Several energy industry experts have weighed in on President Biden’s decision to release 50 million barrels of oil from the country’s strategic reserves in order to tamp down rising gasoline prices.
And most don’t think that’s going to help much.
“One needs to be careful to directly equate a relatively minimal release of oil reserves to lower gasoline prices,” Philip Walsh, professor of entrepreneurship and strategy at Ryerson University in Toronto and principal investigator at the university’s Center for Urban Energy, told Newsweek.
“First of all, 50 million barrels of oil is less than three days of consumption in the United States, and the market for oil is not limited to producing just gasoline,” he added.
“Heating oil and oil-fired power generation will also compete for that surplus supply,” he said.
What’s more, gas prices “are influenced by oil prices which are driven by the demand-supply balance,” said Walsh.
“So any short-term impact on gasoline prices from the release of oil from the U.S. Strategic Reserve will be dependent on how quickly that oil gets into the U.S. energy system and at what daily amount,” he added.
The Department of Energy (DOE) announced in a statement on Tuesday that companies will be able to submit bids for the oil up to December 6, with contracts awarded no later December 14.
The oil will be delivered from January through April 2022, “with early deliveries accepted in late December.”
Walsh noted on Wednesday that “the overnight trading response to this announcement and similar announcements from other countries around the world has resulted in higher trading prices for oil contracts.”
Biden’s decision to release the oil was “an intervention in the market with an instrument designed for reduced or interrupted energy supplies,” noted Professor Dirk Buschle, the Iberdrola Manuel Marin chair for European Energy and Climate Policy at the College of Europe in Belgium, told the magazine.
“As energy prices may remain volatile for some time, governments should be careful in not making this kind of intervention a rule rather than an exception,” he warned.
Devin Gladden, a spokesperson for the American Automobile Association, said that the release might have some impact but it will be minimal.
“Although we will see some incremental decreases, we’re not expecting this to have a long-term impact. But it certainly will have an impact,” Gladden said.
Noted Newsweek: “GasBuddy, a company that compiles real-time gas prices across the nation, showed the average price of gasoline was around $3.40 a gallon on November 24.”
Late last month, Republicans began blasting Biden over the rising price of gas which is acting, essentially, as a new tax on Americans, hitting the lowest wage earners the hardest.
“There’s nothing that’s becoming more expensive than gasoline today,” House Minority Leader Kevin McCarthy, R-Calif., said. “And it doesn’t have to be the case. When gasoline becomes more expensive, the people that it truly hurts are those that are less fortunate, those that have less money. It literally takes food away from their children.”
“As we look to Thanksgiving coming up, it’s going to be the most expensive Thanksgiving in history for Americans,” he added. “But the real challenge is happening here. It’s the policies of this new administration.”
The Daily Caller News Foundation added:
Since July, energy prices have skyrocketed in the U.S. and abroad with both oil and natural gas hitting multi-year highs. Heating costs may even tick up as much as 54% for Americans this winter and could be even higher depending on how cold it gets, the EIA projected on Oct. 13.
Meanwhile, gasoline prices rose again Wednesday, reaching a national average of $3.39 per gallon, according to a AAA database, and soaring past $7.50 per gallon in some areas. The last time Americans paid more than $3.40 per gallon at the pump was in September 2014, Energy Information Administration (EIA) data showed.