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The Biden Administration’s politically motivated release, over six months, of 180 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) exceeds his authority and threatens national security.
Following the 1973 Arab Oil Embargo, Congress created the SPR through the Energy Policy and Conservation Act (EPCA) of 1975. To prevent government interference with normal market functions, EPCA specifically limited oil reserve releases when there are emergency shortages caused by a severe interruption of imported or domestic oil supply, or an act of sabotage, terrorism, or “acts of God” such as hurricanes.
While all consumers are suffering from high-priced gasoline, the price increases are not due to a severe oil supply interruption. Unlike the 2011 Libya civil war, Russia’s invasion of Ukraine has not caused a disruption of supplies in the world markets. In fact, the U.S. and EU sanctions on Russia expressly exempt Russia’s sales of oil. Even the sanctions on Russian banks’ use of the SWIFT international transaction system exclude energy sales.
Although oil prices increased partly due to reduced production in response to the economic slowdown from the pandemic, the more significant cause is the effect of the administration’s regulatory assault on the oil and gas industry, beginning on Biden’s first day in office when he unilaterally cancelled the permits for the partially constructed Keystone Pipeline.
That was followed by suspension of new lease sales, removal of highly productive offshore and onshore tracts from future lease sales, imposition of burdensome regulatory requirements for necessary infrastructure development, and proposed restrictions on capital investments in oil and gas projects.
The cumulative effect of the Administration’s assault on all fossil fuels, which continues unabated by the President and Congressional Democrats, discourages the immense capital investment required to drill even one new well.
But the industry’s response to the Biden administration’s hostility is not an emergency disruption of supply. It is exactly the response that a rational industry would make, and the response the Administration intended—less investment in new development leading to less production.
Similarly, the decision to prohibit any U.S. purchases of Russian oil is not a severe supply disruption because those imports amounted to less than five percent of consumption. But even if it was more, the supply was stopped not by the war in Ukraine or by the U.S. sanctions. Russia continues selling crude oil around the world, including to its largest customers China, India, and, alarmingly, the EU.
These fundamental realities are highlighted by the International Energy Agency’s announcement that the collective releases of oil is justified only by “price volatility” resulting from Russia’s war, and the “prospect of large scale disruptions of Russian oil."
In short, the Congressionally manded circumstance of a “severe energy supply disruption” for the President to release oil from the SPR simply does not exist.
The upcoming midterm elections obviously motivates the Administration’s unauthorized action. But worse than the President ignoring the law is the threat to national security by depleting the SPR before there is a true supply disruption.
Should, for example, Iran decide the time is right, with the distraction of war in Ukraine, to pursue a show of force in the Middle East and attack Saudi Arabia, we could be facing an actual world-wide disruption of supply with a depleted reserve of crude oil in the SPR. Similarly, if a category five hurricane hits the Gulf of Mexico and shuts down oil production for weeks, as with Hurricane Katrina, the SPR may not be able to respond to the actual emergency.
President Biden’s pursuit of his no-fossil-fuels energy policies caused high gas prices well before Russia invaded Ukraine. Now, faced with historically poor polling as the midterm elections approach, the Administration has grasped for a lifeline. But the action itself exceeds the legal limits of his authority and creates unwarranted risk to our national security.
National security is no place for political gamesmanship. As President Biden flounders for solutions to the bad outcomes of his policies, we can only hope common sense secures new voices in Congress and the White House.
About the author: Mark R. Robeck is a former U.S. Dept. of Energy Deputy General Counsel for Energy Policy. Before joining the Department, Mark was in private practice with Kelly Drye & Warren LLP, where he was Co-head of the Energy Practice Group, and Baker Botts LLP, where he was Co-head of the Energy Litigation Practice Group.
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