The decision to tap the federal oil reserves was followed by a $5 a gallon dip in petroleum prices.
Wary that oil prices could start surging for the summer, the White House will release 30 million barrels of oil from the nation’s strategic reserves in an effort to offset supplies lost due to Mideast turmoil.
How much of an impact the move will have is uncertain, however. The move is the equivalent of just two days worth of oil consumption in the U.S. and about three days of oil imports. But in the past, tapping into the country’s emergency oil reserves has been able to ease upward price pressures.
Oil prices have actually already been falling, according to the AAA Daily Fuel Gauge Report, reaching a national average of $3.61 a gallon on Thursday, the 20th consecutive daily decline. That figure is 21 cents below where fuel prices stood a month ago. One reason may be that motorists have been curbing their driving in response to higher fuel prices.
“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” said Energy Secretary Steven Chu.
The move was hailed by some who have demanded that President Barack Obama move to cut gas prices, but others, including Republican lawmakers, denounced the decision to tap the strategic reserves as a purely political move.
Dubbing the move “pathetic,” House Majority Whip Kevin McCarthy, a California Republican, asserted the reserves are “intended for national emergencies, not as a political tool.”
But others countered that similar steps have been taken in the past by presidents of both parties, including George W. Bush during the 2008 fuel price run-up, and the inflow of additional oil has often helped stabilize or drop fuel prices, however temporarily.
“This is a very welcome decision by the president,” countered Vermont Congressman Peter Welch, who suggested it may push back against the oil speculators he claims have driven up gas prices by an average 50 cents a gallon.
For the moment, the White House may be able to claim success, oil prices immediately dropping by about $5 a barrel to around $90 in late Thursday trading.
But it remains to be seen if the impact will be more than short lived. Part of the problem the Administration has to deal with is that as the summer season gets underway Americans traditionally begin to take the road trips they’d long been planning, driving up demand. This year, some have warned that could nudge fuel prices as high as $5 a gallon.
But the recent declines reflect the fact that motorists have not only been migrating to more fuel-efficient automobiles but also cutting back on their travel.
A report by the Federal Highway Administration reveals April travel dipped by 2.4% — equivalent to 6.1 billion miles less than in April 2010. It was the second monthly decline in a row and the biggest drop since February of 2010.
The AAA, meanwhile, is predicting a “slight decline” in travel during the upcoming Independence Day holiday. Last year, 33.7 million Americans drove at least 50 miles over the long weekend. This year, the number is expected to drop to 32.8 million.