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CNN guest and president of Rapidan Energy Bob McNally said Saturday that President Biden’s recent move to tap into the strategic petroleum reserves wouldn’t lower gas prices and warned that the US could be “in trouble” if we don’t replenish the reserves.
Host Erica Hill asked McNally during “CNN Newsroom” if Biden’s recent announcement that the administration would be releasing one million barrels of oil per day over the next six months would have any impact at the gas pump.
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“Unfortunately, probably not in a good way,” he said.
“Oil prices are probably headed higher because, while the US consumes about 20 million barrels a day, the right way to think about the United States adding one million barrels a day from the strategic stocks is to compare it to the amount of oil that we could lose from Russia due to Putin’s invasion of Ukraine.”
McNally said the one million barrels a day wouldn’t be enough to address the Russia problem and that the price of crude oil around the world determines the price in the US
“So, unfortunately, as long as Russia poses a problem to the global oil market, a disruption risk, gasoline prices are probably headed higher,” he said, explaining that a supply disruption anywhere in the world would cause a price increase everywhere.
“We all pay the same price, and that’s determined in the global crude oil market pool.”
Hill and McNally also discussed replacing the barrels of oil in the strategic reserve.
Hill noted that this is typically done when oil prices are cheaper and asked if the US needs to worry about replacing the reserve. McNally agreed that the administration likely would wait until prices went down to $70 or $80 per barrel, but warned of the need to refill the reserves sooner rather than later.
“If we don’t refill the reserves, we’re in trouble because there are all kinds of other disruptions in the world. Houthis are attacking Saudi facilities; Libya is unstable. If we don’t replenish that emergency reserve in the coming years , we will be even more vulnerable to price spikes when, as they always do, these geopolitical disruptions occur,” he stressed.
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“If we don’t replenish in the coming year —I don’t want people to freak out too much at home, right? So we’re talking about 180 million barrels, there will still be more than 400 million barrels… Correct me if my math is wrong there, in the strategic reserves, which are also there for things that happen in the United States… Are we okay, for the time being?” Hill asked.
McNally answered “not really,” noting that it was a bipartisan problem.
“The Democrats and Republicans have been very irresponsible to the Strategic Petroleum Reserve.”
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Gas prices trended slightly lower following Biden’s announcement. According to AAA, the average dropped to $4.192 per gallon after reaching a high of $4.33 on March 11.
This time last year, Americans were paying an average of $2.87 per gallon.