During the Arab oil embargo of 1973, some people speculated that the US had a strategic petroleum reserve in the form of gasoline sitting in the driveways of most suburban homes. The speculation was that many people made a point to refill their gas tanks as soon as ¼ of the tank had been consumed. At that rate, the average amount of gasoline in this mobile storage was 7/8 of the tank. By some calculations that was the equivalent of a month’s usage of gasoline. Whether the mobile storage was indeed the equivalent of a month’s usage of gasoline or was much less, the storage capability was quite large.
During the question and answer period after Adam Sieminski, Administrator of the US Energy Information Administration talked to the National Capital Area Chapter of the US Association for Energy Economics on 2012 October 19 on the EIA Winter Fuel Outlet, I asked Adam about the possibility of oil supply interruptions in the Northeast, which is the area most heavily dependent on residential heating oil. I included in my question a reference to the gasoline shortage in California that had pushed gasoline prices there more the 50 cents a gallon above the national average.
Part of Adam’s response included a discussion of the high elasticity of demand for gasoline, the time it took for tankers to move gasoline from other parts of the country, or from overseas, and that historically such price spikes lasted about five or six days, much less than the fourteen days necessary to ship gasoline the requisite distance. Later I wondered about my above musings, about the mobile inventory of gasoline.
Do people respond to gasoline price spikes by a partial depletion of their individual mobile inventory? Does the average gas tank level drop from 7/8 to ¾ to ½, or even lower, by only having partial fill-ups? After all, some newspaper articles included interviews of workers who changed their fueling practices in include partial fill-ups.
How could we estimate the size of the partial drawdown of this mobile strategic petroleum reserve? Or even the size of the mobile strategic petroleum reserve before the drawdown? Does EIA have sufficiently fine data to make these estimates? And how would a drawdown of this mobile reserve effect the elasticity estimates that Adam identified?