Oil in Global Economy Series: United States release 4.5 million barrels of crude from SPR

In response to the disaster caused by Hurricane Harvey that battered, the U.S. Gulf Coast, Southern Texas, and Louisiana last week, the United States Department of Energy (DoE) led by secretary Rick Perry has released almost 4.5 million barrels of crude oil from the Strategic Petroleum Reserve (SPR). Three million barrels of crude oil will reach Marathon Petroleum Corporation from reserve and another half a million barrels will reach Valero Energy Corp. from the reserves at the Bayou Choctaw site. Previously another 500,000 barrels were released for Phillip66’s refinery in Louisiana. Energy Secretary Rick Perry said that the government is trying to stabilize without affecting the market pace too much.

At the peak of the disaster, U.S. refineries operating in the Gulf Coast were shut down hitting capacity in the tune of 4.9 million barrels per day. While some refineries were operating and some restarted, many of them are starving of crude oil. The crisis last week, pushed the gasoline price above $2 per gallon. Nationwide, the average price for a gallon of gasoline is $2.52, the highest price of 2017, according to AAA. States experiencing the highest gasoline price hikes include South Caroline, Delaware, and Kentucky. Many of the refineries have come online this week but estimate suggests that still, capacity in the tune of 3 million barrels are down. WTI is currently trading at $47.3 and Brent at $5 per barrel premium to WTI.