Regulatory policy

The release of SPR abroad is part of a bad energy policy

Last week, Reuters reported that more than 5 million barrels of oil from Strategic Petroleum Reserves had been exported to Europe and Asia, “even as U.S. gasoline and diesel prices hit record lows. record highs”.

This oil was sent to the Netherlands, India and China, Reuters reported. According to U.S. Customs data, Phillips 66 also allegedly sent crude from a Texas Strategic Petroleum Reserve storage site to Trieste, Italy. Trieste is home to an oil pipeline that sends oil to refineries in central Europe, Reuters reported.

“What is most remarkable is that a third shipment headed for the sworn enemy of the United States, China, which is now directly benefiting at the expense of American consumers due to Biden’s growing panic to undo the consequences of his catastrophic green policies by selling America’s most valuable assets directly to Beijing! according to an article from oilprice.com.

Local officials commented on the news but focused more on the totality of President Biden’s energy policy. U.S. Representative August Pfluger, a Republican from San Angelo who also represents Midland and Odessa, said Biden continues to make “every misstep possible.” And that it has drained the United States’ emergency oil supply to its lowest level in 40 years without providing benefits to American families.

“Instead, it threatened our national security and enriched our adversaries abroad, including China,” Pfluger said.


Bloomberg reported last week: “If Washington sticks to its current pace, the reserve will shrink to a 40-year low of 358 million barrels by the end of October, when releases are due to stop. A year ago, the SPR, located in four caverns in Texas and Louisiana, contained 621 million barrels.

“The truth is that President Biden and congressional Democrats have no plan to replenish this critical stockpile,” Pfluger said in a statement. “In 2020, Senator Schumer blocked the Trump administration’s request to reload the SPR at a time of historically low oil prices, calling it a big oil bailout. I fear that environmental groups will soon recommend the same strategy again. Congressional Republicans have proposed legislation that would require the administration to come up with a plan to replace oil extracted from the SPR, only to be voted down by Democrats.

The Bloomberg article added: “In the current state of the oil market, it is difficult to see how Washington can stop selling in October. Removing this additional supply would mean that commercial stocks would quickly run out, putting upward pressure on oil prices.

Steve Pruett of Midland, president and CEO of Elevation Resources, said the use of SPR to “lower fuel prices is futile and not the intended use of SPR, which relates to natural disasters such as hurricanes or national security concerns, including in times of war”.

“The fact that 5 million barrels were exported overseas highlights the real problem: insufficient U.S. refining capacity due to regulations on the use of renewable fuel additives in gasoline and diesel. “, wrote Pruett. “For refiners who run out of renewable additives, including ethanol, they have to buy RIN credits on the open market, which increases the cost of gasoline. A more effective way to reduce fuel prices is to eliminate renewable fuel standards, which would prevent the use of food products in our gas tanks that are needed to feed the world and livestock and reduce the use precious water to grow corn for our gas. reservoirs.”

Pruett added that “since 1992, 86 refineries have been retired or converted to renewable fuels production, representing over 3 million barrels per day of capacity. The 268,000 bpd capacity LyondellBasell refinery in Houston has not found a buyer and will be closed by the end of 2023 due to the billions in investment needed to keep it in compliance with regulations. The last new refinery commissioned in the United States dates back to 1977.”

Pruett also said a downward price trend was occurring not because of SPR oil withdrawals, but because of the destruction of demand for petroleum products caused by high fuel prices and well-placed fears of a global recession driven by high inflation.