The price of oil quickly dropped from nearly $95 a barrel to roughly $90 after the International Energy Agency announced plans to release 60 million barrels of oil — including 30 million barrels from U.S. reserves — into the world market over the next month.
But its not clear whether the increase in supply — which is slight, considering worldwide consumption of oil stands at 89 million barrels a day — will have an impact on prices at the pump, which are already on the decline.
The average price of a gallon of regular gasoline has fallen to $3.61, compared with $3.83 a month ago, the AAA Daily Fuel Gauge Report said Thursday. A year ago, the price was $2.74 a gallon.
President Bill Clinton released 30 million barrels of oil from U.S. reserves in 2000 as the price-per-barrel approached $40. The resulting drop in the cost of oil from $37 a barrel to $30 a barrel was short-lived, however. One month later, OPEC cut production, which leveled supply and again drove up prices.
The administration says it prepared for that contingency this time around. Gulf Cooperation Council countries have agreed to increase oil production by at least 1.5 million barrels a day for the next six months.
Countries included in the agreement are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.