Oil Prices Continue to Rise in Response, and the United States Uses Strategic Reserves

The war in the Middle East has sent international oil prices to the sky. The oil pipeline in Alaska in the United States leaked at this time. This simply added fuel to the fire and made the already high oil prices even higher. Consumers suffering from high oil prices can only sigh: When will the increase end?

According to reports from the Washington Post and other U.S. media, on August 6, BP, the world’s second largest oil company, shut down its largest oil field in the United States, the Prudhoe Bay oil field on the North Slope of Alaska. . This means a reduction of 400,000 barrels per day (8% of total domestic crude oil production capacity in the United States) from the field.

As a result, international oil prices rose sharply. On August 7, the price of Brent crude oil futures in London reached a new high, with the closing price reaching $78.67 per barrel, setting a new record of $78.18. Affected by this, European stock markets suffered their largest decline in three weeks. BP announced on August 7 that it would replace more than 20 kilometers of its oil pipelines, which will take about 2 to 3 months. Therefore, oil production and transportation in the area will be suspended for a longer period.

What happened is that on August 4, BP's oil pipeline scanning system showed that there were 16 damages to the underwater oil pipeline in the eastern area of the Prudhoe Bay oil field, and the thickness of the pipe wall was reduced by 70%. The worst thing is that the damage to the welding joint of the oil pipe caused a small amount of crude oil to leak. Although the total amount was less than 1 ton, oil transportation had to be suspended.

On the evening of August 7, the U.S. Department of Energy announced that it would use the National Strategic Oil Reserve to cope with the shortage. This is the first time since last year's Hurricane Katrina that the Bush administration has announced the use of strategic oil reserves to stabilize oil prices. Currently, the U.S. government holds 700 million barrels of strategic oil reserves. However, the oil security situation in the United States is still very serious.

In 2005, the United States consumed an average of 21.93 million barrels of oil per day, of which 8.71 million barrels were produced domestically and 13.22 million barrels were imported. The import dependence has reached 60%. In order to reduce dependence on imports, on June 29 this year, the U.S. House of Representatives passed a bill that relaxed restrictions on oil exploration on the coastal continental shelf and will allow the exploration of most continental shelves beyond 80 kilometers from the coast. However, the bill still awaits a vote in the Senate. The leak of the pipeline will undoubtedly provide environmental groups and Democratic senators opposed to development with an excuse that they may use to prevent the Senate from passing the bill.

What makes the Democrats even more confident is that this is not the first time that BP has had an oil spill. In March this year, BP's oil field in Prudhoe Bay leaked 267,000 gallons of oil, contaminating a large area of the Alaskan ice sheet. In July, the company experienced spills at 12 of its oil wells in the northern Gulf of Alaska. The successive leaks have had a negative impact on BP's reputation in the United States. The company's head of North America had to step forward and apologize to the public.

However, Democrats who are concerned about environmental issues are still reluctant to give up. On August 7, Democratic Congressman Edward Markey fiercely criticized BP: "With oil prices now exceeding $70 per barrel, BP's profits have also hit a new high. It should be able to maintain its own oil pipelines." He also suggested that it should be able to maintain its own oil pipelines. Raise standards in pipeline maintenance. As the U.S. midterm elections approach, other lawmakers have even called for congressional hearings on the issue.

The Prudhoe Bay oil field is located on the northern slope of Alaska. It was discovered in 1968 and was exploited after the oil crisis broke out in 1973. The oil reservoir is located 750 to 3,200 meters underwater. Prudhoe Bay Oilfield has 3.6 billion tons of oil reserves and more than 2 billion tons have been produced. In addition, several other oil fields on the North Slope of Alaska have more than 2.2 billion tons of oil reserves. In 2005, the daily output of the oil field was 864,000 barrels, and the peak production reached 2 million barrels per day.

The oil field is developed by three companies: ConocoPhillips holds 36.07% of the shares, with a daily production of 144,300 barrels; BP holds 26.35% of the shares, with a daily production of 105,400 barrels; Egypt ExxonMobil holds 36.4% of the shares and has a daily production of 144,200 barrels. BP is responsible for operating the connecting pipeline transportation between the continental shelf oil field and Alaska's main highway.