US President Joe Biden said Thursday that he’ll be releasing 1 million barrels of oil a day from the US’ Strategic Petroleum Reserve over the next six months. According to the White House, the unprecedented withdrawal could lower gasoline prices between 10 to 35 cents a gallon in the coming weeks.
After record highs in early March, the cost of gas has continued to dip. The average price at the pump on Friday was about $4.22 a gallon on Friday, according to AAA, 2 cents lower than it was a week prior. But even that’s well above the $3.62 average just a month ago.
And as demand increases with warmer weather, more price hikes are likely across the US.
Here’s what you need to know about gasoline prices, including how they’re affected by the Strategic Petroleum Reserve, the Ukraine crisis and other factors.
What’s the Strategic Petroleum Reserve?
Managed by the Department of Energy, it’s the nation’s emergency oil stockpile. The reserve was established by President Gerald Ford after the 1973 oil crisis, when OPEC nations placed an embargo on the US because of its support for Israel.
At their peak in 2009, the Strategic Petroleum Reserves held more than 720 million barrels in four massive underground caverns in Texas and Louisiana along the Gulf of Mexico.
Biden released 50 million barrels in November 2021 and then the United States and other members of the International Energy Agency released 60 million barrels of oil from their reserves in early March.
On Thursday, Biden announced the US would release another 180 million barrels over the next six months to offset higher prices and limited supply. That’ll bring the stockpile down to less than 390 million barrels, its lowest level in four decades.
But insiders say it won’t move the needle much: Mike Sommers, CEO of industry trade organization the American Petroleum Institute, said the withdrawal “is far from a long-term solution.”
“It will lower the oil price a little and encourage more demand,” Scott Sheffield, chief executive of Texas oil company Pioneer Natural Resources, told The New York Times. “But it is still a Band-Aid on a significant shortfall of supply.”
What else is the government doing to lower gas prices?
The White House is also pressuring US oil companies to increase drilling and production. In Thursday’s announcement, the administration criticized energy concerns for “sitting on” more than 12 million acres of federal land and 9,000 approved production permits.
Biden said he’d like companies to face fines if they leave wells leased from public lands unused.
There’s also the option of getting energy products from other sources. The US has been working at improving relations with Venezuela, which has been banned from selling oil to the US since 2018, and is negotiating another nuclear nonproliferation treaty with Iran, which would bring Iranian oil back onto the market.
Separately, Connecticut, Maryland and Georgia have suspended state gas taxes to help consumers, and at least 20 other states are considering similar moves. A bill in Congress would pause the federal fuel tax, though it faces stiff competition.
Will gas start rising again?
Fuel prices hit a record high of $4.33 on March 11 and have tapered down since then. But they’re still $1.35 more than they were a year ago.
California continues to lead the nation at nearly $5.88 per gallon, with Nevada and Hawaii having crossed the $5 threshold, as well.
Analysts say drivers should expect another uptick as companies switch to summer blends of gasoline. In the warmer-weather months,…
Read More: What’s the Strategic Petroleum Reserve and Will It Help Lower Gas Prices?