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In November, the federal government announced initiatives aimed at lowering gasoline prices, one of which involves sending two million barrels of crude oil from the Strategic Petroleum Reserve (SPR) to ExxonMobil on Dec. 30.
The third crude oil exchange with ExxonMobil has just taken place. As part of efforts to increase supply, the DOE currently supplies seven million barrels through the SPR. An exchange occurs when refineries or other oil entities borrow essential supplies from a storage and processing company. Those supplies must later be replaced in full, plus taxed.
“Exchanges usually occur during severe weather events, such as hurricanes or in response to temporary disruptions, such as pipeline blockages and ship channel closures when a facility’s normal scheduled deliveries are interrupted,” according to the DOE.
As part of a coordinated worldwide response to high oil prices, the White House announced plans to release 50 million barrels of oil from the SPR after OPEC allies rejected a U.S. appeal to release more crude into the market to stabilize the price.
There are 50 barrels of oil, of which 32 million barrels are exchanges, which will be replenished in the coming years. At the end of December, there were 595 million barrels in reserve. A total of 714 million barrels are stored. The SPR accounts for about half of total global strategic reserves.
Experts predicted that the SPR release had little impact on prices since it was intended to be tapped in times of natural or man-made contingencies. “President Biden’s decision to tap America’s strategic reserves—which will release just 3 days’ worth of oil onto the market—is not about a real solution to our energy crisis,” Kevin McCarthy stated on Twitter in November.
Because of this, the SPR release hardly affected market sentiment and oil prices, which recently reached a seven-year high.
In the wake of the pandemic, Omicron has unnerved economies worldwide which were recovering at an accelerated pace from the shutdown. Oil prices have been mitigated by lower demand, but the rise has not yet subsided. GasBuddy claims that a national high of $4-per-gallon could possibly hit sometime soon this year.
“Most major U.S. cities could see prices peak around or just short of $4 per gallon, though some Californian cities such as San Francisco and Sacramento could see average prices soar to over $5 per gallon,” according to GasBuddy’s 2022 Fuel Price Outlook