MIRAMICHI
177.9
183.1
5.2
CAMPBELLTON
175.7
179.9
4.2
SUSSEX
176.2
181
4.8
WOODSTOCK
177.8
183.1
5.3
HALIFAX*
172.1
175.4
3.3
SYDNEY
174.1
177.2
3.1
YARMOUTH
173.2
176.3
3.1
TRURO
173.3
176.4
3.1
KENTVILLE
172.7
175.8
3.1
NEW GLASGOW
173.3
176.4
3.1
CHARLOTTETOWN*
173
173
0
ST JOHNS*
190.4
193.9
3.5
GANDER
192.9
196.4
3.5
LABRADOR CITY
197
200.5
3.5
CORNER BROOK
191.1
194.6
3.5
GRAND FALLS
192.9
196.4
3.5
SOURCE: KALIBRATE • All figures in CAD cents
(*) Denotes markets used in Volume Weighted Canada Average
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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