Biden fails tremendously again.
President Biden’s recent decision to draw down the Strategic Petroleum Reserve (SPR) to historically low levels has rekindled negative attention, coinciding with the ongoing conflict in the Middle East involving Israel and Palestinian fighters. This situation has led to a notable surge in oil prices.
According to Fox, on Monday, both the global oil benchmark, the Brent crude index, and the U.S. WTI index experienced significant increases of over 4%, bringing them closer to the $90 per barrel mark. This volatility in oil prices is primarily attributed to the turmoil in the Middle East. The conflict erupted over the weekend following a series of unprovoked attacks by Palestinian militants on Israelis. Analysts suggest that this conflict could result in the withholding of substantial global oil supplies.
Energy analyst Saul Kavonic explained the potential impact, stating, “If the conflict escalates to involve Iran… up to 3% of the global oil supply could be at risk. And in the event of a broader conflict affecting transit through the Strait of Hormuz, as much as 20% of the global oil supply could be disrupted,” in an interview with Reuters.
“Timing is crucial here, and these attacks almost certainly delay any potential reconciliation between Saudi Arabia and Israel, as well as any expectations of Saudi Arabia reducing or eliminating its additional 1 million barrel per day cut if oil prices resume their recent decline,” noted analysts from Citibank in a published statement.
However, the Biden administration’s decision to deplete the SPR, which serves as an emergency oil supply established for crisis situations, is noteworthy. The SPR’s current inventory stands at 351.3 million barrels of oil, a 44% decrease from January 2021 when President Biden took office and the lowest level recorded since September 1983.
Since assuming office, President Biden has authorized the release of approximately 260 million barrels of oil from the SPR to address surging fuel prices experienced by consumers in late 2021 and mid-2022. While there have been efforts to replenish the emergency reserve, concerns have been raised by Republican lawmakers and energy experts who argue that such actions expose the U.S. to short-term supply vulnerabilities.
Ben Lieberman, a senior fellow at the Competitive Enterprise Institute, voiced these concerns, stating, “There are numerous reasons why the Biden administration should have refrained from utilizing the SPR to curb prices, one of which is that it depletes the SPR’s availability in case of a significant emergency. Unfortunately, we’re currently facing that scenario. The SPR was established to ensure the nation has an emergency oil supply, making this move especially unwise, particularly given this administration’s unfavorable stance toward domestic oil production.”
Additionally, earlier this year, House Energy and Commerce Committee Chair Cathy McMorris Rodgers and Senate Energy and Natural Resources Committee ranking member John Barrasso requested a Government Accountability Office investigation into how the SPR releases, though indirect, might jeopardize national security.
The SPR, with a total capacity of 714 million barrels, comprises four storage facilities in Texas and Louisiana. The 1975 Energy Policy and Conservation Act, which created the reserve, restricts the release of SPR stocks unless there is a severe domestic supply shortage, an act of sabotage, or a natural disaster.
Before 2021, the most recent SPR emergency release occurred during the Libyan civil war in 2011, when then-President Barack Obama tapped into the reserves due to disruptions in Middle Eastern oil supplies. Prior to that, the SPR was utilized during Hurricane Katrina in 2005 and the first Gulf War in the early 1990s.