This week marks the unofficial start of holiday season with Thanksgiving on Thursday and before we know it, we will be ringing in the new year. As we enter into this holiday season there is a lot of discussion around the cost of everything from food to fuel.
Unless you have no access to social media it would not take long to find someone commenting on the higher price of gas over the past year, or let us not forget the infamous I did thatJoe Biden stickers pointing at the cost of a gallon of gas.
In an attempt to pacify the mess that we are in the current administration announced this morning that they were going to release 50 million barrels form the U.S. Strategic Petroleum Reserve SPR.
So, what does this mean? First lets take a look at the market reaction. While most of us were sleeping at 5:21 this morning JAN Crude Oil was trading at 76.02. Somewhere around the 6 oclock hour the White House released a statement about their intended action. JAN Crude made a low of 75.70 after the release. At the time of writing this article (10:58) Crude was trading at 78.27. (All Times Central).
From a longer-term perspective will 50 million barrels really make a difference? According to CEIC the United States consumes 17,177.648 Barrel/Day in DEC of 2020 (1). So 50 million barrels wont quite make it three days. Little more then putting a band aide on a broken leg in my opinion.
Additionally, this is not the first time that we have tapped into the Strategic Petroleum Reserve in 2021. Even though this release is by far and away the largest release through November of 2021 the United States has released 33.4 Million Barrels from the SPR. See table Below (2).
There are a number of ways that this action can be interpreted. Some are suggesting that this is a political move because the administration woke up and saw the plummeting polls. While others will look at this as a legitimate attempt to fix our festering energy problem.
This blog intends not to be political, and there are enough talking heads and bloggers out there that will put that spin on things. But Gas prices have a tangible impact on our day-to-day lives, operations, and savings.
My biggest takeaway from this action is the fact that we have an even bigger problem on the horizon and the government is beginning to come to that realization. If we dont find a way to solve this issue it will become a full-blown crisis before we know it, and the inflation that we have experienced thus far will seem minuscule in 2022.
(1) https://www.ceicdata.com/en/indicator/united-states/oil-consumption
(2) https://www.spr.doe.gov/dir/images/img2.jpg
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