Five weeks after the US stopped draining oil from the Strategic Midterm Petroleum Reserve, which helped push gasoline prices sharply higher in January…
… on Monday afternoon, the Biden administration announced plans to sell more crude oil from the SPR, claiming it is fulfilling budget directives mandated years ago that it had sought to stop as oil prices have stabilized. Of course, the upcoming sales which will more than offset last Friday’s announced Russian production cut of 500kb/d, have nothing to do with the recent spike in oil and gas prices.
According to Bloomberg sources, the congressionally mandated sale will amount to 26 million barrels of crude, and is “in accordance with a budget mandate enacted in 2015 for the current fiscal year”, said a spokesperson for the Department of Energy.
The Energy Department has laughably sought to stop some of the sales required by 2015 legislation so that it can refill the emergency reserve, which currently has about 371 million barrels. After this latest release, the reserve will dip to about 345 million barrels, the lowest since 1983 following a drain of over 200 million barrels since the start of 2022.
Biden officials decided last year to tap 180 million barrels from the strategic oil reserve in an effort to ease supply issues after Russia invaded Ukraine, upending global oil flows and sending crude above $100 a barrel. Some Republicans criticized the Biden administration for that drawdown, which was the biggest release ever and helped drain the SPR to its lowest level since 1983. Critics admonished the move as a political stunt intended to combat rising gasoline prices ahead of midterm elections.
Just as laughably, Biden officials have since spoken with energy companies about purchasing oil to refill the SPR when oil prices approach $70 a barrel. What the officials forgot to say is that they will also sell even more SPR oil when oil prices approach $80 a barrel, like they did today…
… before falling 1% on the SPR drain news.
Finally, and completing the joke, the US House last month passed legislation meant to curb the Energy secretary’s ability to use the reserve unless the government increases the amount of federal lands available for gas and oil drilling. Apparently that particular legislation was just as toothless as everything else the Republicans are trying to pass.
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