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The Exports Still Help Gas Prices
But even if some of the crude oil purchased from the SPR does not stay in the States, energy analysts and economists told FactCheck.org that the exports still help with U.S. gasoline prices.“The markets for crude oil and for gasoline are global,” Lutz Kilian, senior economic policy advisor at the Federal Reserve Bank of Dallas, said in an email. “Selling this crude (whether at home or abroad) will tend to lower the global oil price, which is what determines what refiners pay for crude oil. Hence, lower crude prices allow the price of gasoline in the U.S. (and elsewhere) to decline.”
Finley of the Baker Institute said that American refiners have to determine if they can use the reserve oil that will be released. If not, it may be of use abroad.
“Each individual refinery is optimized for its marketplace and is built to run optimally on a certain type of crude oil and to produce a certain mix of gasoline and diesel fuel,” he told us. “And so it may be that the type of oil being offered from the Strategic Petroleum Reserve doesn’t perfectly match what the U.S. refiners are looking for and it might be a better match for the specific requirements of refiners elsewhere.”
Kilian made a similar point.
“If the oil released is medium sour, for example, a U.S. refiner specializing in light sweet crude would not be interested,” he explained. “There may be spare capacity at a refinery in Europe, however, that specializes in processing medium sour crude, so trade makes sense.” (Light and medium refer to the density of the crude oil, and sweet and sour refer to measures of its sulfur content.)
Patrick De Haan, head of petroleum analysis for the fuel-price tracking service GasBuddy, told us in an interview that so far the SPR releases are having an impact on gasoline prices by “preventing prices from escalating more substantially” – not so much by “actively pushing prices down.”
He said that dynamic would not change if the oil from the SPR was used exclusively by refiners in the U.S. to make gasoline.
“The government’s role is to supply oil to a market that needs it. It’s irrelevant where it goes as long as it’s going into the market,” De Haan said.
Furthermore, the U.S. already exports plenty of oil to other countries, including China, and has done so for years. Annual exports of crude oil have averaged around 3 million barrels per day since 2019.
That’s significantly more oil than the almost 260 million barrels of crude oil that Biden announced would be released from the emergency reserve between October 2021 and October 2022 — only some of which has been exported.
U.S. Selling Oil from the Strategic Petroleum Reserve to the Highest Bidding Companies - FactCheck.org
Q: Is the Biden administration selling crude oil from the Strategic Petroleum Reserve to other countries? A: The oil is sold to eligible companies that make the highest offers. Some of the companies are U.S. subsidiaries of foreign companies, and some that purchased oil have then exported a...
www.factcheck.org
