Biden gasoline sale isn’t expected to have a major impact pump prices

The Biden administration’s move to sell 1 million barrels of gasoline from a reserve in the Northeast is unlikely to have a substantial effect on pump prices as summer driving season gets underway, according to market analysts. 

The Department of Energy said Tuesday the sale would be timed to have a maximum impact on prices this summer with deliveries completed before the Fourth of July holiday.

But the barrels in the Northeast Gasoline Supply Reserve are equivalent to just 2.65 hours of total U.S. gasoline consumption and two or three days in the areas where the gas is stored, said Patrick De Haan, head of petroleum analysis at GasBuddy.

“It’s not going to be a huge needle mover,” De Haan said, though the sale could provide 5 cents to 10 cents of relief in the Northeast where the gasoline market is historically tight.

“This is not going to be huge party at the pump,” the analyst said.

The motorist association AAA agrees, with spokesman Andrew Gross saying the sale might “help stave off any regional pump price surges, but likely won’t move the national average that much.”

Oil prices surged last month as Israel and OPEC member Iran stood on the brink of war, raising concern at the White House that gasoline prices could jump heading into the summer.

But gas prices have been trending lower for weeks now as demand has softened and U.S. oil prices have pulled back 11% from April highs after a broader conflict in the Middle East was averted.

Prices at the pump are averaging about $3.61 per gallon nationwide heading into Memorial Day weekend, around 5 cents lower than the average last month, according to data from the motorist association AAA. However, current prices are still roughly 5 cents higher than the year-ago average.

When adjusting for inflation, pump prices are about 2% lower compared to last year, according to the Energy Information Administration.

The gasoline sale announced by the Biden administration fulfills a mandate passed by Congress in March to close the Northeast Reserve this year.

De Haan said the reserve didn’t make financial sense to begin with. It was set up in in 2014 in the aftermath of Superstorm Sandy, which knocked out refineries and caused chaos at the pump.

But the reserve cost taxpayers $200 million just to maintain while the gasoline in the stockpile is only worth about $103 million right now, De Haan said.

“I don’t like the political victory lap,” he said of the Biden administration’s announcement. “It didn’t make sense to have this reserve. [Former President Donald] Trump tried to shut it down in 2020. Congress now approved it being shut down.”

De Haan said the summer driving season is already getting off to a “soft start,” with gasoline demand about 8% lower through Thursday compared to the year-ago period. Even in costly California, gasoline prices are down…