President Biden has ordered the release of one million barrels of oil each day from the Strategic Petroleum Reserve (SPR) for the next six months. It is the third such order in his 16-month tenure. He released 50 million barrels last November and another 30 million barrels in March this year. The current drawdown of 180 million barrels will be the largest in the 45-year history of the SPR. It surpasses the earlier record of 50 million barrels set in November.
The SPR now holds 568 million barrels. After Biden's latest draw, the SPR will shrink to 388 million barrels. The reserve supply can meet 19 days of U.S. needs. The reserve is not adequate, and a geopolitical event in the Middle East that jeopardizes supply could result in dry pumps.
Global demand is 97 million barrels per day. So, the release represents 1% of global needs, a small amount that can't alter market dynamics. The U.S. consumes about 20 million barrels per day, and this release will meet about 5% of that demand.
According to the AAA, the national average price for gasoline on Wednesday was $4.23, up from $2.86, a 48% increase. President Biden hopes that the latest move will reduce gas prices by 10 to 35 cents.
Political considerations drive the current move. Americans are dealing with the worst inflation in forty years. Due to inflation, an average household would spend an estimated $3,600 extra over the next year. Democrats face headwinds in the midterm elections in November. The current action by Biden is a gesture that he is trying to do something about it.
President Biden's green policies have reduced domestic oil production. To offset this, we purchased Russian oil, which contributed to President Putin's war chest. Until recently, Russia supplied the United States with 700,000 barrels of crude oil per day.
While not true, the White House and its media allies blame Russia for the current situation in its entirety. Before the Russian invasion, gas prices had climbed by 48% since Biden assumed office. The price was $3.41 for the week of February 21, when Russia invaded Ukraine, up from $2.298 when President Biden took office.
Nonetheless, the President blames Putin for high prices, believing that it will come true if he repeats the same thing. "Make no mistake: The current spike in gas prices is largely the fault of Vladimir Putin," Biden said on Thursday.
As we pointed out in a November editorial, the SPR is not a piggy bank, and it comes at a cost.
First, the current situation is not an emergency, and the SPR is not a tool to fight inflation. SPR depletion jeopardizes national security. What if an emergency disruption hits before we can replenish the reserves? Emptying the security blanket could expose the U.S. to a bigger crisis.
Second, President Biden's actions would also embolden future presidents to use the SPR at will.
Stopping domestic oil production and replacing it with oil from countries like Russia and Venezuela is a misguided energy dependence strategy. Despite division on most issues, Americans unite on energy independence - even if it comes at the cost of climate change priorities. According to an IBD/TIPP Poll, two-thirds (63%) support drilling for domestic fossil fuels at the expense of climate change.
Soon after his inauguration, President Biden signed executive orders to halt new oil and natural gas leases on public lands and water. Wanting to be non-Trump, he canceled the Keystone XL pipeline. It could have transported about 830,000 barrels per day to Nebraska. While clean energy may be the future, it is still in its nascent stage. There is a long way to go before alternative sources can meet the country's demands.
While President Biden's decision to release U.S. reserves is a band-aid for some immediate relief, it puts national security in jeopardy. President Biden's energy policy must get to the root of the problem. He must engage the U.S. oil and gas industry and pursue a long-term energy independence plan.
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