Will the Biden administration release 50 million barrels of oil to lower gas prices? Do not hold your breath

President Joe Biden has released 50 million barrels of oil from the country’s strategic oil reserves in an effort to combat rising costs that are eating away at household budgets for everything from energy to groceries. .

But if drivers expect the oil barrel release to equate to an immediate price drop at a time when the national average for a gallon of gas is $3.40 — and even higher in some states — then Some experts say they’d better keep hoping.

“It makes a little difference for motorists as we head into 2022 as we move into 2022,” said Andrew Lipow, president of Lipow Oil Associates, an energy industry consulting firm based in Houston, Texas. The oil actually hit the market. He noted that refineries bought their oil supplies for December.

What about potential price savings in 2022? Lipow estimates: “It can be up to a few cents per gallon that motorists see at the pump.

The “White House announcement” could have some short-term impact, said Seth Blumsack, a Pennsylvania State University professor specializing in energy economics. His hunch is that the impact could lead to a 3 to 5 cent drop in pump prices as early as about a month from now.

“I don’t think this release of 50 million barrels is the cure for $4, $5 gas prices. Blumsack, who is also director of the university’s Center for Energy Policy and Law.

On Tuesday afternoon, Mr. Biden said the release was “a major effort to correct oil prices, an effort that will extend the global reach within its reach and eventually reach the corner gas station.” you, God willing.”

“It’s going to take time, but soon you’ll see gas prices drop where you get gas,” Biden later added. He said while oil futures
is trading up on Tuesday.

The White House said countries including China, India, Japan and the UK are also freeing up supplies. But Blumsack said other countries – including those in the Organization of the Petroleum Exporting Countries – could take a different approach.

On Tuesday, the national average price for a gallon of gas was $3.40, according to AAA. That’s an increase of more than $1 from a year ago, its statistics show. Californians are currently paying the most, $4.70 on average, and Oklahoma residents have the lowest on average, at $2.97 per gallon.

50 million barrels came from the country’s Strategic Petroleum Reserve, with 32 million barrels for trade and 18 million for sale. There are 606 million barrels of crude oil in cache since the beginning of this month.

The exchange for 32 million barrels, Lipow explained, is essentially a loan with interest. Contractor can get the oil now, but Lipow said it will have to return it later, in the form of returning the same amount of oil, plus an additional amount.

“This release doesn’t add more oil in the ground, it just moves supply in the short term,” he said.

The sale of 18 million barrels, Lipow said, would accelerate sales that were allowed in the 2018 deficit reduction law. Lipow said the market planned to sell the oil. However, speeding up the timetable may not be a problem as refineries already have their December scheduled.

“If your fridge is full of milk, you don’t need to buy more milk on December 1,” he said. “Just because it doesn’t mean the buyer cares because the buyer has made their plan.”

According to recent data from the Bureau of Labor Statistics, the oil release came as inflation hit a 31-year high in October. The agency said the percentage change in gas prices had up 49.6% in October from a year ago.

Americans are acutely aware of price increases Going into the holiday season and a recent poll shows the price main road people now rate how good the economy is.

Last week, Biden asked the Federal Trade Commission to investigate whether oil and gas companies have mistake The driver increases the price.

Patrick De Haan, GasBuddy’s head of oil and gas analysis, said on Twitter, companies certainly have room to wobble.
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The release could provide “temporary relief”, he said, but the long-term consequences are unclear. On the other hand, he added:

On Tuesday, Mr. Biden noted an imbalance between the drop in wholesale prices and pump prices, which hadn’t budged a cent. In other words, the gas supply companies are paying less and making more, and they are unlikely to pass it on to consumers at the pump. ”

Both Lipow and Blumsack said the release of the 50 million barrel of oil was not a game. But it was not just an empty political gesture, they said.

The release may be a call for domestic motorists, but Blumsack said it’s also a message to oil-producing countries around the globe that “the authorities are ready to act, even when that’s not normal, in the face of rising consumer energy prices.”

“Consumers are seeing prices go up and they want the government to do something about it,” Lipow said. “The government did something. Whether it works or not, we’ll see. ” Will the Biden administration release 50 million barrels of oil to lower gas prices? Do not hold your breath

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