By Lauren Fix
President Joe Biden is ordering the release of 1 million barrels of oil per day from the nation’s strategic petroleum reserve for six months or 180 days in a bid to control energy prices, the largest such release from the stockpile in history. This is the lowest level since 1984.
The latest amount of US oil release would make 180 million barrels of oil available, or the equivalent to about two days of global demand, and would mark the third time the United States has tapped the SPR in the past six months.
Will this lower your gas prices?
Let’s start with some facts, and what is the strategic oil reserves? The Strategic Petroleum Reserve is an emergency stockpile of petroleum maintained by the United States Department of Energy. It is the largest known emergency supply in the world, and its underground tanks in Louisiana and Texas have the capacity for 714 million barrels.
The United States created the Strategic Petroleum Reserve in 1975 after the Arab oil embargo spiked gasoline prices and damaged the US economy. Presidents have tapped the stockpile to calm oil markets during war or when hurricanes hit oil infrastructure along the US Gulf of Mexico. The country also maintains small heating oil and gasoline reserves in the US northeast.
As an example, President George W. Bush authorized the release of oil from the Strategic Petroleum Reserve due to Hurricane Katrina’s effects on oil refineries on the Gulf Coast.
To the question–will the release of a million barrels a day lower your gas prices?
Analysts have warned that a release from the Strategic Petroleum Reserve would only produce a short-term effect, as it would not increase US production capacity. This dumping is about nine days’ worth of demand, but even less because a barrel of crude from the Reserve does not equal a barrel of gasoline. Not all oil can be converted to heptane or diesel. The US consumes about 20 million barrels of oil per day. The average cost of gasoline declined to $4.23 a gallon Thursday, a roughly 2.1 percent decrease compared to two weeks ago.
The Bottom Line
The country with the most gas and oil is strategically the strongest because it can outlast its opponents. This is true with many other items including food. I don’t think a million barrels a day is going to move the price of gasoline at all. You may see a few cents drop over a few months but prices will increase again if more is not produced to make up for the shortfall. Being energy independent is the best choice. The government is planning to add additional 11 new tax hikes on the oil and gas industry and this will not incentivize them to increase production.
Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news, and safety issues.
Lauren is the CEO of Automotive Aspects and the Editor-in-Chief of Car Coach Reports, a global automotive news outlet. She is an automotive contributor to national and local television news shows, including Fox News, Fox Business, CNN International, The Weather Channel, Inside Edition, Local Now News, Community Digital News, and more. Lauren also co-hosts a regular show on ABC.com with Paul Brian called “His Turn – Her Turn” and hosts regular radio segments on USA Radio – DayBreak.
Lauren is honored to be inducted into the Women’s Transportation Hall of Fame and a Board Member of the Buffalo Motorcar Museum and Juror / President for the North American Car, Utility & Truck of the Year Awards.
Check her out on Twitter and Instagram @LaurenFix.
