Rising gasoline prices and production cuts tied to a tropical storm churning through the Gulf of Mexico have some energy analysts predicting the U.S. will announce a release from its Strategic Petroleum Reserve.
Gasoline prices climbed on Aug. 26 to the highest level since May as Tropical Storm Isaac caused evacuation of oil platforms, shutting 78 percent of the Gulf oil output and several refineries. An explosion and fatal fire at the largest refinery in Venezuela has crimped supplies.
“Isaac and the Venezuelan refinery explosion increase the chances that we will have a release from the Strategic Petroleum Reserve,” Whitney Stanco, a Washington-based analyst with Guggenheim Securities LLC, said in a phone interview. The announcement “might happen this week or early next week,” she said.
White House spokesmen have said the administration is monitoring oil markets and that a release is among the actions being considered if prices were to rise or supply was disrupted. Yesterday, spokesman Clark Stevens said that there was no new announcement though “all options are on the table.”
Without a release, gasoline prices may approach $4 a gallon, making them a subject for attack when President Barack Obama faces his presumptive Republican challenger Mitt Romney during the presidential debates in October, according to Stephen Schork, president of The Schork Group Inc., an energy consulting firm based in Villanova, Pennsylvania. Obama will probably seek to avoid such criticism, he said.
“And so the easiest way to do it, for everyone to see, would be releasing barrels” from the Strategic Petroleum Reserve, Schork said in a phone interview. “It has to happen, I think, within the next week.”
Releasing oil from the stockpiles has proven no guarantee of lower prices at the pump over the past eight years. Gasoline went up in the week following the announcements in four out of six cases since 2004. In 2008 and 2011 tapping stockpiles brought down the cost of a fill-up, according to data from AAA.
Pump prices increased 0.6 cent to $3.76 a gallon yesterday, the highest level since May 7, according to AAA, the largest U.S. motoring group.
Gasoline prices fell 2 percent in the week after Obama’s release of 30 million barrels last year, done in coordination with 27 other countries belonging to the International Energy Agency.