Biden Administration Sells 1 Million Barrels of Gasoline Prior to July 4th Holiday

Federal Government Completes Sale

The U.S. federal government has successfully sold 1 million barrels of gasoline from the Northeast Gasoline Supply Reserve (NGSR), according to a statement released by the White House. This sale was announced last month, with the aim of releasing 42 million gallons of gas from storage facilities in Maine and New Jersey to help reduce pump prices during the busy summer driving season.

Contracts Awarded to Five Companies

Following 19 proposals from five companies since May 21, the federal government awarded contracts to all the firms: BP (500,000 barrels), Vitol (200,000 barrels), Freepoint Commodities (100,000 barrels), George E. Warren (100,000 barrels), and Irving Oil (98,824 barrels). The gas reserves were sold at an average price of $2.34 per gallon.

Administration Officials Praise the Sale

Senior administration officials have hailed this sale as another victory in the federal government’s efforts to combat inflation. Energy Secretary Jennifer Granholm stated that the Biden-Harris Administration continues to take strategic action to lower prices for American consumers, especially as the summer driving season begins. She added that this release ensures a sufficient supply for the northeast when it is most needed.

Gasoline Prices and the White House's Efforts

Despite the fact that gasoline prices have not significantly increased this summer, the White House is working on a number of measures to reduce energy costs. National Economic Advisor Lael Brainard stated that gas prices have decreased nearly 20 cents in the last two months, but there is still more work to be done. This release will help lower prices at the pump, building on other actions by President Biden, including historic releases from the Strategic Petroleum Reserve, record energy production, and the largest-ever investment in clean energy.

Current Gas Prices

According to the American Automobile Association (AAA), gas prices are currently around $3.49 per gallon, down 5 cents from a year ago. However, the cost of gas could start to increase due to the rise in crude oil prices. U.S. crude reached $83 a barrel on the New York Mercantile Exchange during the July 1 trading session. So far this year, the West Texas Intermediate crude oil benchmark has increased about 17 percent.

Factors Influencing Oil Prices

Oil prices had cooled since the end of April, but the recent resurgence of geopolitical tensions, investors preparing for the Federal Reserve to cut interest rates, an active hurricane season, and tight international energy markets have boosted oil prices in recent sessions.

Gasoline Demand and Prices

The latest Energy Information Administration (EIA) data show that gasoline demand was 8.96 million barrels last week, down 240,000 barrels from the same period a year ago. Since January 2021, gas prices have cumulatively increased 55 percent, and oil has surged 66 percent.

Background of the Northeast Gasoline Supply Reserve

The Northeast Gasoline Supply Reserve was created in 2012 by President Barack Obama following Hurricane Sandy, which caused significant damage to refineries in the region. Recent EIA figures revealed domestic gas inventories totaled 233.886 million barrels for the week ending June 21, down more than 3 percent from the same period three years ago.

White House's Position on Replenishing the SPR

The White House has repeatedly shifted its position on replenishing the Strategic Petroleum Reserve. In April, the Department of Energy abruptly canceled a 2.8-million-barrel offer to refill a significant storage facility in Louisiana. This decision occurred one month after issuing a solicitation for August and September deliveries. However, Energy Secretary Jennifer Granholm stated in a June 28 interview that the administration could accelerate offers to replenish U.S. reserves beyond a 3-million-barrel-a-month pace.

Establishment of the Strategic Petroleum Reserve

The Strategic Petroleum Reserve was established by the federal government in 1975 in response to the 1973–1974 oil embargo. Its purpose was to limit the impact of disruptions in global petroleum markets. Officials could withdraw from the SPR during emergencies, energy interruptions, or supply troubles.

Final Thoughts

The world’s largest economy consumes about 20 million barrels of oil per day, meaning current reserves would be exhausted in 18 days if production ceased. This raises questions about the sustainability of current consumption levels and the effectiveness of measures to combat rising energy costs. What are your thoughts on this issue? Share this article with your friends and sign up for the Daily Briefing, which is delivered every day at 6pm.