You can’t say we weren’t warned. One month ago, we learned that the Biden administration was in talks with NATO allies regarding the possibility of yet another release of American oil supplies from the Strategic Petroleum Reserve (SPR). Despite warnings from many industry analysts who immediately pointed out that such a move would deplete the SPR to dangerously low levels not seen in decades while having almost no direct impact on gas prices, it appears that Joe Biden is ready to do it again. And if the estimates we’re hearing are anywhere close to accurate, this release could be more than three times larger than the one in November. (Does anyone recall gas prices suddenly dropping back to more “normal” levels in November? I don’t.) But be that as it may… here we go again. (CNBC)
President Joe Biden is preparing to order the release of up to 1 million barrels of oil per day from the nation’s strategic petroleum reserve, according to two people familiar with the decision, in a bid to control energy prices that have spiked as the U.S. and allies have imposed steep sanctions on Russia over its invasion of Ukraine
The announcement could come as soon as Thursday, when the White House says Biden is planning to deliver remarks on his administration’s plans to combat rising gas prices. The duration of the release hasn’t been finalized but could last for several months. The people spoke on the condition of anonymity to preview the decision.
Media outlets were quick to once again cheer President Biden’s “bold” move, referring to the proposed one million barrel per day release as a “meaningful sum.” That’s a curious way to describe the situation when you consider that during one of the lowest periods of oil consumption in modern history, when travel ground to a halt in 2020, the United States was still consuming 18 million barrels of oil per day. We’re back up to nearly double that amount now.
If this does add up to 180 million barrels, the SPR will be down below 400 million barrels. That’s barely half of the SPR’s maximum capacity of 727 million barrels. And we’re already at the lowest level seen since 2003.
The SPR was created in 1975 when it was signed into law by Gerald Ford. It exists to allow us some measure of flexibility should we encounter a major disruption in energy supply lines, primarily intended to keep our armed forces moving if such a shortage were to happen during a time of war. In other words, it was put in place to deal with a true emergency.
We are not currently in an energy emergency. The oil and gas industry always adjusts in response to demand and market forces, but those adjustments don’t happen overnight. What Joe Biden is responding to is a political emergency. Democrats have noticed that the natives are growing increasingly restless over skyrocketing gas and heating fuel costs. This would be very bad news for the party in power heading into the midterm elections. So now they want Biden to do something… anything… to bring the prices down and try to take credit for it.
There is some sad irony in the fact that less than two years ago the United States was a net exporter of oil and gas, having enough energy to meet all of our own needs for the next century and even exporting some. We became competitors against the OPEC+ nations and Russia. And we can be again, assuming we can do away with all of the voices screaming about “leaving it in the ground” and “ending fossil fuels.” (That second one comes right from Joe Biden’s election campaign.) And yet here we are… again.