Oklahoma Experts Weigh in on Historic Release From Nation’s Strategic Oil Reserve

Beverly Cantrell - November 24, 2021 10:07 am

The Biden administration is announcing a plan to take the edge off the high gas prices, by releasing 50 million barrels from the nation’s strategic oil reserves.

“What they’re trying to do here is increase the supply to reduce the price to make it easier for American consumers in this holiday season to drive their cars or get on a jet plane,” said Dr. Steve Agee, Professor of Economics and Dean of Emeritus for the Oklahoma City University.

50 million barrels sounds like a lot of oil but Agee says it’s really not based on daily consumption.

“We consume in the United States alone about 20 million barrels a day, so we’re talking about two and half days’ worth of oil supply based on our consumption,” said Agee.

This means the impact Oklahomans would feel is likely short-lived. Some gas experts say you might see gas go down 25 cents a gallon for only a few months.

“As a practical matter, I personally don’t think this going to have a big impact on crude oil prices and gas prices long term,” said Agee. “Psychologically, I think it will impact things in the short run but it’s not going to change or shift the markets dramatically in my opinion.”

It’s also going to take some time to do this.

Agee says it’ll take at least 90 days to reach 50 million barrels, which would put us past the holiday driving season.

“What happens after 90 days if this doesn’t really materially drop the price of oil and thus the price of refined products,” said Agee. “Will President Biden do it again in 90 more days, will he withdraw another 50 million barrels, we don’t know.”

Historically the strategic oil reserve is used for real dire situations.

In 2011, President Barack Obama tapped into it when disruptions in Libya were happening. During Katrina, President Bush also used the emergency supply.

Experts say the 50 million barrel release by Biden is the biggest.

 

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