Biden’s oil fixes have yet to land
Republicans question sale of U.S. Strategic Petroleum Reserves to Chinese group
Last month, Gallup found that roughly two-thirds of Americans are struggling financially due to high gas prices. At least six in 10 are driving less, and 55 percent are canceling their summer vacation plans. While electric bike and hybrid vehicle sales increase, the White House is still trying to lasso gasoline prices by tapping into crude oil stored in underground salt caverns along the Gulf Coast.
President Joe Biden issued an order in March to sell a million barrels of oil per day for six months from the U.S. Strategic Petroleum Reserve (SPR). Republicans and free market conservatives have criticized the move as premature, and oil industry analysts are butting heads over whether American gas prices will finally fall or if the worst is yet to come.
The U.S. Department of Energy plans to release the allotted barrels in two stages: 90 million between May and August and another 90 million between August and October. But it’s not only American companies that get the emergency resources. In President Barack Obama’s 2015 omnibus spending bill, Democrats repealed a law that banned exports of U.S. crude, meaning the Energy Department must now auction it off to the highest bidders who qualify through SPR’s Crude Oil Sales Offer Program. This week, the department announced the list of 14 recipients, which included Unipec, a Chinese-owned, Houston-based company, which represents the trading arm of one of China’s largest corporations.
Daniel Turner, founder of Power the Future, an American energy advocacy corporation, said any emergency reserves should remain on domestic soil. Although the administration correctly identified the need to boost supply, he argues the SPR was meant to be a resource in time of war against the U.S. or natural disasters, not for price correction.
“For a year and a half now, Biden’s policies have been driving up prices and cutting into supply,” Turner told WORLD. “It would be wrong to say oil prices have nothing to do with Putin, but it would also be wrong to say they have everything to do with Putin.”
Additionally, Turner and other conservatives raised the alarm that the one Chinese company involved has ties to Hunter Biden.
While American companies like Valero, Marathon, and Motiva Enterprises received the bulk of the 37.8 million barrels sold, eyebrows raised at the inclusion of Unipec, which snagged 950,000 barrels. Unipec is the trading arm of Sinopec, a Chinese-owned, Global Fortune 500 company. Conservatives especially objected to rumors that Hunter Biden, President Biden’s son, has an interest in Sinopec.
In 2019, before his father took office, Hunter Biden’s lawyer said he resigned from the board of BHR Partners, which has a major stake in Sinopec. It is unclear whether Hunter Biden still owns stock in the company. Following Russia’s invasion of Ukraine in March, the Chinese company agreed to join the West in boycotting Russian oil. As of May, though, traders told Bloomberg that Unipec was increasing its fleet of tankers to carry Kremlin-sourced crude.
Industry experts told PolitiFact that exporting crude from the SPR is standard practice because even American companies sell it internationally. Rystad Energy reported that U.S. crude exports have increased while production has fallen during Biden’s administration. In June, the U.S. sent 5 million barrels of reserve oil to Asia and Europe, but experts say this won’t necessarily harm American interests. These resources are expected to help lower the international price of oil and offset Russian sanctions.
As of Wednesday, prices at the pump had been falling for 30 consecutive days, landing at a national average of $4.63 per gallon of regular gasoline. As of July 7, worldwide Brent crude oil leveled out at $104 per barrel, down significantly from a high of $140 in March. AAA spokesperson Andrew Goss told NBC the relief is a reaction to recession fears. At the same time, the U.S. Energy Information Administration released data showing demand for gas has remained low compared to past years, helping out the supply side. Although millions of barrels of previously scheduled SPR sales have already been distributed, resources from the latest sale are not scheduled to be delivered until August.
Experts are divided over what happens next. GasBuddy vice president and petroleum analyst Patrick DeHaan posted on Twitter that he cautiously projects the national average will fall to $3.99 per gallon by mid-August. Other analysts agreed that Americans might enjoy more cuts of up to 20 cents per gallon at the pump. But the prices at the gas stations depend on global oil prices, which JPMorgan warned will likely skyrocket to $380 per barrel if the economy falls into a recession. Citibank analysts rejected this projection and predicted crude oil would plummet to $65 per barrel by the end of this year, according to Bloomberg.
Chris Hudson, vice president of government affairs with Americans for Prosperity, described the administration’s situation as a hole it dug for itself. His organization advocates for what he calls “energy abundance, not independence, through a free market.” Turner said Biden could have addressed inflation at the pump with safer economic options before resorting to the SPR.
“The president could have not shut down the Keystone pipeline, he could have asked for a significant review of the National Environmental Policy Act and other regulatory barriers,” Hudson said. “The only true way to bring down gas prices is a free market, and that can’t be done if you’re perverting the marketplace by tapping into your strategic reserves before you allow the marketplace to work.”
The White House said it plans to refill the SPR with the money it gains from the emergency sales once the economy has stabilized. The storehouses held 695 million barrels, near capacity, when President Donald Trump took office in 2017. As of April, resources were depleted to roughly 547 million barrels.
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