The Obama administration’s plan to drive gasoline prices down by releasing oil from the Strategic Petroleum Reserve, the country's emergency stockpile, isn’t going over well with the industry, and analysts’ early reactions have been mixed.
Thursday’s announcement to release 30 million barrels of crude in order to put more oil in the market comes amid mounting political pressure to address the rising cost of gasoline.
“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” Energy Secretary Steven Chu said in a statement. “As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary.”
The release of oil from the U.S.’s Strategic Petroleum Reserve was coordinated with a similar move by the International Energy Agency, which said it would also release oil from global stockpiles. With the U.S. contributing 50 percent, 28 IEA member countries pledged to release a total of 60 million barrels of oil over the next several months.
Forbes reported that crude oil prices and shares of oil companies plunged on the news, with Brent crude down more than $6 to $107 per barrel and West Texas Intermediate off $5 to $90. Shares of ExxonMobil, Chevron and Occidental Petroleum were all down 3% in mid-morning trading, it noted, and the Dow was down 220 points.
The Houston Chronicle reports this morning that reaction from analysts has been mixed:
Craig Pirrong, a finance professor at the University of Houston who specializes in commodities, also was skeptical of the timing of the release. And while oil prices have fallen on the news today, it’s hard to truly say what the short and long-term price impacts will be, Pirrong said.
“Markets are down broadly due to lousy U.S. jobs numbers,” he said, noting the dollar is also rallying, which typically leads to lower oil prices. “Economic news other than IEA accounts for a good chunk of the sell-off.”
Pirrong also cautioned that releasing oil from storage means decreasing tomorrow’s potential supply, even as it boosts supply immediately. “That has offsetting effects on prices over time,” he said. There may be “some initial relief, perhaps, but (it’s) not a long term palliative.”
Amy Myers Jaffe, a senior fellow at Rice University’s Baker Institute of Public Policy, said the release is both politically and economically motivated, but insisted it’s still the right thing to do.
“Given the instability in the Middle East it is important to signal that the SPR is on the table and that a supply crisis can be avoided,” Jaffe said.
Prestigious honor annually recognizes a single attorney for excellence in public interest/pro bono work.
JPMorgan Chase is giving $1 million to Louisiana's community and technical colleges, to help with workforce training efforts to match students to available jobs.
Law firm unveils newly renovated 200-year-old building.
UL grad named web developer at BBR Creative
Lafayette-based emergency department staffing and management company raises $120 million in senior credit facilities through GE Capital, Healthcare Financial Services.
High-rise apartment building, parking garage, hotel and retail part of new development.
The number of Louisianans with jobs continued to set records in September, but the state's unemployment rate kept rising.
Louisiana is drowning, quickly.
An investment group led by Macquarie Infrastructure and Real Assets will buy the Louisiana power company Cleco for $3.4 billion.
Local developer’s Lake Charles Gardens LLC purchases buildings and leases; land still owned by Dugas family.
Economist Loren Scott says Louisiana is in the midst of an industrial boom unlike any other in its history, with more than $100 billion in industrial projects either under construction or in the engineering and design phase.
The Louisiana Treasury holds $18 million in Israel Bonds — bonds that earn 2.868 percent when the three-year U.S. Treasury is yielding 1.08 percent.
ABiz celebrates another class of Acadiana's most influential female trailblazers, the Lourdes Foundation honors a local philanthropist and MedExpress in Opelousas celebrates its 22nd year as the “little ambulance service that could.”
Is Louisiana’s O&G industry ready to head south of the border?
Downtown’s newest live-work space for creatives doubles as a gallery for other upcoming artists to show their work.
A maritime case originating in Lafayette federal court could become a game changer for the oil and gas industry.
Here’s what’s at stake in the November Senate race — regardless of whether Republicans gain control of the upper chamber.
From the publisher’s in-box: ABiz reaches out to Lake Charles, time to “Come Home, Louisiana,” and now accepting nominations for Entrepreneur of the Year.
In late September Cleco and UL Lafayette showed off the Cleco Alternative Energy Center, where researchers explore ways to generate power by using renewable resources.
The most recent promotions, hirings and announcements from Acadiana's biz community.
While Amendments 1 and 2 will shield some health care providers from the budgetary whims of Gov. Jindal, they could make higher ed even more vulnerable to cuts.
Age 60 looks good on the country’s second-largest oil and gas show.
Local pieces and logo-emblazoned corporate gifts
Let’s show how much we care what it looks like.
The Memphis based investment firm Wunderlich recently arrived in Louisiana with the opening of a wealth management branch in Lafayette.