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Feds Tap Oil Reserves – Oil Prices Plunge

Move comes as motorists curb driving.

by on Jun.24, 2011

The decision to tap the federal oil reserves was followed by a $5 a gallon dip in petroleum prices.

Wary that oil prices could start surging for the summer, the White House will release 30 million barrels of oil from the nation’s strategic reserves in an effort to offset supplies lost due to Mideast turmoil.

How much of an impact the move will have is uncertain, however.  The move is the equivalent of just two days worth of oil consumption in the U.S. and about three days of oil imports.  But in the past, tapping into the country’s emergency oil reserves has been able to ease upward price pressures.

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Oil prices have actually already been falling, according to the AAA Daily Fuel Gauge Report, reaching a national average of $3.61 a gallon on Thursday, the 20th consecutive daily decline.  That figure is 21 cents below where fuel prices stood a month ago.  One reason may be that motorists have been curbing their driving in response to higher fuel prices.

“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” said Energy Secretary Steven Chu.