Energy expert, drivers react to Biden releasing more oil from country’s emergency stockpile
NEW ORLEANS (WVUE) – President Joe Biden is tapping into the nation’s emergency oil supply again in hopes of keeping gas prices from skyrocketing and drivers and energy experts have reacted quickly to the announcement.
Kevin Derbigny pumped gas into his truck well aware of Biden’s move.
“Hopefully that helps get back on track, because at some point you really had to break the bank to fill up, especially when your truck is 24, 25 gallons,” Derbigny said.
Biden announced on Wednesday October 15 that he was ordering the release of 15 million barrels of oil from the reserve located in Texas and Louisiana.
But is this sufficient in relation to consumer demand?
Professor Pierre Conner is the executive director of the Energy Institute at Tulane University.
“In the grand scheme of things, I don’t think it’s a lot. The total production and consumption in the world is around one hundred million barrels per day. So in terms of total percentages, it’s obviously pretty small,” Conner said.
The oil companies will have to buy the oil taken out of the SPR.
“I think selective refiners might need a particular type of crude that would be available or cheaper than it would take to transport it,” Conner said. “But the biggest issue with gasoline prices is that the refinery complex in this country is operating at a high utilization level, so even if we had more crude available, turning it into gasoline would be the biggest constraint. We’re running at over 90% efficient utilization, so there’s not much room left to produce more gasoline.”
The two Louisiana locations that are part of the strategic petroleum reserve are Bayou Choctaw in Iberville Parish and West Hackberry in Cameron Parish, according to the US Department of Energy.
Biden does not rule out releasing additional oil.
“We call it a ready-made plan. This allows us to act quickly to prevent oil price spikes and respond to international events,” Biden said.
Conner also commented on the refining environment.
“We haven’t added refining capacity in the United States for 30 years and you know gasoline is one of the products of the refining process,” he said.
The release of oil from the emergency stock follows an agreement by OPEC and its allies to cut oil production by 2 million barrels a day.
But some energy experts aren’t convinced the amount is set in stone.
“I think a very important factor to consider is that the amount of production in a target is not necessarily the amount that’s actually, you know, released to market, so you have to watch it closely to see if OPEC is true to their word on what they’re getting out of the market,” says Conner.
The reserve’s authorized storage capacity is 714 million barrels, but before Biden’s announcement, the amount of oil stored by the government was well below that.
“We’ve now reduced the SPR to around 400 million barrels, which is really the lowest level since 1984 since the original approval,” Conner said. Still, he says it takes about 13 days for oil released from the strategic petroleum reserve to enter the market.
“The physical movement of crude oil can take a bit of time, but there have been exchanges and releases that have occurred due to disturbances from hurricanes or other disturbances and they can be quite efficient, so systems are in place,” says Conner.
And he pointed out that oil prices are not set by energy companies, but rather the market sets the prices.
As for Derbigny, filling up costs nearly $80. Not so long ago he was paying even more.
“A hundred, a hundred or more,” said Derbigny.
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