As Drivers Hit the Road for July Fourth, DOE Releases 1M Barrels of Gas

WASHINGTON — With a record number of Americans anticipated to hit the road this Independence Day weekend, the Energy Department on Tuesday announced the completion of a 1-million-barrel sale from the Northeast Gasoline Supply Reserve that should ease price pressures at the pump for much of the summer.

AAA projects 70.9 million travelers will head 50 miles or more from home over the holiday travel period, which the organization this year is defining as the entire week, including the Saturday before and the Sunday after the holiday.

This year’s projected number of travelers for that time period is a 5% increase compared to 2023 and an 8% increase over 2019.

Helping contribute to the increase is a marked decline in the average price of gasoline nationwide, which is expected to come in at about $3.49 per gallon — the lowest holiday price since 2021, according to GasBuddy, the fuel savings app and internet platform.

The projected national average price of gas on July 4 is just a penny lower than it was a year ago ($3.50), but it is also over $1.30 per gallonbelow what motorists paid over the July 4 holiday in 2022, when the economy became superheated in the wake of the pandemic, and Russia’s invasion of Ukraine pushed oil to triple-digits.

While gasoline prices have bounced back slightly after falling as low as $3.39 per gallon in early June, and some states, notably in the Southeast and parts of the Midwest, have been seeing slight increases in gas prices this week, the top 10 changes in prices from a year ago in the most recent GasBuddy survey were all declines.

These were led by average gas prices now being 71 cents per gallon lower in Washington state than a year ago. 

Other states seeing gas price declines include Oregon (-60 cents), Utah (-44 cents), Colorado (-42 cents), Alaska (-42 cents), Wyoming (-41 cents), Idaho (-37cents), Arizona (-31 cents), Montana (-28 cents) and South Dakota (-27 cents). 

It is against this backdrop Energy Secretary Jeneifer Granholm announced the completion of the Northeast Gasoline Supply Reserve sale Tuesday morning.

One million barrels equals about 42 million gallons of gasoline, which Granholm said was sold at an average price of $2.34 per gallon.

“This strategic action will lower prices for American consumers in every aspect of their lives — especially as summer driving season ramps up,” the energy secretary said.

“By releasing this reserve ahead of July 4, we are ensuring sufficient supply flows to the northeast at a time hardworking Americans need it the most,” Granholm said.

Five companies responded to a request for proposals published in May, and all five were awarded contracts.

The big winner was BP, which purchased 500,000 barrels, followed by Vitol (200,000 barrels), George E. Warren LLC and Freepoint Commodities (which both purchased 100,000 barrels) and Irving Oil (which picked up 98,824 barrels).

The purchased gasoline was released from the Northeast Gasoline Supply Reserve last week, and is expected to begin reaching local retailers today.

Energy Department officials said the sale, which was undertaken in accordance with the congressionally-approved 2024 Consolidated Appropriations Act, was strategically timed and structured to maximize the impact of the release on gasoline prices.

The released reserves are expected to particularly mitigate spikes in gas prices in the states of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey and Pennsylvania, the DOE said.

But Patrick De Haan, head of petroleum analysis at GasBuddy, said he believes the release of the reserve will have “basically zero impact” on national gas prices.

The reason, De Haan explained, is that while 1 million barrels may sound like a lot, it represents a mere 2.6 hours of total U.S. gasoline demand.

“If anything it may take a tiny bite out of the rise in prices, but as it’s done, the impact is now, and will taper off before you may imagine,” he said. “Again, this is a tiny amount of gasoline.”

That’s why GasBuddy is urging consumers to continue to shop around for the best prices, especially when crossing state lines.

Andrew Gross, a spokesman for AAA, agreed that the sale from the reserve “probably won’t affect local prices all that much.” 

“I don’t think the primary purpose of eliminating the gasoline reserve was to lower prices,” he said. “Since the reserve costs about $20 million annually to maintain, the main reason is likely cutting costs. 

“Unlike oil, you cannot ‘store’ gasoline very long, so supply was constantly in flux, with older gasoline moved out to be replaced with fresh gasoline,” Gross explained.

“If anything, that gas hitting regional stations may slow any summer driving price spike, but it won’t lead to plummeting prices,” he said.“Since each gasoline retail outlet sets its price, you can’t pin a firm figure on how much selling the research moves the needle, if at all.

“A million barrels may sound like a lot, but the U.S. produces about 9-10 million barrels of gasoline per day,” Gross said.

De Haan also warned that “the road ahead may be bumpy.”

“Activity in the tropics has increased, and projections remain for a very busy hurricane season. Even after the holiday fireworks are over, we’ll be watching for any potential fireworks at the pump that could be brought on by hurricanes disrupting refineries,” he said.

AAA is a bit more optimistic, projecting that gasoline prices will likely level off and remain relatively stable through Labor Day, similar to last year.

But just like De Haan, AAA warns that hurricane season is an important caveat.

It too says a catastrophic storm could negatively affect gas prices should it impact Gulf Coast oil production and refining centers. 

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