Gasoline prices are on an uptick as President Biden’s deliveries of oil from the U.S. emergency reserve ended shortly after the November elections. President Biden decimated the Strategic Petroleum Reserve (SPR), reducing it to an over 40 year low by using it as a tool to control rising gas prices resulting from his own stated policies. The Biden administration depleted the reserve of 260 million barrels of oil over a 14 month period. The refill was supposed to start in February, but the Biden administration refused the bids due to their high oil prices and crude specifications that did not meet the requirements. As oil prices are even higher today than when the request for bids went out in January, it is unclear when the administration might see fit to refill the reserve.
Department of Energy Secretary Granholm at a recent press conference refused to admit that rising gas prices were due to Biden’s anti-oil and gas policies that began on his first day of taking office on January 20, 2021. Rather she pointed to “international and climate events,” specifically a late December cross-country winter storm that pulled 2 million barrels off the U.S. market as refineries shut down and expectations of a possible increase in global oil demand if China loosens its COVID-19 restrictions. “We know that there are still refineries that have been pulled down both for maintenance as well as because of the winter storm Elliot, but in the end, we think it’ll be balancing out soon,” she said of gasoline prices.
President Biden’s anti-oil and gas policies started immediately, with cancellation of the Keystone XL pipeline’s border permit and a moratorium on oil and gas lease sales on Federal land. His Interior Secretary, Deb Haaland, repealed an existing Secretarial Order setting a goal of “American Energy Independence,” another on “Strengthening the Department of the Interior’s Energy Portfolio,” and yet another promoting an “America-First Offshore Energy Strategy.” The oil and gas industry seeing the direction of the Biden administration decided to write down debt rather than invest in more oil wells since Biden clearly wants to kill the industry, which he pledged while campaigning.
Gas prices were around $2.50 a gallon when Biden took office on January 20, 2021 and they slowly escalated to $5.00 a gallon by early June 2022. Biden’s SPR releases announced at the end of last March slowly put another 180 million barrels of oil on the market, of which some was sold to China. But, those SPR releases combined with China demand sidelined by a COVID lock-down brought gas prices down to about $3.00 a gallon by the end of 2022–an election year. They have now ticked up to $3.48 a gallon. With China ending its zero COVID policy and Biden still on the war path with the domestic oil industry, gas prices are likely to continue increasing along with oil prices. Oil prices rallied in 2023, with global benchmark Brent crude topping $89 a barrel for the first time since early December on the ending of China’s COVID-19 controls and hopes that rises in U.S. interest rates will soon taper off. World oil consumption continues to increase, with 2023 expected to be the highest demand year in history.
Granholm’s mission at the press conference was to indicate that President Biden will veto a Republican-backed bill tying releases of crude oil from the U.S. Strategic Petroleum Reserve to the creation of a plan to increase energy production on federal lands if the bill should make it to his desk. The Strategic Production Response Act (H.R. 21) would limit the drawdown of oil from the SPR by forcing the Department of Energy to develop a plan to increase the percentage of federal lands and waters leased for oil and gas production by the same percentage of oil that it seeks to release from the SPR.
Granholm warned that the bill “would interfere with our ability to be responsive to release oil during an international emergency, helping [Russian President Vladimir] Putin’s war aims,” as well as “potentially delay allowing oil to be released for domestic emergencies following a natural disaster or a pipeline outage at home, leaving prices at risk of rising in the wake of a market shock.” She asserted that the bill “needlessly aims to weaken the [SPR’s] usefulness as a tool to ensure energy security,” and “imposes unnecessary, unhelpful restrictions on when the SPR can be used to help provide supply.” “… proposals like H.R. 21, which risks raising [gasoline] prices and making it harder to offer Americans relief in the future, are simply nonstarters,” she said. In other words, the Biden Administration will not increase oil production from federal lands and waters, starving the U.S. economy and national security of the benefits of more domestic energy production.
President Biden has signaled that further releases from the SPR are possible as his administration considers options for stabilizing global oil markets and addressing pain at the pump domestically, despite SPR oil volumes at a low 371.6 million barrels—the lowest level since December 1983.
Conclusion
President Biden has found that he can use the Strategic Petroleum Reserve as a tool to keep oil and gasoline prices temporarily in check as he continues with his anti-oil and gas policies and his desire for the eventual destruction of the domestic oil and gas industry as he promised. He has begged OPEC for more oil and is willing to turn his back on abuses in Venezuela to allow it to resume its oil productionand blatant increases in Iran production, rather than making domestic oil and gas production more accessible for U.S. producers. Biden promises to refill the SPR that he drained by 260 million barrels, but as China’s zero COVID policies end, it is likely that oil demand will increase as well as oil prices with 2023 seeing more oil demand than at any time in history.
Clearly, signing the Strategic Production Response Act would be a conflict to Biden’s ultimate goals. So, while the bill might make intuitive sense, it will go now where, even if the Democratic-controlled Senate should pass it. “Actions speak louder than words” is a word to the wise when assessing the Biden Administration’s energy policies.
