Background of the decision to release oil reserves What is the impact on gasoline prices, etc.?

As crude oil prices soar, the Japanese government has officially announced that it will release several days of domestic consumption of its national oil reserves at the request of the US Biden administration.

This is the first time that national stockpiles have been released in response to requests from foreign countries, but experts have pointed out that the effect of lowering crude oil prices will be temporary.

We have summarized the background of the release decision and the impact on future gasoline prices.

Prime Minister Kishida announces decision to release part of national oil stockpile

Prime Minister Kishida told reporters on the 24th that he had decided to cooperate with the United States to release a part of the national oil stockpile.

On top of that, "Stabilization of crude oil prices is a very important issue in achieving an economic recovery from Corona. The government is not limited to this measure, but also works on oil-producing countries and measures by industry for agriculture, fisheries, etc. Furthermore, we would like to take measures to mitigate drastic changes in the prices of gasoline and oil, and take such measures firmly. "

How to release oil reserves?

This time, the Ministry of Economy, Trade and Industry will release the national stockpile of oil by advancing the sale time when replacing old oil with new oil.

The country stocks oil in case of an emergency such as a shortage of gasoline supply or an earthquake.

As of the end of September, we have stored 145 days of domestic consumption.

Some of the oil we store is replaced with new oil several times a year.

Old oil is supposed to be sold to oil wholesale companies and trading companies by bidding, and initially it was planned to be implemented after next spring.

The Ministry of Economy, Trade and Industry has explained that this bidding period will be advanced and oil will be released in the form of temporarily reducing the stockpile.

It is said that it will release millions of barrels for several days out of 145 days of domestic consumption stored in the country.

The oil released will be purchased by the company that offers the highest price by bidding, and will eventually be delivered to gas stations around the world and overseas.

Minister of Economy, Trade and Industry Hagiuda said, "We are currently scrutinizing the timing of the sale and the final amount, but we would like to proceed with procedures such as public notice bidding as soon as possible in accordance with the law. We will keep an eye on the impact on the economy and steadily take measures such as continuing to encourage oil-producing countries to increase production in cooperation with related ministries and agencies. "

Aim to curb the rise in US crude oil prices Cooperate with Japan and China

The policy of releasing national stockpiles was decided while the price of crude oil continued to rise.

It was led by the US Biden administration, which is facing high prices, including gasoline prices.

It is said to be a collaborative effort with other major oil consumers, Japan, India, South Korea, the United Kingdom and China, with the aim of increasing supply and curbing crude oil price increases.

The United States will also release a total of 50 million barrels in the coming months.

A senior Biden administration official said it was the first time that the U.S. government had taken the lead in releasing stockpiles in line with major oil consuming countries. We are ready to work with each country to maximize our authority. "

Regarding crude oil prices, there is a view that prices will continue to remain high as the OPEC = Organization of Petroleum Exporting Countries led by Saudi Arabia and major oil-producing countries such as Russia have postponed the additional production increase in December.

US President Joe Biden "Prices will fall soon"

President Biden spoke at the White House, saying, "To support the supply of oil needed to recover from the spread of the new coronavirus, we will make the largest release ever from the US oil reserves. This movement in collaboration with each country will supply The shortage of oil will be improved and prices will be corrected. "

On top of that, "The problem of high gasoline prices will not be solved overnight, but things will improve. It will take time, but eventually you will feel the price drop when you put gasoline in your car. Should be possible, "he emphasized the significance of the release.

Futures prices rise sharply even with the decision to release the Tokyo crude oil market

On the other hand, the closing price of crude oil futures, which is the center of trading in the Tokyo crude oil market, was 3230 yen higher than the 22nd, at 55,190 yen per kiloliter.

Investors are worried that OPEC (OPEC) and other oil-producing countries will oppose the release of stockpiles on the part of consuming countries, and that supply and demand will tighten as the Northern Hemisphere enters full-scale winter. It led to a significant price increase.

Market officials said, "In response to this stockpile release, some oil-producing countries have been reluctant to increase production in the future. Crude oil prices remain high due to lack of materials that can ease supply and demand. I think it will continue. "

At the gas station ...

I heard at a gas station in Setagaya Ward, Tokyo that the government decided to cooperate with the United States to release a part of the national oil stockpile.

One of the men who visited the stand said, "I always put in 3000 yen, but the amount of gasoline that can be put in is getting smaller. I don't know what will happen because it is the first time to release the stockpile, but the gasoline is getting cheaper. I want it. "

Another man said, "I hope the price will be stable, but I think it's better to keep the stockpile in case of a disaster such as an earthquake."

Dai Sato, the director of the gas station, said, "The state of emergency has been declared and the number of customers is returning, but if the price of gasoline is not high, I think it would have been more. It's completely unpredictable, but it would be great if it could be a factor that would make it lower than the current situation. "

Bus company expects fuel prices to drop

The Yamako Bus, which is headquartered in Yamagata City and operates fixed-route buses, high-speed buses, and sightseeing buses, has recently been declining due to the spread of the new corona infection, but the number of passengers is recovering, but the price of crude oil It is said that the soaring price of the bus is affecting the management.

The purchase price of light oil used as fuel has increased by about 30 yen per liter compared to the same period last year, and as a result, fuel costs have increased by several million yen a month.

Regarding the decision by the Japanese government to release a part of the national oil stockpile, Atsushi Yuki said, "We are making sure that drivers are driving to reduce fuel consumption as much as possible. It is difficult to reduce the cost. I am very much looking forward to it because I think that the price will settle down if the national stockpile is released and the supply of light oil increases. "

What is the aim of the US Biden administration?

Washington Bureau Reporter Commentary

Q: This response, in which each country cooperates to release stockpiles.

Will it be effective?

A: High-ranking officials from the Biden administration have emphasized that the effect has already been achieved.

This is because the price of crude oil futures has already fallen recently as a result of the announcement of the consideration of the release of stockpiles.

However, in fact, there is a view that the effect will not last long.

The world's oil consumption averages 100 million barrels a day, but the United States has decided to release 50 million barrels in the coming months.

It is expected that the amount of emissions will be limited in Japan and other countries as a whole, and the price of crude oil futures has risen in the New York market following the announcement.

The future focus will be on the response of oil-producing countries.

It is also observed that if the consuming country increases the supply, the oil producing country will reduce the production accordingly.

Next week, there will be a meeting where oil-producing countries will talk about production in January next year, and the content of the discussion needs to be closely watched.

Q: What is the aim of the Biden administration announced at this time?

A: The background is that President Biden's approval rating has dropped to the lowest level since he took office.

It seems that he wanted to take immediate action because the high prices represented by the gasoline price pushed the approval rating down.

In the United States, Thanksgiving holidays will begin later this week, with Christmas holidays next month.

In the United States, which is a motorized society, many people travel by car, and it seems that the government wants to appeal its attitude to protect people's lives.

The Biden administration has called on oil-producing countries to increase production in order to keep crude oil prices down, but that has not worked.

For this reason, there is a history of calling on the major consuming countries to launch an unusual coordinated release, and it seems that it will have great significance for the administration whether or not the desired effect can be achieved.

Background of the release decision ・ What is the impact on gasoline prices?

Economic Department Desk Commentary

Q: What is the background behind the Japanese government's decision to release an unusual national stockpile?

A: I thought that Japan also had to manage the high crude oil price.

In the new economic measures decided last week, when regular gasoline exceeds 170 yen per liter, it is decided to subsidize the oil wholesale company and embark on an unusual measure to curb the rise in retail prices. Was there.

In addition, we received a "very strong request" from the United States and decided to cooperate.

Q: Is this release from the national stockpile quite unusual?

A: There are ▽ national stockpiling methods and ▽ "private stockpiling" required by private oil companies.

In the past, we have released private stockpiles in emergencies such as the Great East Japan Earthquake.

However, the law does not assume the release as a price measure like this time.

However, in order to respond to the strong demand, we decided that it would be possible to release the "surplus" of the national stockpile, and responded to the cooperation.

So to speak, it is also a measure of bitterness.

Q: It seems that the price of crude oil futures is rising, but will the prices of gasoline and kerosene related to daily life be suppressed as intended in the future?

A: There is a limit to the amount of stockpile that can be released.

Therefore, there were voices in the government who questioned the effect.

In fact, the crude oil market is reacting to futures prices rising (as of the morning of the 24th of Japan time), so it is unclear whether gasoline and kerosene prices will be held down as intended.

Furthermore, the yen is depreciating in the foreign exchange market.

This is a double punch for Japan, as it will further increase import costs.

Gasoline prices have risen to their highest levels since 2014, and demand for kerosene for heating will increase in the future.

The situation of worrying about soaring prices is likely to continue.

Expert "Gasoline price does not go down easily"

Tomohisa Ishikawa, director of the Japan Research Institute Macroeconomic Research Center, commented on the impact of the Japanese government's decision to release some of its national oil reserves on crude oil prices. The amount of stockpiles is limited. Since there are not infinite stockpiles, the effect may be temporary. "

Regarding the outlook for the future, he said that it is necessary to pay close attention to whether oil-producing countries such as OPEC will start increasing production. I think that the crude oil price will continue to be difficult to fall because the supply will not increase due to the slow development of oil fields. "

On top of that, regarding the impact on the lives of citizens, "Since crude oil prices remain high, gasoline prices will not fall easily, and other fuels such as light oil will not fall, so consumers' lives will be severely affected. Isn't it? "