Oil industry executives have reportedly warned the Trump administration that energy prices are likely to spike even more as reserves hurtle closer to a danger point.
Gas prices have already risen sharply as a result of the blockade by both the U.S. and Iran on the trade route through which much of the world’s oil travels, the Strait of Hormuz.
‘I hope they are paying attention to inventories right now. You’re hitting tank bottom.’
According to a Politico report, four executives confirmed that officials of the U.S. energy industry informed the administration that backup oil reserves are being depleted quickly.
“We’re at dangerously low levels already,” said an industry executive who requested anonymity. “We have shared those concerns at the highest levels of government about what’s coming in mid-to-late June. … I hope they are paying attention to inventories right now. You’re hitting tank bottom.”
However, a White House official flatly denied the Politico report.
“Politico’s anonymous sources are wrong,” the official said.
The report was supported by recent public statements from ExxonMobil, Chevron, and other oil companies about depleted oil backup resources.
Gas prices have risen on average by an astounding 42.9%, according to statistics from the Automobile Association of America. A gallon of gas cost just under $3 before the war started, reached as high as $4.50, and has settled recently at $4.26.
Exxon’s senior vice president, Neil Chapman, said at an investor conference that crude oil prices could hit $150 or $160 a barrel once reserves run out.
“You can debate whether that’s going to hit those really low levels in two weeks or three weeks. Once you get to that point, then you’ll see prices shoot up,” he said.
Another oil executive commented to Politico about Chapman’s statement.
“The administration has already been told that,” the executive said. “Don’t think that an open strait is going to mean your July 4 gasoline bill isn’t going to be higher than what it is today. It’s going to be.”
Others expressed surprise that the oil price shock hadn’t hit already.
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The Trump administration points to policy changes it has made to alleviate oil prices, including a waiver to the Jones Act.
“President Trump and his energy team anticipated short-term market disruptions, communicated them openly to the American people, and implemented an aggressive plan to mitigate any impacts,” reads a statement from Taylor Rogers, a White House spokesperson. “President Trump will never allow Iran to possess a nuclear weapon, and he will continue to advance America’s core national security interests.”
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