PORTLAND, Ore., – President Biden’s decision to release one million barrels of oil per day for six months (180 million barrels) from the Strategic Petroleum Reserve (SPR) helped send the global oil price tumbling to near $100 bbl. The release is intended to stem rising energy prices and pump prices have begun to retreat in all 50 states. For the week, the national average for regular loses seven cents to $4.18. The Oregon average slips four cents to $4.68.
The national and Oregon averages are both a bit lower than their record highs set last month. The national average peaked at $4.331 on March 11 while the Oregon average peaked at $4.739 on March 11. These prices eclipse the old record highs set in 2008 when the national average peaked at $4.11 on July 17, and the Oregon average peaked at $4.29 on July 3.
The SPR is a collection of underground salt caverns along the Gulf Coast where millions of gallons of crude oil are stored. Created in 1975 and managed by the U.S. Department of Energy, it is said to be the largest supply of emergency crude oil in the world. President Biden’s announcement came as OPEC and its allies announced they would maintain a plan to gradually ramp up production with 400,000 b/d monthly increases.
“Skyrocketing crude oil prices spurred by Russia’s war in Ukraine are finally easing from the planned SPR oil release and increased COVID fears in China, and the lower global crude prices are putting downward pressure on pump prices for U.S. consumers,” says Marie Dodds, public affairs director for AAA Oregon/Idaho.
On average, about 53% of what we pay for in a gallon of gasoline is for the price of crude oil,12% is refining, 21% distribution and marketing, and 15% are taxes, according to the U.S. Energy Information Administration.
About 3% of oil, and a total of 8% of oil and refined products used in the U.S. last year came from Russia, while about 25% of Europe’s oil is imported from Russia. The U.S. is the largest oil producer in the world. Other top producers are Saudi Arabia and Russia.
Demand for gasoline in the U.S. usually climbs this time of year. But demand is defying seasonal trends and has dipped for the third week in a row, possibly due to higher pump prices and consumers altering their driving habits. Demand dipped from 8.63 million b/d to 8.5 million b/d. Total domestic gasoline stocks rose by 800,000 bbl to 238.8 million bbl last week. The drop in gas demand, alongside growth in total stocks, contributes to price decreases. If demand continues to decline as gasoline stocks continue to build, the national average will likely continue to move lower, as long as crude oil prices don’t climb again.