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Canadian gas prices may increase as the US exploits oil reserves: experts

TORONTO –

US President Joe Biden on Tuesday authorized the release of oil reserves in the hope of curbing high energy costs, but a Canadian expert says it will not be enough to turn around rising gas prices and in fact may lead to a small increase.

According to the White House, the US Department of Energy will release 50 million barrels of oil from the nation’s Strategic Petroleum Reserve (SPR), the largest release in the reserve’s history.

However, the market responded to this announcement by raising the price of oil for the day from US$1.75 to US$78.50 per barrel as of 5 p.m. EST.

Dan McTeague, Canada’s president of Affordable Energy, told CTVNews.ca on Tuesday: “Biden’s gamble didn’t work out. “To be fair, his strategy blew him away.”

Based on market reaction and existing trends, he said it could mean Canadians will see a small increase of a few cents at pumps this week.

McTeague also said the amount of US oil released was simply not enough to have a significant impact on consumer prices.

“When we think 50 million barrels, you know, the world consumes almost twice that number in a given day,” he said. “So it’s really a drop in the bucket.”

Thirty-two million barrels of oil will be released for repayment in the coming years, essentially for lending, while the remaining 18 million barrels will be part of a sale approved by the US Congress. previously approved.

McTeague said that there has been recent speculation about the US planning to dip into the SPR, and so such considerations may have been incorporated into oil prices ahead of Tuesday’s news.

“Reserves are for special times, and these are not unusual times,” he said. “We don’t have a hurricane. There’s no war holding back supply.”

He blamed the shortfall in crude oil production for driving up pump prices, suggesting that policymakers reassess the green energy policies currently in effect to allow for increased fossil fuel supplies.

“If you want to cure high prices, you have to allow high prices to stifle demand,” he said. “You can’t turn around and suddenly decide, ‘Hey, I’ve found a way to get a short fix here to lower the price of energy by flooding the market with a single stock of product. It’s simple,’ you know, if there’s no other way to lower prices, increase demand. It’s very counter-intuitive. This is a supply problem, not a demand problem.”

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