Oil markets are drifting sideways this morning after the Biden administration plans to release 10-15 million barrels of crude from the Strategic Petroleum Reserve in a bid to suppress gasoline and diesel prices at the pump ahead of the next month’s congressional elections, Bloomberg said citing people familiar with the matter.
President Biden’s upcoming announcement of up to 15 million barrels, one of the largest ever, comes as 180 million barrels have been drained from the nation’s emergency stockpile since May.
For context, the Biden administration has cut the SPR to a record low 22 days worth of supply… That is not what you want to see when liberal war hawks are gunning for nuclear war.
On Sunday, White House economic adviser Jared Bernstein said Biden was still mulling over the final SPR release figures. He told Fox News the reserve is 50% full.
“The fact is there is capacity to use the SPR to deal with some of the energy shocks we’re seeing in the world. But I’m not saying we will. That’s up to the president to decide, he hasn’t made that decision yet,” Bernstein said.
Last Tuesday, David Turk, the Energy Department’s deputy secretary, said, “We still have some additional ability to use the SPR over the coming weeks and months as needed.”
Turk said the administration was willing to move forward with an export ban on refined products in response to OPEC+’s decision to cut production.
But while the Biden admin was reluctant to pursue an export ban, a move that would send oil prices higher over the long run, it had fewer qualms about potentially extending its SPR drain.
Sources told Bloomberg White House officials have been discussing with oil companies, including ConocoPhillips and Exxon Mobil Corp., about what to expect in future SPR releases while encouraging crude production and boosting the capacity of refined fuels.
The US’ only problem is that refining capacity has been reduced over the years, and also, there’s seasonal maintenance underway. We outlined in the summer: US Refining Bottleneck The Culprit For Your Gas Pump Pains.
“The administration has a small window ahead of midterms to try to lower fuel prices, or at least demonstrate that they are trying,” one of Reuters‘ sources familiar with the White House deliberations.
“The White House did not like $4 a gallon gas, and it has signaled that it will take action to prevent that again,” they said.
DOE is expected to release details on repurchasing the crude. Since crude production and refining capacity is limited in the US, prices could trend higher once the SPR releases are wound down. We suspect if there’s a red wave during the midterms and fuel prices move higher into next year, and the Biden administration finally admits there’s a recession, Democrats will try to pin the economic chaos on Republicans.
