Strategic Petroleum Reserve Release Helps Make a Dent in Gas Prices
WASHINGTON, D.C. — Days after President Biden revealed the latest move to ease the pain at the pump, there are signs it may be working.
On March 31, Biden announced his administration is putting 1 million additional barrels of oil from the Strategic Petroleum Reserve (SPR) on the market per day on average for the next six months. The "unprecedented" release will provide a historic amount of supply to serve as a bridge until the end of the year when domestic production ramps up, the White House said.
According to the latest AAA report, the president's decision helped send the global oil price tumbling to near $100 per barrel. In addition, the national average for a gallon of gas has fallen to $4.18.
"The upward push on oil prices caused by Russia's war in Ukraine is meeting stronger downward pressure from the planned SPR oil release and increased COVID fears in China," said Andrew Gross, AAA spokesperson. "And lower global oil prices are reflected in falling pump prices for consumers in the U.S."
Citing data from the Energy Information Administration, AAA said total domestic gasoline stocks increased by 800,000 barrels to 238.8 million barrels last week. At the same time, gasoline demand decreased from 8.63 million barrels per day to 8.5 million barrels per day.
The drop in gas demand, alongside growth in total stocks, contributes to price decreases. If demand continues to decline as gasoline stocks continue to build, the national average will likely continue to move lower, AAA pointed out.
On April 4, the national average for a gallon of gas was $4.18, which was 6 cents less than a week ago, 35 cents more than a month ago and $1.31 more than a year ago, according to the association.
According to AAA, the top 10 states with the largest weekly decreases are Connecticut (27 cents), Michigan (10 cents), Wisconsin (9 cents), Indiana (9 cents), Georgia (8 cents), Ohio (8 cents), North Carolina (8 cents), South Carolina (8 cents), Texas (7 cents) and Rhode Island (7 cents).
The top 10 least expensive markets are Missouri ($3.73), Oklahoma ($3.75), Kansas ($3.75), Arkansas ($3.77), Maryland ($3.79), Texas ($3.80), Nebraska ($3.83), South Carolina ($3.85), Iowa ($3.85) and Wisconsin ($3.86).
Biden's Two-Step Plan
This is not the first time Biden has turned to the Strategic Petroleum Reserve. In late 2021, the administration announced it would release 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the disconnect between demand exiting the COVID-19 pandemic and supply.
However, the president is going one step further this time. In addition to tapping into the SPR, the administration's plan also calls for a boost in domestic oil production — which is expected to increase by 1 million barrels per day this year and nearly 700,000 barrels per day next year.
However, Biden said some companies are not doing enough, and he called on Congress to make companies pay fees on wells from their leases that they haven't used in years and on acres of public lands that they are sitting on without producing.