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The federal government's recent move to halt shipments to the nation's strategic oil reserve through the end of the year will have virtually no effect on oil prices or the economy, according to a local expert.
John Moroney, an economics professor at Texas A&M University, said the 70,000 barrels per day the U.S. had been funneling into the reserve is "just a drop in the bucket" in relation to the 20.5 million barrels the U.S. consumes daily.
The oil and gas expert addresses the issue in his latest book, Power Struggle: World Energy in the 21st Century, which was released last week.
"It's a non-event, from an economic viewpoint," Moroney said. "Three-tenths of 1 percent is just too small to affect the prices of refined products."
The Strategic Petroleum Reserve is an emergency stockpile maintained by the United States Department of Energy to stave off interruptions in oil supply.
Oil from the Strategic Petroleum Reserve, underground salt domes in Texas and Louisiana, has been used twice in emergency situations since it was created in the aftermath of the 1973-74 oil embargo: Just before and during the first Gulf War in the early 1990s and in response to the loss of Gulf of Mexico oil after Hurricane Katrina in 2005.
Last month, Congress passed a bill suspending deliveries to the reserve and diverting 13 million barrels of crude oil to refineries. The suspension would go into effect in July, when the Department of Energy's current purchase contract expires.
The stockpile stands at 704.2 million barrels, according to the Department of Energy's Web site.
Moroney said the price of refined oil products is influenced by the price of world crude oil, and the relatively small amount being made available for U.S. refineries would have no noticeable impact.
"There's nothing that the U.S. Congress can do to effectively reduce gasoline prices," Moroney said. "What we can ask is this: What global events could substantially provide lower prices of refined products? Two immediately come to mind."
The first, Moroney said, is an increase in global oil production of 5 to 6 million barrels of oil per day.
"That could only come from the Middle East," Moroney said. "It can't come from Russia or from Venezuela or Nigeria. The Middle East holds the key to the possibility of reduced long-term oil prices."
Moroney said other global event would be a deep and prolonged recession in China -- economic conditions that would serve to reduce Chinese demand for oil. China's demand stands near 8 million barrels per day, he said.
World crude oil prices stood at $123.35 per barrel last week, according to the Energy Information Administration, a statistical agency of the Department of Energy.
Bryan-College Station area customers were paying an average of $3.99 for mid-grade fuel at the pump, according to www.texasgasprices.com, which relies on visitors to report gas prices.
• Holli L. Estridge's e-mail address is holli.estridge@theeagle.com.
