CEI: CEI’s The Surge

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 just before Memorial Day weekend of releasing gasoline from federal stockpiles in the Northeast.

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.

Doubtless, there will be future summers where gasoline prices are as high or higher than they are today. 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.