President Joe Biden is harming national security by ordering the release of massive amounts of oil from the Strategic Petroleum Reserve. The release is a cynical political move, but it will backfire.
Biden announced Thursday he would release a million barrels per day from the Reserve for six full months, meaning the size of the Reserve will drop by 32%. (And that’s from a stash already depleted by some 100 million barrels from its full capacity.) His goal is to try to force gasoline prices to drop . After spending 14 months doing almost everything imaginable to cause energy prices to rise, Biden now realizes the high prices at the pump are a massive threat to Democratic election prospects in November. Result: He now is misusing the Reserve to try to undo some of the political damage from his own policies.
Politicians of both parties have used the Reserve as a price-control mechanism or as a deficit-hiding fig leaf numerous times through the years but never to the extent envisioned in Biden’s order. And it was never right to do so. The Reserve is not intended for price control. It is intended as an emergency stopgap for purposes of national security or for disaster response. Any draw-down of the Reserve, especially one this large, leaves the United States vulnerable to a true emergency wherein serious shortages, not just high prices, threaten the workings of daily life.
If the Reserve were kept at its maximum capacity of about 700 million barrels, it could meet the needs of the nation for six weeks of energy use, or perhaps more if people engaged in intelligent rationing. But after Biden siphons off 180 million barrels, that fail-safe capability will fall from six weeks to just one month. In the event of, say, a huge natural disaster or (Lord forbid) a war, the lack of an extra 11 days of capacity could prove devastating.
Meanwhile, Biden’s order is unlikely to provide any significant relief for pump prices beyond a few days. Unlike an emergency in which the Reserve really would be the only major means of supply, ordinary market forces almost always lead to adjustments in production, supply, and demand that negate artificial supply boosts mandates by the government. Somehow, modern liberals continue their willful refusal to understand how markets work. Biden’s order is akin to trying to control worldwide ocean tides by damming up a single estuary.
Meanwhile, after spending 15 months deterring domestic fossil-fuels production and delivery by killing the Keystone Pipeline, trying to cancel existing leases, slowing or halting new lease sales, and imposing manifold regulatory burdens on the entire energy sector, Biden is asking Congress to “make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing.” This is truly bizarre. First, the administration imposes restrictions and regulatory costs that make production unprofitable, and then it wants to boost supply by putting fees on companies that are failing to produce.
Memo to the president: Get out of the way.
When conditions make those leases profitable, the companies will produce oil from them. But if they are forced to produce oil from them when they lose money from the effort, then they will need to cover the losses by, you guessed it, raising prices on everything else they produce. Consumers will be hurt, not helped.
Those realities represent basic economics and common sense. Alas, this administration seems immune to both. Biden’s attempt to provide a free lunch will prove costly indeed.
