Welcome back to closing balance after news everyone,
President biden announcing a plan to release 15 million
barrels of crude oil from the nation's emergency supply
and the move coming as he is trying to
dampen high gas prices ahead of the midterm elections and
of course after the Saudi Arabia led Opec plus organization
did work the president by siding with Russia and agreeing
to a massive production cut.
Well,
the plan aims to add enough supply to prevent oil price
fights that could hurt consumers and businesses this coming winter.
Take a listen.
Independent analysts have confirmed that draw down some reserves so far
have played a big role in bringing down oil prices,
bringing them down so we're gonna continue to responsibly use that national asset.
Well, joining me now is robert Sinclair,
senior Manager of public affairs at triple A Northeast robert.
It's always a pleasure to have you on the show.
And I know the president saying that the release of oil from the strategic release,
I should bring down prices at the pump,
which were one point at one point over $5 a gallon
in june so is it enough to bring prices down?
Especially as we see Opec planning to cut production starting in november.
Well,
I think the fact and the report from your reporter
in Washington was very illuminating because it mentioned the fact
that it's a continuation of the cuts that we are
already seeing that these cuts now will continue into December.
So I think um,
the extra oil on the market certainly helps an extra million barrels per day, 1%.
Global production daily is about 100 million barrels.
We'll make a difference. Um, we're seeing gasoline prices come down right now.
We're at 3 85 per gallon now, we were at 3 92 a week ago, but we were 3 67 a month ago.
So we're really kind of returning to where we were.
But an extra million barrels per day continuing into december will certainly help.
I think a lot depends on what happens in china. They still have major lockdowns
in cities,
very large cities including shanghai because of Covid and china is
the number one importer of crude oil in the world.
So with those lockdowns and that the lower demand that's happening over there,
I think that will play into the price of crude um, continuing to go down.
But this is,
this is not a day by day situation, an hour by hour situation.
Kristen this is a minute by minute situation and things could change drastically
by the time we finish our conversation to affect gas oil prices,
gasoline prices
going forward, robert, let me ask you this
as prices are higher across the board.
Certainly we saw it in the latest consumer price index
data and americans try to budget for these winter months.
What's the general direction of gas prices
that consumers should be cognizant of heading
into these winter months so they can
make the appropriate decision with their finances.
Well,
I think we've seen an indication of what's going
to happen already with the Energy Information Administration saying that
demand for guests lean last week compared to the
week before was 50 million gallons per day less.
Um, again, but compared to the week before.
So generally as we move into the winter months, the fall and winter months,
we see a lessening in demand and as people tend to hunker down
um, and not drive as much.
And we did surveys asking drivers what the pain point
was for the price of gasoline back in 2018.
And then again back in March and 2018 40% of
drivers said $3 a gallon was the pain point.
This past March,
60% said $4 a gallon was the pain 40.75% said $5 a gallon was the pain point.
So we're 3 85 we're pretty close to $4 a gallon.
So I'm sure more than 40%,
probably more than 50% of drivers are suffering
right now with the price of gasoline.
And I remember a conference board report from 2018 that said that 42%
of Americans don't have $400 of savings to pay for an emergency expense.
And I think that remains the case. It might be worse now.
So we're talking about drivers, maybe half
of them in the country not having the elasticity in their budgets
to deal with the gasoline prices that we are seeing now,
they would have to go down below $3 a gallon,
probably well below $3 a gallon for any kind of real relief to be
had on the part of a significant portion of drivers in the country.
So hopefully prices will keep going down as we drive less.
Americans can vote with their, with their steering wheels. If you will,
let me ask you one more question before we simply run out of time for this segment,
which is that how do you expect the release
of the strategic oil reserves that the biden administration has
announced the president himself to offset the production cut
that we'll see from Opec plus come next month.
Is that an even offset?
Well, even before we saw the Russian invasion of Ukraine,
Opec plus was having a tough time keeping up with demand
that many of the countries were not able to produce that,
which they said that they would produce.
So I think we may have already seen the effect of cuts uh,
as far as production of oil is concerned because
the country's just aren't able to do it.
So I think there would be probably very little
effect as far as the production cuts are concerned.
And again, it's really going to depend on global demand.
And I think on a couple of major nations, um,
there was the talk of Iranian oil coming back
onto the market if a nuclear deal went through.
And also there's talks about allowing Venezuela Venezuelan
oil to come back onto the market.
So if those two things happen,
I think the production cuts will be minimal and have a minimal effect.
All right,
robert Sinclair is the new manager of public affairs at Triple A Northeast robert.
Thank you as always.