Economist warns ‘once it’s gone, it’s gone’ as US oil hits 43-day low

As America’s crude oil reserves dwindle during Trump’s confrontation with Iran, an economist cautioned that “once it’s gone, it’s gone,” warning the Strategic Petroleum Reserve has limited capacity to shield consumers from rising fuel costs.

The administration has been drawing from the reserve since March to address supply shortfalls, but Michael Snipes, Associate Professor of Instruction of Economics at the University of South Florida, likened it to a limited emergency fund.

“The current administration… is tapping the strategic oil reserve for the United States to help boost supply shortages due to the conflict in the Straight of Hormuz. Think of the strategic oil reserve as a savings account for oil for the U.S. It’s nice to have, but once it’s gone, it’s gone. The sooner the situation in the Middle East is resolved, the better it will be for oil and gas prices,” Snipes told The Mirror US in an email.

The alert follows fresh data revealing America’s reserve stockpile sits significantly below typical levels. Based on Bank of America Global Research figures compiled by Bloomberg and referenced by The Associated Press, the U.S. currently maintains approximately 43 days of crude oil supply, including the Strategic Petroleum Reserve, compared to the historical long-term average of roughly 65 days.

The AP indicated this metric has reached its lowest point since the 1980s, providing minimal cushion should hostilities intensify or if petroleum transport through the Strait of Hormuz faces interruption. One day before the report’s release, President Donald Trump attempted to place responsibility on oil companies rather than the continuing Middle East conflict that has restricted passage through the Strait of Hormuz.

Oil prices have fluctuated dramatically throughout the conflict, with Brent crude occasionally surging beyond $90 per barrel due to concerns about supply constraints and elevated shipping risks.

Trump took aim at Exxon and Chevron following the companies’ record-breaking earnings during a stretch of elevated oil prices. “They’re making too much money. [It’s] too much money. You’re surprised? I’m saying it. I’ll say it loud and clear,” Trump told reporters before demanding the companies reduce retail fuel prices.

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Arif Gasilov, Partner, Natural Resources and Built Environment at Gasilov Group, pushed back, stating, “He can pressure them all he wants, but under one percent of the convenience stores that sell gas in this country are owned by a major oil company and 95 percent of them are independently owned. He is demanding a price cut from people who do not work for Exxon or Chevron.”

Industry analysts say the primary factors driving gasoline prices higher are international, not domestic. Snipes observed that crude oil “is sold on the global market” and that “the price of crude is set at a global scale,” indicating overseas conflicts can rapidly introduce a “risk premium” to prices experienced worldwide.

He further contended that today’s increase is being fueled predominantly by geopolitics: “I don’t feel that any kind of rent-seeking done by oil companies is what is primarily driving gas price increases these days: that is almost exclusively due to the conflict in the Middle East.”

Alexander Briggs, Chief Trading Strategist at Supertrader, cautioned against presuming oil-company earnings directly correlate with prices at the pump. “People often assume oil company profits and gasoline prices move in lockstep. They do not,” Briggs said.

Others highlight domestic limitations that can exacerbate price surges. Gasilov notes refiners and fuel distribution networks can establish a constraint that maintains elevated pump prices for extended periods.

“There is a bottleneck between the barrel and the gas tank, and whoever owns that bottleneck collects,” Gasilov said.