Questions have been raised about the art of plunging into Japanese oil reserves

Earlier this week, US President Joe Biden announced the release of 50 million barrels of crude oil from the Strategic Petroleum Reserve – an attempt to influence the oil market – the largest in US history. Biden’s decision is part of an ongoing effort to reduce prices and address global supply shortages.

Similar major energy nations, including China, India, Japan, South Korea, and the United Kingdom, have taken similar action. According to Tokyo Prime Minister Fumio Kishida, Japan is working with the United States to sell some of its national oil reserves “without violating the Petroleum Reserve.”

The decision is aimed at lowering Japan’s oil reserves for the first time and is unprecedented. The current national stockpile is enough for 145 days, more than the planned 90 days. Government officials have described the release as “not a price to pay” but a “formal transaction”.

He doubted that Japan’s oil industry had decided to use the so-called “last resort” national reserves.

The mainstream media in Japan were also skeptical of the decision. Major daily newspaper, liberal and conservative, unusually skeptical of the art of measurement..

“There is no strategy for price stability in sight,” writes the Minichi newspaper. Yomiuri, “Will unprecedented measures stop inflation?” He asked. “Cooperation is needed with oil-producing countries,” Sanke said. The financial daily Nikkei was also critical and even wrote: “Releasing oil reserves is not a way of market intervention.”

Rising fuel prices are nothing new. When I was studying Arabic in Cairo, Egypt from 1979 to 1981, the price of crude oil tripled during those three years as an officer in foreign service, from $ 12.8 to $ 42.8 per barrel, and now it costs more than $ 100. But before 1972, the price of crude oil remained stable for less than $ 5 a barrel for more than a century.

In 1973, crude oil prices in the Arab world rose from $ 3.01 to $ 11.65 a barrel. A.D. In 1973, a war broke out between Israel and the Arab League in October.

The most common myth about oil is that war and conflict add value. History shows, however, that this is not necessarily the case. A.D. During the Korean War, the 1956 Swiss Crisis, the 1962 Cuban Crisis, and the 1967 Six-Day War, crude oil prices were relatively stable, mainly because the United States had sufficient oil production. Since 1973, however, no country has had complete control over oil prices.

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Is it possible to stop inflation? Probably not. Biden knew that the decision would not solve the problem of high gas prices overnight. “It will take time, but you will soon see oil prices fall,” he said. This may not happen in the future.

US oil consumption will reach an average of 20.5 million barrels a day in 2019, according to the Department of Energy. Simplified estimates indicate that 50 million barrels of oil will be produced in the United States in less than three days. The situation is similar in Japan.

Releasing the oil reserves is probably a sign that the White House is “taking action”. According to Biden, he was personally advised that leaving the reserve would not effectively reduce current prices and that the option to release oil reserves was one of the few action plans on the table.

Will oil companies cooperate? Biden blames oil producers. “One of the major reasons why Americans are facing gas prices is because oil-producing countries and large corporations are not growing fast enough to meet demand,” he said.

Unfortunately, this is not a very strong argument. The Biden administration has reportedly asked Saudi Arabia, one of the world’s largest and most influential oil producers, to do something. But Saudi Arabia seems to be keen to increase its production. Over the past few years, oil-producing countries have suffered at the hands of low prices, which have taken a heavy toll on their economies.

Oil producers and traders, both foreign and domestic, are making economic decisions. Simply put, you do not want to increase supply and sell cheaper. A.D. After the United States lost its major market power in 1970, no country, including Russia and Saudi Arabia, took full control of the world’s energy supply.

But Biden said this week: “In the long run, as we move toward clean energy, we will reduce our dependence on oil.” I wondered how he could do that. One option may be to increase domestic oil production, but Biden does not appear to be interested.

One of the reasons for this lack of interest may be that the US President publicly stated at the COP26 United Nations Climate Summit a few weeks ago that the United States was “leading by example” on clean energy initiative. Commitment is free but difficult to implement. Fossil fuels are easy to criticize but are still important in modern societies.

No country, including the United States and Japan, can have it either way. Reducing the use of oil, gas and coal to cope with climate change and decommissioning must be carefully planned and coordinated.

What we are seeing is the opposite. We need to revise our policies or we will fail to grow the global economy and prevent global warming.

Cunningham is president of the Institute for Foreign Policy and director of research at the Canon Global Research Institute. Former diplomat Mike serves as special adviser to Prime Minister Fumiyo Kishida’s cabinet. The views expressed herein do not necessarily reflect the views of the Japanese government.

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