USD professor on why release of oil from reserves will have ‘small effect’ on gas prices – fox5sandiego.com

by: Kelsey Christensen

Posted: / Updated:

SAN DIEGO – Holiday travel is expected to hit pre-pandemic levels and it’s going to be a pricey one for San Diegans hitting the road as gas prices soar.

“It’s a little bit sad, but I guess it is what it is, you gotta travel,” traveler Connor Rule said.

In efforts to cut costs, President Biden announced Tuesday that the Department of Energy will release 50 million barrels of oil from the Strategic Petroleum Reserve, which is an emergency backup of oil typically used during natural disasters. The U.S. and a handful of other countries are pulling it into the market, hoping to cut back on soaring costs during such high demand.

But University of San Diego economics professor Alan Gin said it won’t decrease by that much. 

“It’s not going to drop like a dollar a gallon as a result of this,” Gin said. “There’s just not enough out there but, again, it could have a small effect.”

He said the drop in price could be 10 to 15 cents per gallon. But it’s going to take about two weeks to take effect and from there Gin said the extra oil supply will only last a few days. 

The move comes about a week after the president called on the FTC to investigate whether oil companies were raising prices in the correct manner. 

Gin said high prices at the pump come as the cost of oil spikes. He said a big factor is supply and demand. As the economy rebounds, that means more people are driving at a time when oil is running low. 

“OPEC and Russia cut back their production a lot during the pandemic and they have increased but not to the same levels that they were at before the pandemic,” Gin said. 

And all that means higher prices at the pump. According to AAA Southern California, San Diego’s gas prices are only 6 cents shy from the highest on record. 

It’s currently about $4.66 on average for a gallon of regular gas in San Diego. That’s up about $1.50 from this time last year. 

The hope is once travel dies down, so will sky-high prices. 

“After the holidays though, I think things will settle down a bit and there won’t be as much travel and I think the prices will start edging downwards,” Gin said.