Oil Prices Are Set To Rise As US Taps Into Reserves

Stepping outside each day can almost be a game of let’s guess what prices have risen overnight. Unfortunately, it doesn’t look as though things will improve too much in the short term, especially among announcements of continued rising interest rates and prices. Gas is one thing that’s risen off the charts in recent months.

2022 has been a tough year for so many for a host of reasons. Still, the rising gas prices and shortages have wreaked more havoc than many ever believed was possible. Now, it seems oil prices are set to rise again as the US taps into reserves. So, what does this mean for the nation and the cost of living?

The Strategic Petroleum Reserve is being utilized among the rising prices

Nations across the world have a stockpile of crude oil that can be tapped into in case there's a natural disaster, economic crisis, or any man-made accidents. The US has the largest of them all, and it’s called the Strategic Petroleum Reserve. Still, it has a maximum capacity of 727 million barrels, meaning it’s not an endless supply, and the US has even loaned some of its stores to other countries at times. Now, new measures mean another 15 million barrels of oil are set to be released. This is a part of the 180 million to be released following global events throughout 2022.

The reserves won’t be restocked until oil prices drop again

As of October 2022, the SPR now only has just over 400 million barrels of crude oil left in its supply, down 40% from its usual numbers and to the lowest that it’s been since 1984. The twist? Those barrels won’t be replenished any time soon until the price drops below $70 a barrel again, meaning the US could be a long way off building back up the thriving crude oil supply it’s had to its name for so many years. 

Reduced oil manufacturing is adding to the rising prices

The end of October 2022 saw oil prices rise once more to around $85 a barrel, despite the fact the SPR is releasing more of its supply. It turns out the rising cost of living and inflation aren’t the only reasons that prices are continuing to rise. The Organization of the Petroleum Exporting Countries and its allies have agreed to cut oil production by as much as two million barrels a day, which is having significant knock-on consequences across the world. Although gas prices have dropped slightly in recent weeks, AAA reports that the average cost is still 56 cents higher than it was this time in 2021.

Even though the US is tapping into its crude oil reserve, that doesn't mean gas prices are set to fall any time soon. In fact, using up supplies teamed with a dramatic decrease in the amount of oil produced could see it rise again as the months continue to pass.