Even if the U.S. Administration decides to release crude oil from the Strategic Petroleum Reserve (SPR), American drivers are unlikely to see gasoline prices coming down, because U.S. refiners already have enough oil to run at maximum rates, and much of the oil products that would be produced could be exported, analysts briefed by Reuters say.
Last month, reports emerged that the Trump Administration was considering tapping into the SPR to try to reduce gas prices before the mid-term elections in November. Options being reviewed range from a test sale of 5 million barrels to the release of 30 million barrels from the SPR, Bloomberg reported in July, citing people familiar with the deliberations.
As of August 3, the SPR inventory stood at 660 million barrels of oil, including 254.6 million barrels of sweet and 405.4 million barrels of sour crude.
Various analysts who have spoken to Reuters think that even if a potential SPR release manages to bring crude oil prices down temporarily, this would not automatically mean that prices at the pump would also drop.
“It’s unlikely to have any measurable impact on the diesel or gasoline market in the United States,” Zachary Rogers, refining and oil products analyst at Wood Mackenzie in Houston, told Reuters. “There’s already enough crude to run at max rates,” Rogers noted.
According to Kenneth Medlock, a fellow in Energy and Resource Economics at Rice University, U.S. demand is not as high as to take in all the refined oil products. Related: The Shale Boom That Will Never Happen
And if an SPR release ended up as exports outside the U.S., this would lead to “a very negative reaction” among American taxpayers, Barry Worthington, executive director of the United States Energy Association, told Reuters.
For the week ended August 6, the average U.S. regular gasoline price was $2.852 a gallon, up by $0.474 from a year ago, EIA data shows. In the early days of August, the national gas price average was $2.87/gallon, which is the most expensive gas price seen in August since 2014, AAA says.
By Tsvetana Paraskova for Oilprice.com
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