The Trump administration has “started to panic” over skyrocketing oil prices, according to CNN’s Wolf Blitzer.
That rapid rise in oil prices has now raised the possibility of tapping into the U.S. strategic petroleum reserve, despite the administration previously ruling that out.
Even if those reserves are used, it may not have an immediate effect.
CNN Senior Reporter David Goldman said history shows that prices go up rapidly but descend slowly, a term the oil industry calls “rockets and feathers."
Even with added fuel from U.S. reserves, prices won't dive. Goldman points to a 2022 situation where President Joe Biden released 180 million barrels of oil from the strategic petroleum reserve.
“And by the Biden administration's own calculations, gas prices only fell by around $0.17. So that's not a huge dent,” Goldman said. He noted that the slight price drop then took four months to accomplish. A similar release now would likely bring gas prices down to the mid-threes, “but not nearly where we were before, which was below $3.”
Tapping the strategic petroleum reserves is also a one-time action.
“The other thing is that once you release all of that oil from the strategic petroleum reserve, it's like pulling a trigger that you can only pull once. You don't get to do it again until new supply comes on. So it's maybe helpful, but not a catch-all,” Goldman said.
Gas stations make very little profit on gasoline sales, Goldman noted.
“Also, if you bought a tank of gas and filled your station at $3.54 today and oil starts to come down, that doesn't necessarily mean that you can sell (gasoline) for cheaper. You got to sell all of that (higher-priced) gas before you start to make a little bit more profit on that.”
Stations also don’t want to be the first mover in lowering prices.
“You're looking for other folks to do that,:” Goldman said. “So, you know, we saw this also in 2022, when oil fell about $20 in just a matter of weeks. It took several months for oil to come back below $4 a gallon.”
Even if the war ended today, it would “still potentially be months before we started to see oil come down,” Goldman said, blaming Iran’s continued control over the Strait of Hormuz.
“They've said that they would attack any ship that's going to travel through that strait,” Goldman said. “And in fact, one oil analyst that I spoke to said it could take one to three months after the conflict is over to start getting oil back to normal through that strait.” That's because production needs to return and safety assured to the oil tanker crews.