Depleting the Strategic Petroleum Reserve to hold down the price of gasoline before a national election, as President Biden did last year, is unwise because the SPR is meant for more serious purposes.
That’s according to Odessa oilman Kirk Edwards, State Rep. Brooks Landgraf and Texas Independent Producers & Royalty Owners President Ed Longanecker, who say the SPR’s drawdown to half of its 714-million-barrel capacity is proving very hard to correct with a projected cost of $10.6 billion.
“The Biden administration thinks they are coming to the rescue of the domestic oil industry by fulfilling their promise to fill the SPR, but the problem with their announcement last week is they are only adding in three million barrels of sour crude total and they want to go out to bid for that measly amount for August delivery,” Edwards said Tuesday.
“Let’s put that in perspective. Three million barrels is less than 38 minutes of the world’s daily usage. It is four hours of domestic production and 1.67 percent of the 180 million barrels they took out last year to manipulate the oil price before the November elections.”
Edwards said U.S. Department of Energy Secretary Jennifer Granholm “should label this the bottom of the barrel as these folks don’t understand that all of our domestic sour production is going into our U.S. refineries.
“Those refineries need 100 percent of it and we have to import other sour crude mainly from folks like Saudi Arabia and Canada to the tune of four-five million barrels per day,” he said.
“So when the winning bid comes out you can be 100 percent certain that it will be coming in on a super nice super tanker straight from one of those two countries. Not a drop will come from the United States.
“But our wonderful Biden administration can then come to the microphone and claim they are filling her up slowly but surely, ugh! Our Republicans in Congress need to pay attention to the shell game going on with the most important commodity that this country needs for its national security.”
Landgraf said Biden “is risking the long-term security of our nation for short-term political gains in misusing the SPR.
“Great leaders prevent problems from occurring and solve problems that exist,” said Landgraf, an Odessa Republican who chairs the Texas House Energy Regulation Committee in Austin. “President Biden’s reckless energy policies have weakened our country’s energy security, raised prices for the average American and increased the likelihood of environmental issues.
“That’s not leadership, that’s foolishness.”
The SPR now holds 358 million barrels in four deep underground storage caverns that were created in salt domes along the Texas and Louisiana Gulf Coasts.
A Landgraf spokesman said the SPR was established in 1975 “to serve as an emergency supply in the event of disruptions in oil markets, ensuring energy security and reducing vulnerability to supply shocks.”
The spokesman said the release of oil from the SPR can be authorized by the president in response to severe supply disruptions, natural disasters or significant price increases.
“Oil can be drawn down in three different ways: a full drawdown to counter a severe energy interruption, a limited drawdown of up to 30 million barrels such as the drawdown that took place during Hurricane Katrina and a drawdown for a test sale or exchange,” he said. “Traditionally the SPR has been used as an emergency response tool to address sudden disruptions in oil supply such as during hurricanes, geopolitical conflicts or unexpected production outages.”
The Landgraf spokesman said misusing the SPR “can have negative consequences such as distorting market dynamics and artificially manipulating oil prices, leading to market instability and potential economic repercussions.
“It is important to use the reserve judiciously and in accordance with its intended purpose to maintain its effectiveness as an emergency energy resource,” he said.
Longanecker said maintaining energy security is one of the top priorities of the United States, but diminishing reserves from the Strategic Petroleum Reserve is not the answer.
“At best, using the SPR temporarily manipulates markets and may provide some short-term energy price relief,” he said. “But in the long run tapping into our country’s oil reserves puts the U.S. in a vulnerable position should something catastrophic take place that disrupts domestic and global oil markets.
“Instead the Biden administration should be focusing on investments in energy infrastructure and thoughtful, collaborative energy policies that support increased production of oil and gas, allowing producers, including those in Texas, to help meet growing energy demand at home and around the world,” Longanecker said, adding that the average price paid for oil in the reserve is $29.7 per barrel.
“This means it would cost $10.6 billion to replenish the 358 million barrels of crude oil that are needed for the SPR to be at full capacity,” he said.