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Oil prices are unlikely to drop to the level the U.S. Administration has said would trigger purchases for refilling the Strategic Petroleum Reserve (SPR), U.S. oil executives and analysts say, suggesting that the shale patch will not boost production in response to President Biden’s plan to increase output in the short term.
Nearly 80 percent of 49 respondents in a Twitter poll created by Matt Gallagher, chief executive at Greenlake Energy Ventures, responded last week that the prompt WTI Crude price would be higher than $72 per barrel in 2023. $72 oil is the upper limit the Biden Administration has set for stating repurchases of crude for the emergency crude oil reserve.
Last week, President Biden announced that the Administration “intends to repurchase crude oil for the SPR when prices are at or below about $67-$72 per barrel, adding to global demand when prices are around that range.”
The Biden Administration is in the process of releasing 180 million barrels from the SPR by the end of this year, and is considering further releases in its efforts to bring down gasoline prices ahead of the midterm election on November 8.
The Administration hopes that the plan to refill the reserve will help stimulate greater domestic oil production as it would signal stable long-term demand.
But the U.S. shale industry is unlikely to significantly boost output, analysts have told Reuters.
The announcement of the latest release and the repurchase price set at $67-$72 a barrel was President Biden “trying to walk a fine line between supporting his green base and trying to lower fuel prices. And he did neither,” Trisha Curtis, CEO at consultancy PetroNerds, told Reuters.
American Petroleum Institute (API) President and CEO Mike Sommers said last week, commenting on President Biden’s remarks about gasoline prices, “At a time when American energy can be a stabilizing force at home and abroad, we urge caution in continuing to rely on short-term efforts that are no substitute for sound long-term policies that enable American energy leadership.”
“The administration should instead focus on addressing the fundamental economic and security challenges we face by spurring more investment in American energy, infrastructure and markets that enable U.S. consumers to benefit from America’s reliable energy resources,” Sommers added.
