Will lower oil prices bring down costs at gas pumps?

Consumers are paying more even as crude oil prices are slowly dropping

Ask any Wyomingite how they feel after filling up their gas tank at the pumps within the last few weeks and you’ll get an earful. It’s no wonder – gas pump prices in Converse County are high, even with 56% of the active, standing rigs in the state located here.

In Douglas, the prices range from $3.39/gallon at Loaf ‘N Jug, Conoco and Maverick, to $3.49/gallon at Safeway and Sinclair (East Richards), and $3.64 at Shell. Orin Junction’s Sinclair station, outside of Douglas, is listed at $3.79/gallon.

Glenrock’s gasoline prices, while still not inexpensive, are somewhat less costly when it comes to fueling up. The Sinclair station and Grab N Dash were both listed at $3.19/gallon (all prices are via Gasbuddy.com for regular gas on Dec. 6).

RIG COUNTS

Presently, there are nine rigs standing in Converse County, 11 rigs in the Powder River Basin and 16 rigs in Wyoming, according to ENVERUS’ Maria Sanchez. ENVERUS is a leading data, software and insights company focused on the energy industry.

Wyoming’s rig count is up by one over the previous week; a year ago the Cowboy State had just two rigs, which was up from no rigs at all, Baker-Hughes reported.

There are 569 rigs operating in the United states, an increase of 246 rigs from the same time period last year.

On Tuesday, ENVERUS confirmed there are two rigs each in Campbell, Laramie and Sublette counties, and one in Johnson County, in addition to the nine rigs in Converse.

RELEASING RESERVES

About two weeks ago, the federal government attempted to decrease gasoline prices by releasing oil from U.S. stockpiles.

President Biden announced Nov. 23 that the Department of Energy would release 50 million barrels of oil from the Strategic Petroleum Reserve. The object of this decision, according to a White House press release, was to lower gas prices for Americans and address the mismatch between demand exiting the pandemic, and supply.

“The president is working with countries across the world to address the lack of supply as the world exits the pandemic . . . this release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom . . . Over the last several weeks as reports of this work became public, oil prices are down nearly 10%,” according to a Nov. 23 press release.

Indeed, oil prices have dropped from the seven-year high we experienced earlier this year, but will the release of U.S. oil be enough for Americans to see significant price drops at the gas pumps?

Only time will tell.

TOPPING, DROPPING

Oil prices topped $80/barrel just a few weeks ago, when West Texas Intermediate (WTI) led the increase in prices, due to a post-pandemic surge in travel, an onset of winter and the need for Americans to heat their homes.

Tuesday morning, WTI Crude sat at $72.78/barrel, while Brent came in higher at $76.09/barrel. OPEC Basket stood at $71.61 (values based on data from oilprice.com Dec. 7).

According to the White House, the U.S. Department of Energy will make available releases of 50 million barrels from the Strategic Petroleum Reserve in two ways: 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead. The exchange is a tool matched to today’s specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the Strategic Petroleum Reserve over time to meet future needs.

Then, 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized, the press release states.

Biden is also focused on how consolidation in the oil and gas sector may be resulting in anti-competitive practices that keep American consumers from benefitting when oil prices fall, the administration said.

“There is mounting evidence that declines in oil prices are not translating into lower prices at the pump. Last week, the president asked the Federal Trade Commission to examine what is going on in oil and gas markets and to consider whether illegal conduct is costing families at the pump.”

MAKING BILLIONS

Some people contend if the prices are high at the pumps, it means oil prices are high, too – which is good for Wyoming, right?

That may not be the case, according to Accountable.US President Kyle Herrig, who wrote on his website Monday morning that “drivers are struggling at the pump as gas prices rise to seven-year highs.

Accountable.US is a nonpartisan watchdog group that exposes corruption in public life and holds government officials and corporate special interests accountable, according to their website.

“As Americans make sacrifices to cover high gas prices, oil and gas corporations are raking in billions that they then use to shower mega-rich CEOs and shareholders with more money. Rather than increase production or reinvest to meet the energy demand increase caused by the world re-emerging from Covid-19 lockdowns, oil and gas companies are taking advantage of bloated prices, fleecing American families along the way,” Herrig said.

Herrig contends that 24 of the top oil and gas corporations made over $74.9 billion in the third quarter of 2021, continuing the trend of billions in gains every quarter that has given the industry $174 billion in profits in just nine months.

“Oil and gas corporations refuse to take action to alleviate high gas prices so they can continue raking in record profits while Americans pay the price,” he said.