Republicans on the House Committee on Energy and Commerce have raised concerns about how the Biden administration’s oil reserve releases may impact U.S. national security.
Rep. Cathy McMorris Rodgers (R-Wa.), the leading Republican lawmaker on the House Committee on Energy and Commerce, and Rep. Fred Upton (R.-Mich.), the top Republican on the Subcommittee on Energy, said in a June 2 letter (pdf) to Secretary of Energy Jennifer Granholm that they are “concerned” that the U.S. Department of Energy (DOE) is “rapidly depleting the nation’s petroleum reserves” in an attempt to alleviate energy shortages before the midterm elections in November, and that the Biden administration has failed to come up with a plan to maintain reserves over the long term.
“As you are aware, the Biden administration recently announced the largest SPR [Strategic Petroleum Reserve] drawdown in history, with plans to release up to 260 million barrels of crude oil from the SPR from October 2021 through October 2022,” the lawmakers wrote.
They noted that the ongoing drawdown has had few tangible benefits, with average U.S. gas prices now at a record $4.60 per gallon.
Before the Biden administration, emergency SPR releases had happened only three times since Congress authorized its establishment following the oil embargo implemented by the Organization of Arab Petroleum Exporting Countries (OAPEC) in 1973, Rodgers and Upton pointed out. Those three occasions were Operation Desert Storm in 1991, Hurricane Katrina in 2005, and the disruption of the oil markets caused by political instability in Libya in 2011.
The lawmakers said the current situation particularly was problematic now that sanctions against Russia have shut off many nations’ trade with the aggressor nation, while leaving China, which seeks aggressively to stockpile oil reserves, the beneficiary of expanded energy transactions with Moscow.
“The Biden administration is depleting the nation’s petroleum reserves, while allowing OPEC, Russia, and China to gain geopolitical leverage over the United States,” the letter stated.
When President Biden announced a 50-million-barrel release from Strategic Petroleum Reserve (SPR) in November 2021, the lawmakers noted, the move theoretically was to happen “in tandem” with similar steps taken by China and other oil importers.
But far from lessening its reserves, China actually pulled ahead with crude oil purchases from both Russia and the United States. This happened, the letter noted, despite a surge in oil prices that could only be expected when too much demand chases too little oil on the global markets. Even as the United States and the European Union go the opposite way, enforcing a ban on Russian imports, talks underway between China and Russia may result in even more purchases for China’s reserves, putting China in a highly advantageous, not to say dominant, position globally.
“As a result, China may now control the world’s largest stockpile of oil, with total crude inventories estimated at 950 million barrels,” Rodgers and Upton predicted.
In their letter, the two lawmakers requested information concerning the DOE’s plans to manage and maintain the SPR and the Northeast Home Heating Oil Reserve (NEHHOR), which are at levels they consider dangerously low as a result of recent and planned releases made by the DOE. They note that the SPR has fallen to its lowest level since 1987 and that if current rates hold, the SPR, whose peak capacity was 727 million barrels, is on track to reach roughly 130 million barrels by 2031. The Biden administration is reportedly considering tapping into the NEHHOR to ease the supply crunch.
“NEHHOR, which currently contains only 1 million barrels of diesel fuel, could be liquidated in a matter of days,” Rodgers and Upton cautioned. “At the same time, China is rapidly strengthening energy ties with Russia and expanding its own strategic petroleum reserves with cheap Russian oil,” they added.
The lawmakers noted that the United States and global energy markets have undergone extensive changes since the SPR’s formation in the 1970s, and that in 2015, Congress asked the DOE to undertake a long-term strategic review of the SPR, in addition to investing up to $2 billion to modernize the reserves.
Despite the requested review, many questions about the viability of the SPR remain, and are all the more urgent in the light of the reset of global energy supply caused by the Ukraine crisis and China’s newfound advantages as a buyer of cheap oil from Russia.
The lawmakers requested answers from the DOE to a number of these questions in their letter, including: what has been the effect of recent SPR releases on U.S. gas prices; how many barrels of SPR crude oil has the U.S. exports to foreign powers, and which are the top buyers of SPR crude oil; and what plans are in place to refill SPR and NEHHOR.
The lawmakers also demanded to know what impact Beijing’s refusal to act in lockstep with the U.S. release of 50 million barrels from SPR reserves has had on the impact of the coordinated release envisioned by the Biden administration.