U.S. Energy Secretary Jennifer Granholm announced Tuesday that the Biden administration has ordered the release of approximately 1 million barrels of gasoline from the nation’s reserves to lower pump prices in the Northeastern United States.
The release will occur in 100,000-barrel increments, aimed at easing fuel costs between Memorial Day and July 4. The gasoline is expected to reach local retailers ahead of the Fourth of July holiday, providing relief to consumers at a critical time.
"The Biden-Harris Administration is laser focused on lowering prices at the pump for American families, especially as drivers hit the road for summer driving season," the Department of Energy wrote in a statement.
Why It Matters: Gasoline prices typically rise during the summer months due to increased demand as Americans travel more for vacations and other activities. This seasonal surge is a result of higher consumption rates, which naturally drives up prices. Warm weather and school holidays encourage road trips, causing a noticeable uptick in fuel usage across the country.
Notably, gasoline prices are a crucial component of the Consumer Price Index (CPI) basket and a significant input cost for producers.
As The Hill reported, they often become a focal point of political debate, especially in election years. High gasoline prices can impact voter sentiment, leading to political scrutiny. Politicians may face pressure to address fuel costs.
The release is mandated by a congressional bill passed earlier this year to keep the government operational. This legislation requires the sale of gasoline from the Northeast reserve and the subsequent closure of the reserve, which was established following Superstorm Sandy
Trump Reacts: The move is expected to draw criticism from Republicans, reminiscent of the backlash following the Strategic Petroleum Reserve releases in the summer of 2022, ahead of the midterm elections.
As reported by Forbes, former President Donald Trump also criticized the current action, asserting that President Joe Biden is tapping into the reserves “in a bid to lower prices before the election” and that gas prices are “higher than they've been in a long time.”
Trump further accused Biden of resorting to the reserve “because he's unable to drill properly,” speaking to reporters outside the courtroom where his hush money trial is ongoing.
Market Reactions
Gasoline futures are experiencing a 4% decline this week, on track to notch a three-day losing streak after dropping below $2.50 a gallon. Current gasoline prices are approximately 43% lower than their June 2022 peak, when they surpassed $4.00 a gallon.
Chart: Gasoline Prices Are Currently 43% Lower Compared To 2022 Peak
The United States Gasoline Fund LP UGA saw a 1.2% decrease on Monday, followed by a 1% drop on Tuesday, and continued to fall by another 1% during early trading hours on Wednesday.
Energy-related stocks, as tracked by the Energy Select Sector SPDR Fund XLE, have underperformed recently, dropping by 0.5% on Tuesday and by 0.6% as of 09:35 a.m. EDT Wednesday.
Among the notable losers in energy stocks on Wednesday were Devon Energy Corporation DVN, Marathon Oil Corporation MRO, and EQT Corporation EQT, each experiencing declines of approximately 1.4-1.5%.
Read now: 3 Stocks To Watch As Copper Surges To Record Highs: ‘Something Is Cooking In China’
Image generated using artificial intelligence via Midjourney.
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