GREENSBORO, N.C. — With President Biden’s announcement to release 50 million barrels of oil from the Strategic Petroleum Reserve (SPR), 2 Wants to Know how this decision will affect your wallet the next time you’re at the pump.
Todd McFall is an assistant teaching professor in the department of economics at Wake Forest University.
He said consumers should see prices drop fairly quickly.
“Historically, the use of the Strategic Petroleum Reserve has dropped the price of a barrel of oil somewhere between two and ten dollars,” McFall explained.
“Which in percentage terms is going to be somewhere between about five percent and 15-percent. So right now, I think gas in the Piedmont is about $3.50 a gallon. Ten-percent drop on that, like conservatively would bring it down to about $3.10, $3.15 per gallon.”
But how long will this drop last?
The SRP is sort of an emergency fund for gasoline.
McFall said releasing this oil supply may lower prices in the short term.
“He is a president that has positioned himself to be the front of the pack on climate change and higher prices on gasoline would be helpful to mitigate climate change,” McFall said.
“So, I think from the Biden political perspective, like this is also a short-term versus long-term thing. They’re going to have to give up a little bit in the long-term to make sure voters understand what they’re trying to do for them in the short-term.”
The Department of Energy will make the oil available from the SRP in two ways.
Thirty-two million barrels will be released in the next few months and will return to the reserve in the years ahead, while 18-million barrels will be part of a sale of oil authorized by congress.