As U.S. gasoline and diesel prices reached a record price point in June amid global conflict and economic policy decisions, the United States exported more than 5 million barrels of oil to Europe and Asia.
In an effort to keep energy prices under control, President Biden ordered approximately 1 million daily barrels to be released from the Strategic Petroleum Reserve (SPR) through October.
U.S. officials claim that if the SPR were not tapped, prices at the pump would be much higher than current levels. The national average sits at $4.66 as of Tuesday, a far cry from the $2.28-a-gallon average just before President Biden took office.
“The SPR remains a critical energy security tool to address global crude oil supply disruptions,” a Department of Energy spokesperson said, adding that the emergency releases helped ensure a stable supply of crude oil.
According to U.S. Customs data, Phillips 66, the fourth-largest U.S. oil refiner, shipped about 470,000 barrels of sour crude from the Big Hill SPR storage site in Texas to Trieste, Italy.
Atlantic Trading & Marketing exported two cargoes of 560,000 barrels each. At the same time, additional shipments of SPR crude were sent to the Netherlands, a Reliance refinery in India, and China, an industry source said. And finally, at least one cargo of crude was exported from the West Hackberry SPR site in Louisiana and is set to be shipped out sometime this month.
“Crude and fuel prices would likely be higher if the SPR releases hadn’t happened, but at the same time, it isn’t really having the effect that was assumed,” said Matt Smith, lead oil analyst at Kpler data and analytics.
Roger Read, a Wells Fargo Securities senior energy analyst, explained why Biden’s planned daily release from the SPR is “unlikely to solve the problem.”
One million barrels daily is “only about 1% of daily global production and 5% of U.S. consumption,” Read said. “I don’t want to make it sound like it’s nothing, but…in the end, it’s a little bit of a Band-Aid.”
He opined that Biden is likely hoping OPEC can catch up and bring stability later in the year.
OPEC, the Organization of the Petroleum Exporting Countries, coordinates policies to stabilize oil markets. This means OPEC’s primary responsibility is to ensure an efficient, economical, and regular supply of petroleum to consumers, thus preventing oil price volatility.
Exporting 1 million barrels daily is undoubtedly draining the SPR, which last month fell to the lowest level since 1986. U.S. crude inventories are now at the lowest since 2004 as refineries run near peak levels. Refineries in the U.S. Gulf coast are utilized at 97.9%, the most in three and a half years.