Trump’s Strategy Helped Shield US From Energy Collapse Amid Biden’s SPR Sell-off, Analysis Suggests
14:37 GMT 24.09.2022 (Updated: 14:20 GMT 15.11.2022)
US media warned this week that the nation iss “running on empty” and risks calamity as the Strategic Petroleum Reserve - a crude oil stockpile meant for use in energy emergencies - continue to be drained. To date, the Biden administration has withdrawn about 200Mln barrels of oil (more than 30 percent) of the stockpile.
The Strategic Petroleum Reserve (SPR) tends to grow during Republican administrations and fall under Democratic ones, and the energy independence strategy pursued by recent administrations, including Donald Trump's, may help shield the country from an energy catastrophe even as the Biden White House continues to eat away at the reserve supply, veteran energy expert Robert Rapier believes.
In an analysis for OilPrice.com, the observer pointed out that the past decade-and-a-half has seen a substantial drop in US dependence on foreign oil thanks to domestic shale oil production. If in 2005 the US depended on foreign nations for 10.1 million barrels per day (bpd) of crude, by 2021, imports shrank to 6.1 million bpd, and the US had become a net exporter of refined oil products.
In 2005, the SPR’s 685Mln barrels of sweet and sour crude was enough to cover 68 days if all other sources had become unavailable for whatever reason. Today, the SPR is down to about 427Mln barrels – its lowest level since 1984, and enough to last only 22 days.
Still, thanks to the increased availability of domestically sourced crude, Rapier believes that the SPR carries “less strategic importance” presently than it once did, and that a 700Mln-barrel reserve may no longer be necessary.
24 September 2022, 08:08 GMT
The observer characterized the Biden administration's move to siphon off up to a million barrels per day to the market from the SPR beginning in March as a “political decision” that contradicts the Democrat’s stated goal of reducing carbon emissions, with an increase in supplies actually expected to bring down prices, which means keeping both demand and emissions high.
“But even though the Biden administration wants to tackle rising carbon emissions, high gasoline prices cause incumbents to lose elections. So, they try to tame gasoline prices even though it contradicts one of their key objectives of reducing carbon emissions,” Rapier explained.
When Biden took office in January 2021, the SPR had about 640Mln barrels of oil. This week, pointing to the shrinking of the reserve by more than 30 percent, an editorial in the Wall Street Journal blasted the president and described his actions as a potential “national security risk.”
However, Rapier pointed out that the use of the SPR for political goals has been a long-established practice in American politics, with presidents Bill Clinton and Barack Obama similarly using the reserve around election time, “whereas Republican presidents (until Donald Trump) added to the SPR”. Trump was estimated to have withdrawn about 10 percent of the reserve during his tenure, and failed to top it up substantially during the unprecedented crash in oil prices in the spring of 2020.
24 September 2022, 05:43 GMT
Although Biden officials have announced that the administration intends to replenish the SPR sometime “after” fiscal 2023
, Rapier doesn’t believe that this will take place until after the 2024 presidential election.
“President Biden’s gamble to deplete the SPR to fight high oil prices may not hurt him at all. Of course, if for some reason we had a true supply emergency and found ourselves needing that oil, it would be looked upon as a terrible decision,” Rapier concluded.
Dr Mamdouh Salameh, an international oil economist, disagreed with Rapier’s analysis, warning
that although the drop in the SPR under Biden may not cause problems in the short term, “long term, this could be critical for US energy security, particularly in view of the deteriorating situation between Russia and China on the one hand, and the US and the EU on the other over the Ukraine conflict and Taiwan, respectively.”
Salameh said that US shale production was a “spent force” that has proved its inability to increase output dramatically, and warned that there is an “ever-shrinking global oil spare capacity”, including within OPEC+, “making it more difficult for the US to replace the crude it released from its SPR”.
13 September 2022, 17:30 GMT
Burning Through the Reserve
The US Department of Energy announced last week
that it would sell off an additional 10Mln barrels of crude from the SPR in November, extending the drawdown of up to a million barrels per day announced by Biden in March.
Republicans and other Biden critics slammed the president this summer after reports emerged that millions of barrels of crude from the SPR had been shipped abroad instead of being used domestically to lower prices, with some of the oil reportedly sold to companies affiliated with the president’s son Hunter
The SPR was created by President Gerald Ford in 1975, two years after western countries suffered the impact of the devastating OPEC oil embargo placed on them over their support for Israel during the 1973 Yom Kippur War. Formally, the SPR is supposed to be released only in the event of a “severe energy interruption” which poses a threat to US national security.
7 September 2022, 09:05 GMT