Gas prices in the United States edged down in the recent week as stocks increased, demand decreased, and the Biden administration announced an “unprecedented” release of oil from the country’s strategic reserves.
The price of regular gas averaged $4.18 as of April 4, down 1.3 percent from a week ago when prices were averaging $4.24, according to
data from American Automobile Association.
Total stocks of gasoline rose by 785,000 barrels to 238.8 million barrels for the week ending March 25 when compared to the previous week, according to data from the U.S. Energy Information Administration (EIA). During this time, gasoline demand nationwide declined from 8.63 million barrels per day (bpd) to 8.5 million bpd.
Gas prices also faced downward pressure after the Biden administration announced that it will release a million additional barrels of oil per day on average into the market every day for the next six months. The oil will come from the country’s strategic petroleum reserve.
“The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time,” the White House said in a March 31
Fact Sheet. “This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.”
Opinions on the oil release from strategic reserves are mixed. Biden had ordered a similar release in November, adding 50 million additional barrels to the market. After Russia invaded Ukraine, 30 million more barrels were released. However, oil prices went up despite these actions.
Commerzbank’s Carsten Fritsch argued in a report that the planned six-month
oil release is likely to make sure that the oil market does not remain undersupplied during second and third quarters.
However, Stephen Brennock from oil broker PVM does not expect the oil release to make up for the shortfall created from the loss of Russian oil supplies, according to
Reuters.
Roger Read, senior energy analyst at Wells Fargo Securities, pointed out that Washington’s planned release will only account for one percent of daily global oil production and five percent of U.S. consumption. It’s “unlikely” to solve the problem, he said according to
CNBC. “In the end, it’s a little bit of a Band-Aid.”
Meanwhile, oil analyst Patrick De Haan sees gas prices in America coming down this week. “The US national average has declined 6c/gal over the last week to $4.173/gal while diesel has fallen 2.9c/gal to $5.097/gal,” he said in an April 4
tweet.
“#GasPrice declines will continue to outpace diesel and should fall another 4-9c/gal in the week ahead barring any unforeseeable changes in situations.”
