With fuel prices flying past $4.00 per gallon and projections of possible shortages crossing the front page of every news outlet, news the US released several million barrels of its own emergency oil reserves in just a week’s time might make you think help is on the way. But the withdrawal isn’t meant to provide any relief to Americans at the pump.
According to the U.S. Energy Information Administration (EIA), the sizable release is part of an agreement solidified with the International Energy Agency back in March, shortly after the start of the Iran war. Member countries pledged to release 400 million barrels of crude oil from their own emergency reserves to help “address disruptions in oil markets stemming from the war in the Middle East.”
As per that agreement, the U.S. is expected to provide 172 million barrels of its own emergency crude oil. And subsequent reports from the last six weeks show it appears to be holding up its part of the bargain, making small withdrawals from the US Strategic Petroleum Reserves since mid-March. The largest withdrawal so far was the 7.1 million barrels the week of April 24.
Paying up for the Iran war in crude oil
The U.S.’s plan as outlined by the EIA is a slow release of the 172 million barrels of crude in the coming weeks, instead of dumping what comes out to be about 40 percent of its current reserves into the market all at once. The withdrawal of 7.1 million barrels was uncommonly large, as only 10.4 million barrels of crude oil were released in the four weeks prior (in order of amount released in millions: 0.3, 1.7, 4.1, 4.1). Last week’s EIA report showed a withdrawal of just 5.2 million barrels of oil.
Yes, the US has dipped into its fuel reserves, but there’s still plenty of oil (over 390 million barrels) in the tank(s). Just none of it is allocated to help Americans. The reality is the U.S. is making up for the production shortages it helped create which has already had massive impacts on jet fuel, diesel, and the latest, bunker fuel as reported by AP News. And even if the war ended tomorrow, those shortages alone will take some time to replenish to a stable state.
In the meantime, gas prices are likely to remain higher as world supply demands every drop of oil it can squeeze from Mother Earth, which makes the U.S.’s bountiful surplus and its 16 million barrels of crude produced daily hot ticket items. And let’s be real, we know better as American relief of any kind isn’t even a priority of the White House.
