Biden’s Gas Policy? Right Idea, Wrong Action

Permanently increasing the supply of gas will lower the price and provide enough gas for the US to use and sell.

President Biden announced that he will release one million barrels of oil from the strategic reserve each day for the next 180 days in order to increase the supply. While Biden is correct that a reduction in the supply of gas has caused gas prices to rapidly increase, the action he has taken is simply wrong.

And it’s wrong for a number of reasons.

First, this action is temporary. It will likely lower gas prices about 15 cents per gallon during the six-month period. However, because prices will fluctuate widely over the next six months, the decrease in price will not be easily noticeable by the general public. After it expires, the price will return to normal. His action doesn’t really increase total supply, it simply takes supply from the reserve and puts it onto the market.

That means the strategic reserve will be depleted by about 50%. Eventually, the reserve will have to be replenished. If oil hovers at $100 per barrel the cost to replenish the reserve will be a whopping $18 billion. That huge number is actually worse than it looks.

In April 2020, with most of the world locked down and not using cars for transportation, oil that was on tankers saw no…