Release of 1M barrels of gas ‘not likely’ to ease price at pump

Published 2:09 pm Friday, May 31, 2024

Will President Biden’s release of 1 million barrels of gasoline from a Northeast reserve alleviate pain at the pump this summer, and make the vacation drive more affordable?

Not likely, and if so, it will be short-term, according to David E. Dismukes. The now-retired LSU professor was the Center for Energy Studies Executive Director and Director of Policy Analysis. 

“The refined product market is very large, and this simply will not be enough supply to change price for any sustained period,” he said. 

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The Associated Press May 21 article said the reserve was established after Superstorm Sandy and released in a “bid to lower prices at the pump this summer” and the “Biden-Harris administration is laser-focused on lowering fuel prices.”

Patrick De Haan, an analyst for GasBuddy, was quoted in the article as saying, “The million-barrel reserve only amounts to 2.7 hours of total U.S. gasoline consumption,” and the gasoline reserve, which has never been tapped, would provide minimal relief during a severe shortage. Maintaining it costs $19 million a year.

To see lower prices would require an unexpected scenario, a sustained decrease in the price of crude oil supply, a sustained increase in gasoline production and supply or a sustained decrease in demand, creating a disconnect between current inventories and need, Dismukes said.

Prices could go up. The summer driving season often heralds a price increase, as demand picks up and remains that way until Labor Day, according to Dismukes. Gasoline prices are a function of supply and demand.

Larger market forces determine prices. However, localized geographic considerations can influence prices such as refinery outages, pipeline disruptions and natural disasters.

“Weather forecasters are calling for an active tropical season this year, so disruptions of refining capacity, due to tropical-activity induced outages along the Gulf Coast could drive up prices,” Dismukes said.