Fewer Memorial Day gimmicks, more oil production will bring down gasoline prices

The Biden administration treats high gasoline prices as a public relations problem rather than a real hardship for millions of Americans, hence the gimmicky announcement ahead of the Memorial Day weekend that it will release gasoline from federal stockpiles in the Northeast. As with similar releases of oil from the Strategic Petroleum Reserve in 2022, the added supply is not enough to reduce prices appreciably, which currently average about $3.60 per gallon nationwide.  And the preference for draining the nation’s emergency stockpiles stands in sharp contrast to the administration’s aggressive efforts to block the far greater supplies potentially available through increased oil production.

At least the administration understands the law of supply and demand when it says putting more fuel on the market will reduce prices. But these stockpiles were designed for temporary emergencies – like Middle East turmoil or major storms – and are not nearly enough to help hard-pressed drivers very much or for very long. The total of 42 million gallons of gasoline to be released through July 4th may sound like a lot in press releases, but Americans use 376 million gallons  each and every day.   

In fact, the recent history of releases from government stockpiles (usually oil from the Strategic Petroleum Reserve sites in Texas and Louisiana) has often left experts debating how much, if any, prices moderated in response. In 2022, for example, the releases did not stop gasoline and diesel prices from reaching $5.00 per gallon in the summer of that year.  

The 42 million gallons of gasoline to be released pales in comparison to the lost potential from the Biden administration’s opposition to oil leasing on federal lands, including Alaska’s Arctic National Wildlife Refuge (ANWR). By some estimates, ANWR drilling could reach 880,000 barrels or more per day and stay productive for two decades. Since each barrel of oil can be refined into about 20 gallons of gasoline, the 42 million gallon release equates to no more than a few days’ worth of peak production from ANWR. And ANWR is the largest, but far from the only potential source of oil on federal lands and offshore areas that is being placed off limits.    And note, this would be new oil added to the market rather than previously produced oil that had been held in storage.

Granted, oil from ANWR won’t come online immediately, but it is worth remembering that the Biden administration reversed a process to develop ANWR that was already in place  when he took office in 2021. Further, the expectation of future supplies has a near-term effects on current prices that is well established though hard to quantify.    

Doubtless, there will be future summers where gasoline prices are as high or higher than there are today. This is especially so given that the administration’s fantasy of a wholesale switch to electric vehicles is being supplanted by the reality that most new vehicle buyers don’t want them. Eliminating the government obstacles to increased domestic oil production makes infinitely more sense than draining existing stockpiles in a futile attempt at a short-term price drop.