Biden’s release from the Strategic Petroleum Reserve amounts to less than three days supply in the United States. And this release will benefit India and China much more than it will the United States.
The oil in the reserve is what is known as sour oil. What that means is that there is more impurities in it and that makes it more expensive to refine. Countries like India and China prefer sour crude because it is much cheaper.
Eighteen million barrels of the release will go to markets in India and China. The rest will go to the American consumer. So, now we are getting less than 2 days of supply.
Additionally, Biden had already released twelve million barrels from the SPR, all of which went to Asia.
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This was done quietly in hopes no one would notice. That oil will need to be replaced at a higher cost or Biden can just allow the SPR to fall below the level needed in case of an emergency such as war. He will study the situation carefully before doing what is worst for the country.
For a decade the U.S. was the world’s swing oil producer. But U.S. drillers have retreated amid a regulatory assault from Washington, pressure from progressive investors, and challenges obtaining capital. Some say they are also struggling to find workers. Output is set to hit a record in the Permian Basin, where the break-even costs are low and new production doesn’t require long-term investment.
But U.S. production is still about 1.7 million barrels per day below its pre-pandemic peak and has been declining in other oil fields such as the Bakken Shale, where a shortage of pipeline capacity has raised costs. The Democrats’ multi-trillion-dollar spending bill is chock-full of fees that would make U.S. producers less globally competitive.
This will translate into higher prices far into the future, which is Biden’s true goal. Renewable energy is extremely expensive, so Biden will drive up the cost of oil and gas in order to make renewables appear to be more attractive. And in the meantime, he is benefiting China, the country that pays the light bills at his Delaware mansion.