tv Inside Story LINKTV November 25, 2021 5:30am-6:01am PST
as the leader of a single party government. this is al jazeera. let's get a round of the top stories. 31 refugees and migrants trying to reach britain have drowned in the english channel. it is the worst incident in the crossing since they started keeping records. >> this disaster underscores how dangerous it is to cross the channel in this way. it also shows how vital it is we step up our efforts to break the business model of the gangsters who are sending people to the
sea in this way. i say to our partners across the channel, now is the time for us to work together, to do everything we can to break these gangs who are literally getting away with murder. >> three white men under the u.s. have been found guilty of murdering ahmaud arbery, a black man who is chased down and shot dead in their georgia neighborhood last year. greg mcmichael was found guilty on all charges. his father was found guilty of felony murder. a third man who joined the chase and filmed the killing was also found guilty of felony murder. they pursued a 25 roll block who was jogging. all three said they acted with self-defense. the son of the libyan former minister has been barred from running in next month's residential election. he is one of 25 candidates
barred from standing. the libyan electoral commission says he is ineligible because he was convicted of a crime should a warlord with 72 others remain in the race. an overnight curfew is holding in the french caribbean territory of guadalupe after days of violent protest against covid-19 restrictions. long-standing grievances over policy and the quality. vaccination rates remain low with less than half the population receiving jabs. the protests have spread through the neighboring island of martinique. leaders of three german political parties have agreed to form a coalition government after two months of talks. olaf scholz will take over as chancellor. those are the headlines. we are back in half an hour. right now, it is inside story. ♪
>> fuel prices and inflation are rocketing in the u.s. the president has ordered williams of bearers of oil to be released from the strategic reserves. is that going to make a difference or is it to bst his falling approval ratings? where several other countries joining in? this is inside story. ♪ hello and welcome to the program. it is a remove president joe biden hopes will ease u.s.
petrol prices and reduce inflation that has hit a 31 year high. he is tapping into the strategic petroleum reserve. 50 million barrels of world are being released and that is roughly what the u.s. uses in two and a half days. several other countries have agreed to use their emergency reserves. his critics say it is a temporary fix. some argue it is eight political move to help his political writings. he has asked the organization of oil-producing countries known as opec plus to increase its output. doug kai brought together other nations to contribute to the solution. india, japan, republic of korea, united kingdom have agreed to release additional oil from their reserves and china made you more as well. this coordinated action will help us deal with a lack of supply, which helps ease prices. >> this is how america's strategic petroleum reserve
works. it holds over 600 million barrels of oil mostly in underground caverns in texas and louisiana. it was created after herbst states led by saudi arabia imposed an oil embargo on the u.s. in 1973. it is designed to store or for use in an emergency. the international energy agency is responsible for managing global oil supplies and it says member countries can only release reserves during wars or natural disasters and not just the correct prices. george biden is not the first u.s. president to tap into it -- joe biden is not the first u.s. president to tap into the reserve. our white house correspondent explains why the move has not been welcomed by everyone. >> what the criticism has been is this might resolve the issue in the short-term and lead to lower gas prices but because the issue of supply and demand globally has not been resolved,
this will drive the prices up. what you heard is the president not only saying this is a global problem but the fact he is also saying this will work out in the end. one point to know is with regard to the release of these reserves, the president is not just releasing it all overnight. there is going to be one person -- one portion done in the first three months and another in the coming months. this he believes is going to allow for this kind of staggered approach that will ensure as the supply catches up to the demand as a result of people turning the economy back on due to the covered pandemic that this will resolve those issues and the prices will stabilize at a lower rate. that is what the biden administration is counting on shared one other announcement of importance and it affects domestic consumers is the point the president was making that he believes oil and gas companies are exploiting the situation.
he accused them of price gouging. they are now seeing lower rates and it will supply and not passing that on to the consumer. the president announcing he will be investigating that. took a look spring in our panel of guests. a research director of energy intelligence joining us from new york. an energy analyst and ceo of meyer resource. and the director of energy, climate and resources at eurasia group and joined us from london. thank you for being with us. how much of this is about cooling down oil prices and how much of this is about president biden's falling approval ratings? >> it is really about both. thanks for having me on today. it is about both and they are both quite related. the administration is fighting
the messaging and the data around information broadly and with energy and petroleum products. it is front and center. i think they are handling the economies and one of the aspects of the polling that comes out. i think there is a targeted plan to address that. and certainly lowering oil prices is the goal. we are just about to go into thanksgiving weekend. i'm about to hit the road myself. followed by we will have the holidays coming up later in december. there'll be a lot of travel coming up in the u.s. wanting to lower the price at the pump is a key priority. it goes hand-in-hand for sure. i think we will get to it later in the conversation. the focus is short-term price relief.
there are medium-term consequences that will come as a result. >> the uae energy minister is reported to have said he sees no logic in the uae putting more oil into the market because there is predicted to be a surplus at the start at least in the first quarter of next year. i understand opec plus is due to meet in the early part of december. how do you think it will react? >> opec plus will have to regather on this. they will not react much. for december, it is all done because they have over time released 400,000 barrels a day -- this increase is scheduled to go on through april. they might just reduce that a little bit but opec does foresee for the whole of 2022 actually quite a significant supply overhang, which the eia, the american entergy and agency and
the international agency out of paris also foresee for the first quarter supply overhang. for opec, it is in the million plus barrels a day. for the others, it is in the 100 to two earth 300 barrels a day. there is a divergence over how people look at it but it is clear that next year, we will see a supply overhang. doug -- >> it seems as though it would be easy to assume this is just a u.s. issue dealing with the prices and also the falling approval ratings of the president. why have other countries joined in? >> thanks for the invitation. first of all, the participation of other countries so far is
symbolic at best. india has committed 5 million barrels. south korea and japan have not really said how much. china has been doing this anyway. in the case of india, japan, south korea and britain, it is almost certainly political support with the unit it states. japan and south korea are strategic allies. the u.s. is the most important partner in britain now freshly out of the you also seeks closer relationships with the united states. this is a symbolic joining for them. none of them will bring anywhere near as much oil to the market as the u.s. have done. this shows it is largely a domestic effort to reduce pump prices in the u.s. rather than globally. >> you mentioned before the international energy authority. and its position. if either staying correctly, it
has a rule that says countries cannot release strategic oil reserves for anything other than crisis situations. the rules also say the iea cannot get involved if it might affect market prices. it begs the question, what is the point of the iea in point like this? -- a situation like this? >> it is the agency of the oecd countries. they are the rules but america is the 500 pound gorilla in the room. the 500 pound gorilla may choose to do other things. the question is how do you define a crisis? for president biden, this was a crisis. he has tried several times to entice opec plus t to lift more barrels. they have said we will not be a
holden to u.s. pressure. the question is, what constitutes a crisis? the biden administration does not just look at it from, we need petrol and read the prices at the pump to go down. that will have a time lag. they also are worried about inflationary pressure and inflation can be considered an economic crisis. darker you were talking about the timeline of this earlier. the president himself admits this is not going to happen immediately. is this actually worth doing given the fact the reaction is not going to be as quick as one would imagine leading up to holiday season? >> it is a great question. they were effectively compelled to look like they were going to do something.
i think ultimately that is what it came down to. it was mentioned earlier the contributions from india and japan and south korea, the u.k. are drops in the bucket in terms of actual volume they will add to the market. what is interesting is the u.s. announced itself it is also fairly small. 50 million barrels. 18 million will be accelerated. the remaining 32 million are in exchange. it will have to be replaced over time depending on who takes it out. the actual amount is very small. it is going to be phased over the next several months. the u.s. consumes over 20 million barrels per day. 50 million barrel release is
very marginal. they felt compelled to look like they were doing something. the actual impact is going to be fairly limited. the one thing i would note is we look back a couple weeks ago and oil prices for brent were heading toward 90. just the talk in the market of the fact there was going to be a release has thrown prices off. what was announced yesterday from all the different countries was fairly underwhelming. it is hard to say exactly what the market expected. someone said would hundred million barrels. sunset a little bit more is what would have been needed to get prices to go down. the actual amount was fairly underwhelming. it did have some affect but in terms of the actual barrel
impact, it will be fairly limited. it is kind of more an announcement for the sake of making an announcement. the actual thing is going to be -- >> i'm going to come to you first. >> i think it is fairly small compared to 600 million barrels a day but it is the largest ever release of spr the u.s. has undertaken. let us not forget during the first gulf war in 1991, the only released 17 million barrels a day when libya came asunder in 2011, they released 30 million barrels a day. in that context, it is quite the bit. the oil price came down about 8% since the talk of the release of strategic reserves.
yesterday, eight rows. that is a -- in stock markets, you have this by on the rumor and sell on the fact. there was a classic event with this. darker you wanted to make a point. >> the but an administration clearly wanted to bring this headline out. 50 million barrels. it is not 50 million per day. it is 50 million barrels over the stretch of four months, which is far less and we don't know whether these 50 million barrels will be released. one of them was already announced. it is actually less and it is less than the 2011 release, which was 31 thousand over in month. -- 30 million over a month. i do agree it was the action that was needed.
it was said earlier we needed threatening on announcing this pulldown prices over the last few weeks. what has happened now is the markets said part of this was already priced in 10 the smaller trend that was announced in 2018. the other part is that now the market is expecting opec to scratch its head and say does the market need and it's 400,000 barrels a day we have been planning to add and the answer is probably or maybe that they will hesitate because the market is expected to flip into oversight -- to oversupply. opec does not want to add to that. they have spent one and a half years drilling these down. the market is being politicized. that is basically not what the iea was therefore. and should not be used for price influencing.
that is the problem we are seeing. >> just as 1.i wanted to add. -- just this one point i wanted said. -- wanted to add. what this comes down to is the fact that u.s. domestic oil effectively recovered from covid already. the supplies remain significantly lower and close to 2 million barrels a day especially for oil. this is sort of the key mismatch administration is dancing around. that is the key risk mash and topic that is going to be driving prices over the short to medium-term. the transition and a longer-term shift away from oil consumption. short-term demand is going nowhere. we see a record u.s. oil demand
as early as may or june next year. 21 million barrels a day. it is going to go higher from there. supply has not been keeping up at all. the fact a continues to go higher makes the drawdown of the spr stick -- the spr a dangerous tool when you think about where demand can go next summer. i just wanted to add that in. happy to throw more color on that but i think the short-term release is actually shortsighted in terms of where demand is going to be going. >> somebody made the point earlier i don't understand how the oil market works and you guys do. i'm relying on you. without wanting to oversimplify too much, i would imagine if you were going to get rid of a
relatively small amount comparatively speaking, if that is going to be released onto the market, that still has to be replaced and one would imagine replacing the is going to leave the u.s. and others open to having to buy that replacement oil at a higher cost and that seems print -- seems counterproductive. tell me how that actually works. it may work but opec forecasts has forecasted a really substantial oversupply for the whole of next year. demand in the u.s. may go up but look at what is happening in europe. nobody thinks we are out of the woods with the virus. if you look at the new lockdowns in europe, if you look at what is happening in asia with the virus, how quickly will towards, will international air travel
rebound when you have a big domestic market? how quickly will it and how sustainably will it rebound over the next year or so as long as we are still stuck with this virus? there is that and then we have seen the u.s. shale producers have not really upped their production either. they have not stepped up to the challenge. because they too are very wary of where it is going. it is nice to have good demand forecasts but the proof of the put a is -- again, the demand supply forecasts vary so differently between what opec sees, with the national energy agency sees and what the u.s. energy information agency sees that it is really hard to get a neutral picture of those. dark i want to come back to a
point i think you are making earlier about whether or not the oil companies are going to buy in on any of this loan or sales. president biden has us the federal trade commission to immediately investigate whether illegal activity by oil and gas companies is pushing up gas prices. one would imagine some of those companies are going to be the ones he will want to take this oil. it is not going to work counterproductive will yucca -- is that going to work counterproductive? >> it is an interesting point and perhaps underreported or hundred noticed -- releasing spr's by the u.s. government is not just dumping all this crude oil into a big pool everyone gets. it does need to -- the first change is a loan. if you take a loan now, you have to repay in couple of years.
you are taking a bit on future oil prices. it depends very much on the conditions that this loan will be offered at. and the second -- it will depend on whether the private oil industry figures that is a good deal. this is a big difference between the u.s. and china, which has also released spr over the last couple months. china is not part of the international agent g industry. they are open about whether the lick process or not. and also, the vast majority of companies have state control. that is not the case in the u.s.. dark i know you wanted to come in here. >> i totally agree. i would like to add one element here. i have a little bit of a heart
for oil companies because on one hand, you tell them or the world tells them fossil fuels have to faze you out. on the other hand, one asks them in the short term to invest. is there terribly under invested. if you think the last year, over 400 billion were invested in upstream oil and gas, which is about half of what was invested in 2014. there terribly under invested. we say basically we want to faze you out. that makes it a little bit difficult to with all of the esg, which we all want to save the planet to don't get me wrong. but with all the esg obligations these companies are facing and the uncertain future and very
uncertain regulatory environment in especially oecd countries, it is a tough spot they are in. >> i know you wanted to come in there. we are getting to about a minute and 15 seconds left. if i can ask you to be relatively brief. >> just to extend the point on companies, the spending budgets are controlled by wall street. investors are the ones to look to if you want to increase short-term supply. that is where the administration should be making their phone calls if they want companies to produce more. it is not companies themselves. the second point i wanted to make is one of the things most closely linked oil prices is inventory levels. there will be virus issued on
the short-term but as we saw with the delta variant, they are pretty transient. we see oil demand growth back to pre-covid levels in six to nine months. and then going out the next six to 10 years. if there is not enough supply to keep up with that, it is going to eat and you to draw down inventories. the more you draw down inventories, the more you are putting upper pressure on prices. this is all setting up for multi-year upward pressure on oil prices. even if there's some short-term relief to get through thanksgiving and christmas. >> we are going to leave it there and i want to say thanks to all of our guests. thank you for watching. you can see the program again any time by visiting our website, al jazeera.com. for further discussion, go to our facebook page. you can join the conversation on twitter.
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