Fifty years ago, in response to an energy crisis caused by a war in the Middle East, the United States built up a massive crude oil stockpile to protect itself from any attack.
As a result, Vice President Joe Biden is in a political bind due to the oil that is currently sitting in half-filled salt caverns around the Gulf Coast.
The stockpile is at its lowest point since the early 1980s after the Biden administration sold off more than 40% of the Strategic Petroleum Reserve to help prevent increasing fuel prices when Russia invaded Ukraine. At a time when Hamas’s terrorist strikes in Israel are feeding worries of a wider regional war affecting fuel shipments from the Middle East, this is giving credence to Republican charges that Biden has left the U.S. susceptible to an interruption of global oil supplies.
“That’s Joe Biden’s fault for trying to lower the price of petrol before the election,” Bruce Westerman (R-Ark. ), chair of the House Committee on Natural Resources, told AWN.
Kevin McCarthy (R-Calif.), the former speaker of the House, had earlier told reporters, “our Strategic Petroleum Reserve is down to nothing.”
Despite being down significantly from its Obama-era high of 727 million barrels, the reserve still has 351 million barrels, which is enough to sustain the United States roughly 56 days on its own oil imports. That is in addition to the 424 million barrels that private corporations in the United States were storing as of the beginning of October.
The government has maintained that the reserve still has sufficient petroleum to meet the country’s strategic needs and shield it from price fluctuations. Energy Secretary Jennifer Granholm assured a House committee in September, “I am not worried about the reserve levels at all,” and added, “It is the largest strategic reserve in the world.”
U.S. citizens no longer have to wait in long lines for gas or pay exorbitant prices because of an Arab oil embargo imposed on the country after the Yom Kippur War in 1973. The decline in domestic oil production coincided with a growing domestic demand for petroleum, compelling Congress to establish the reserve in 1975.
After just importing crude oil and refined petroleum products for the first few years, the United States is now the world’s largest oil producer. Even while demand has slowed, production has reached all-time highs and is continuing to rise.
Some conservatives have argued for the reserve’s abolition over the years, with the Heritage Foundation voicing this concern eight years ago, saying, “Presidents have used the SPR as a political tool.”
However, the reduced size of the reserves restricts Biden’s ability to respond to a future shock to the oil markets, such as one caused by an escalation of the conflict in the Middle East.
If the 20 million barrels of oil that flow daily from the Persian Gulf through the Strait of Hormuz were to be cut off due to a conflict, oil analysts warned that not even a fully stocked reserve could shield the United States from the ensuing price shock. According to Bob Ryan, an analyst with BCA Research, having a full reserve would have allowed the White House more leeway to implement sanctions barring Iran’s oil shipments.
Due to the low SPR stocks, “the U.S. is in a position to rely on Saudi Arabia and others with spare capacity to ramp supply in the event of a cutoff,” Ryan wrote in an email regarding the potential loss of Iranian oil.
The government maintains that it is carrying out the economic sanctions against Iran that previous President Trump enacted in 2018. However, experts who track oil shipments argue that Iranian exports have skyrocketed under Biden’s administration.
To criticise Biden’s policies as a whole, particularly his focus on combating climate change and his efforts to get Hamas’s patron Iran back to the bargaining table over Tehran’s nuclear programme, Republicans have seized on the petroleum reserve.
In the 10 months after Russia’s invasion of Ukraine pushed world oil prices surging last year, Biden released more than 200 million barrels from the petroleum reserve, sending average U.S. fuel prices to a record high of $5 a gallon in June 2022. The planned releases persisted through the autumn, despite additional disruption in supply caused by the OPEC+ cartel’s decision to reduce oil shipments.
Biden’s sales of oil from the reserve lowered petrol costs by much to 40 cents per gallon, according to the Treasury Department’s estimates. On Friday, the national average price dropped to $3.63 a gallon, a decrease of 28 cents from the same day a year ago.
In February, as mandated by the Bipartisan Budget Act of 2015, the administration put up for sale an additional 26 million barrels.
Last year, a Morning Consult poll found that the majority of Americans approved of Biden’s releases. Even on Thursday, Democratic Senator Tom Carper of Delaware pointed out that both Republican and Democratic administrations had used oil stockpile sales to calm the market.
“It’s not something you want to do permanently,” Carper told AWN. But it was a useful instrument “to help stabilise prices, in other words, extreme ups and downs in our economy.”
Several releases have been done for non-emergency reasons, such as collecting extra revenue for Washington, continuing the bipartisan history of tapping the reserve’s huge oil stocks.
Three bills passed in 2015 and 2016 by a Republican-led Congress authorised sales of over 190 million barrels from the reserve, with the proceeds going towards things like highway construction and medicinal licencing. In 2011, then-President Barack Obama used it to mitigate oil market disruptions in the wake of the Arab Spring, garnering criticism from Republicans at the time. To help close budget gaps, the Trump administration has authorised the sale of 100 million barrels of SPR oil through 2027.