There are 15 gas pumps, and the line was 5 cars deep at each line of pumps waiting for gas one night after work this week. Just north of my house is a membership warehouse club that just came to town. You can buy nearly anything there, such as a lifetime supply of chewing gum, huge apple pies, and most shockingly a funeral casket. However, the cars weren’t lined up for the pies or caskets but the 50¢ a gallon discount on gas.
Gas prices are killing our budgets right now. The national average for unleaded gas is $4.22 a gallon according to AAA. It’s better here in the Midwest, Missouri, Kansas, and Arkansas has an average of $3.77-3.80 a gallon according to AAA.
On March 31, President Biden announced the release of up to 1 million barrels of oil a day every day for six months from the U.S. Strategic Petroleum Reserve to help fix the high gas prices. That would leave our Strategic Petroleum Reserve at 388 million barrels, the lowest level since 1984, according to the Wall Street Journal. This would be four times the largest ever drawdown in history according to the analysts at ClearView Energy Partners, LLC.
Releasing 1 million barrels a day sounds like a lot, but is it? In 2021the US used 19,800,000 barrels of oil a day and our US oil fields pump out 18,900,000 barrels of oil a day according to JPMorgan. A million barrels extra a day would only amount to a 5% increase in oil added to our markets.
This million-barrel release might look good, but I don’t think it does much to help gas prices. I say that because the U.S. released 50 million barrels of oil from the reserve last November, and then another 30 million barrels this month, and neither dramatically lowered gas prices.
Many in the president’s party face a difficult re-election in Congress this November. He’s getting pressured to do something because the political polls show that high gas prices are concerning to voters. The problem is there aren’t a lot of fixes. Biden has suggested suspending the federal gas tax which could help slightly but he has also sent three senior U.S. officials to meet with Venezuela to possibly import their oil. This last option would be very controversial.
As I write, oil prices are down about 5% lower on Biden’s announcement and OPEC’s (which strangely still includes Russia) announcement that they will increase production slightly. This is a start but I don’t see any significant change soon.
So, I guess I will wait my turn in line at the big membership warehouse club by my house because 50¢ a gallon is significant. It’s annoying to sit there with 45 other cars in a long line. If only I could park my truck in line and then run in and buy one of those huge, delicious pies and not lose my place in line. If these gas prices stay high, I might need to figure out how to do that.
Have a blessed week!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.