HOUSTON — Why will the release of the US oil reserve not lower gas prices for the long term?
The White House has announced it is making a dramatic move in an effort to lower gas prices, releasing one million additional barrels of oil a day from the strategic petroleum reserve. That will continue for the next six months.
It would be the largest withdrawal from the reserves since it was created.
And while most experts agree it should lower gas prices in the U.S., the effects will not be huge and will not last long term.
The national price for a gallon of regular is up more than a dollar since last year, thanks to everything from the pandemic to the war in Ukraine.
KHOU 11 energy expert Ed Hirs says prices could drop by as much as 50 cents a gallon with this release. One of the reasons we won’t see a bigger drop is because the energy alliance known as OPEC Plus just announced a small increase in monthly production, not the larger increase most experts were calling for.
Plus while this release does increase supply, it is temporary. The strategic oil reserve was created in the late seventies in response to the oil crisis.
Right now, more than 550 million barrels of oil are stored in salt caverns in Texas and Louisiana. It was meant to keep the U.S. supplied with oil during a crisis. The Biden administration has tapped it twice in the last several months, and according to the Wall Street Journal, those moves did provide drivers some relief but not dramatically.