Economist Justin Wolfers said Tuesday that the G7’s agreement to release 100 million barrels of oil is not a solution, but just political leaders agreeing to look like they’re fixing a manufactured crisis.
G7 Pledges 100 Million Barrels
G7 leaders agreed Friday to release 100 million barrels of oil and refined products through the International Energy Agency over four months, including a “frontloaded substantial diesel release within the first 20 days,” according to the leaders’ statement.
“That’s not a solution. That’s political leaders agreeing to look like they’re solving a made-up crisis,” Wolfers said in a post on X.
President Donald Trump floated restricting U.S. diesel exports last month and said he was still thinking about it. He has since said the U.S. will not ban exports.
Are the Barrels New?
In his newsletter ‘Platypus Economics’, Wolfers argued that the release was mostly leftovers.
The International Energy Agency coordinated a 400-million-barrel release from member countries’ emergency reserves in March, a plan Wolfers says later added up to 426 million.
Much of that has already been delivered, Wolfers wrote, leaving “roughly 100 million barrels left in the commitment.”
The front-loaded diesel release ends Oct. 22, less than two weeks before the Nov. 3 midterm elections.
The G7 statement doesn’t explain why getting diesel to market just before the election matters, Wolfers said.
“I suspect you can work out your own theory here.”
Does the Release Match the Shortfall?
Even if every barrel is new, Wolfers noted that the release equals roughly one day of global oil production, or about 0.8 million barrels a day over an average of four months.
Strait of Hormuz flows fell from about 20 million barrels a day before the war to about 8 million in August, a gap he calls 15 times larger than the fix.
Saudi Aramco CEO Amin Nasser said on Monday that global oil stockpiles have fallen from about 10 billion barrels to under 6 billion since the U.S.-Iran war began, calling them “scarily thin.”
AAA data showed diesel averaging $6.3151 a gallon Tuesday, down from $6.4391 a week earlier, but up from $5.8970 a month ago and $3.6790 a year ago.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo Courtesy: Matt Gush on Shutterstock.com
