As conflicts in the Middle East threaten to send global oil prices soaring, officials within the Biden administration say President Joe Biden may authorize another set of releases from the U.S. Strategic Petroleum Reserve (SPR).
Biden, who on his second day in office as president signed executive orders constraining the domestic energy sector, authorized a series of releases from the SPR in 2021 and 2022, draining it to a 40-year low.
The official reason given to the public was to offset price increases caused by Russia’s war with Ukraine. No mention was given to the numerous actions by the administration that sent gas prices skyrocketing.
So far, the budding conflicts in the Middle East have not impacted gas prices. But analysts and administration officials fear sharp price increases if the conflict in Israel spreads, which could constrain the flow from major producers in the area, prompting officials to consider new releases, according to the New York Times.
“They succeeded last year in the second half, but this year I think they’ve kind of run out of bullets,” Amrita Sen, director of research at Energy Aspects, told the Times.
Part of the reason, she added, is that the Biden administration failed to refill the SPR when prices were lower, a move which could undercut its ability to lower rising prices now.
“They got a little overconfident that prices would stay low,” she said. “In some ways, they’ve missed the boat.”
Administration officials planned to refill the SPR once prices dropped to $79 per barrel or lower. But so far, oil is still hovering at about $85 per barrel and the emergency supply remains low. In 2020, Democrats fumed at the Trump administration’s plan to fill the SPR at a time when prices were $25 per barrel, saying filling the reserve would be a handout for Big Oil.
This summer, Energy Secretary told CNN that though “the bottom line is we are going to replenish” the SPR, it is unlikely that it will happen prior to the end of Biden’s first term.
Republican lawmakers have slammed Biden’s tapping of the SPR, calling it illegal and an abuse of power.
“The purpose of the SPR is ‘primarily to reduce the impact of disruptions in supplies of petroleum products’ and supply crude oil to Americans during times of national emergency,” lawmakers wrote in a letter to the White House. “The oil within the Strategic Petroleum Reserve was intended for the American people, not for adversarial countries, and certainly not to make the Biden Family richer at a time when our citizens are paying almost $5.00 a gallon for gasoline and $6.00 for diesel.”
There are still 350 million barrels of oil in the SPR, the Times reported. But releasing more to dampen gas prices, especially ahead of an election, could be politically unwise, analysts told the Times.
“There’s another arrow in the quiver, but there’s only so many arrows right now,” said Jim Burkhard, head of energy markets research for S&P Global Commodity Insights. “Could they repeat it? Yes, but then you’re left with much, much less oil.”