The Strategic Petroleum Reserve storage at the Bryan Mound site in Freeport, Texas, Oct. 19.
Photo:
Brandon Bell/Getty Images
White House officials accuse OPEC and its allies of manipulating oil prices, but then what do you call what President Biden is trying to do? Three weeks before Election Day, Mr. Biden is ordering 15 million more barrels released from the nation’s Strategic Petroleum Reserve (SPR) to reduce gasoline prices.
The new releases are a sign of political desperation. Crude price climbed after OPEC+ this month announced a two million barrels a day cut in production. This is really closer to one million barrels a day since many countries aren’t meeting their quotas now. But as day follows night, U.S. gas prices have increased, and the political timing couldn’t be worse for Democrats.
The Administration says its planned drawdown will add about 500,000 barrels a day to global supply in December. That’s misleading. About one million barrels a day on average have been released since this spring. The drawdowns were scheduled to end next month, so the new releases will merely prevent supply from contracting more than it otherwise would.
The Administration first started tapping the SPR last fall to combat rising gas prices. Please, Mr. President, stop calling it “Putin’s price hike.” Russian exports have fallen a mere 560,000 barrels a day from pre-Ukraine war levels on a global supply of 101 million.
The main problem is that oil demand has outstripped supply amid the post-pandemic economic recovery owing to a lack of investment, especially in the U.S., which had been the world’s swing producer. U.S. production has been flat since May. Now the swing producers are Saudi Arabia and the United Arab Emirates. OPEC countries and their allies, which account for 45% of global oil production, accounted for 85% of new supply in September.
The Biden SPR releases have probably helped reduce prices at the margin. But one risk was always that…
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