Roughly one month ago, the White House answered one question we’ve been hammering them about for more than a year. Joe Biden drained nearly 200 million barrels of oil out of the Strategic Petroleum Reserve in a failed effort to keep gas prices low ahead of the midterm elections. Was he ever planning on replacing that oil? And how much would it cost if he does?

At the time, Biden was saying that he would place the first order for three million barrels of oil for the SPR in February. That doesn’t happen overnight, so they opened up the process to take bids from the oil companies. As you would expect, the oil and gas industry responded, sending in their bids quickly. Those bids were turned over to the Department of Energy (which oversees the SPR), but the process remained under the watchful eye of the White House. This weekend we received our answer. Nobody’s bid was accepted. The DOE rejected all of them. Where we go from here remains a mystery. (Yahoo News)

The U.S. Department of Energy has rejected the first batch of bids from oil companies to resupply a small amount of oil to the nation’s emergency crude oil stockpile in February, according to a DOE spokesperson.

The DOE last month had said it would purchase up to 3 million barrels for delivery to the Strategic Petroleum Reserve in February, the first buy since last year’s record 180-million-barrel release to tame U.S. pump prices.

“Following review of the initial submission, DOE will not be making any award selections for the February delivery window,” the spokesperson said in an emailed statement.

The DOE did not release the actual bids for the media to review, so we’re just taking them at their word here. (I know…) But an Energy Department spokesperson released a statement saying that the government will only accept bids “that meet the required crude specifications and that are at a price that is a good deal for taxpayers.”

That may sound like a reasonable response for a press release, but it’s really not. First of all, the oil and gas industry has been doing this for a long time. They know what crude specifications their customers require and they measure their products carefully. There is no reason for there to be any issue as far as that goes.

Then the spokesperson said that the price of the oil has to be “a good deal for the taxpayers.” While it’s refreshing to hear anyone in Washington at least pretend to care about shepherding the taxpayers’ money more carefully, that’s a nonsensical statement and the DOE knows it. The current price of oil is hovering just a shade above $76 per barrel.

That’s almost exactly where it was predicted to be when I wrote about this after the announcement came out on December 18th. The price is not predicted to decrease significantly in the next few months and will likely increase a bit. Biden is saying he doesn’t want to pay more than $70 per barrel, but that’s not how the energy market works. Many factors (particularly supply levels) go into the price of oil, but the price is the price. They aren’t going to sell it to the government as a favor if they are losing money on the deal.

But even if the price dropped to $70, that would still be a terrible deal for the taxpayers. Take a look at this chart depicting oil prices over the past decade. In December 2018, after Trump had been in office for a couple of years, oil was selling for $45 per barrel. That’s also not coincidentally the last time we made a deposit in the SPR. We always stock the SPR when oil is cheap. And for nearly all of Trump’s presidency (except for a brief spike in the summer of 2018) oil was far cheaper than it is now. That’s not a coincidence, in case you’re wondering. We were cranking out massive amounts of oil and gas back then and high supply translates to lower costs.

So at this point, Joe Biden looks as if he’s reversing himself (yet again) and he will not start refilling the SPR in February as he promised. And if he somehow does, we’ll be paying nearly twice as much per barrel as the original cost of the oil he sold off to everyone (including China!) just to try to push his approval rating up a couple of points.

As an old television advertising campaign once advised us, ‘this is no way to run an airline, folks.’ Thanks to Joe Biden’s political ambitions and foolish policies, we’ve lost a huge quantity of our Strategic Petroleum Reserve in the middle of an energy crisis. We’re going to be paying through the nose if we do manage to get it back. And this guy wants another term as president? I’ll check back with you all in a bit. Right now I think I could use a stiff drink.