Strategic Petroleum Reserve: DOE shows no intention of refilling it but instead relies on an accounting trick

The Strategic Petroleum Reserve is clearly not important to this administration.

Source: Wikipedia

Imagine that you scold your child for spending some of their savings frivolously, and they respond that it’s not a problem because they canceled their plans to spend even more of their savings, so they have actually already recovered part of the money you are complaining about.

As convoluted and illogical as that sounds, that is exactly what the DOE said in a May 15, 2023 announcement, “DOE Announces Purchases for the Strategic Petroleum Reserve.” While soliciting bids to purchase 3 million barrels of sour crude oil, DOE explained how non-sales in the future actually replenish the SPR:

DOE has already secured cancellation of 140 million barrels in congressionally mandated sales scheduled for Fiscal Years 2024 through 2027. This cancellation has already led to significant progress toward replenishment and will allow the SPR to have the same number of barrels in reserve by the end of FY 2027 that it would have had emergency barrels not been sold in 2022.  

DOE is saying that Congress has agreed to cancel its plans to sell 140 million barrels of SPR oil in 2024-2027, so DOE can now count those canceled sales as refilling the SPR, leaving only 40 million barrels to refill the SPR to its prior level. You might chuckle at such logic coming from your child, but this is scary stuff coming from the DOE. It sounds like something from Kurt Vonnegut’s “Welcome to the Monkey House,” but it isn’t. This is an actual statement released by the United States Department of Energy explaining how their plan will keep the country safe.

Remember that President Biden decided to drain the SPR, which Congress created after the 1974 Arab oil embargo, for the specific purpose of lowering gasoline prices ahead of the mid-term elections in 2022. DOE brags about that strategy in the first part of this announcement:

Today’s announcement advances the President’s replenishment strategy following his historic release from the SPR to address the significant global supply disruption caused by Putin’s war on Ukraine and provide a wartime bridge for domestic production to increase. Analysis from the Department of the Treasury indicates that SPR releases last year, along with coordinated releases from international partners, reduced gasoline prices by up to roughly 40 cents per gallon compared to what they would have been absent these drawdowns. 

The message is U.S. citizens should not worry about the fact that the Strategic Petroleum Reserve is now actually 180 million barrels lower than they were when Biden took office, a 40-year low, but rather they should rejoice that gasoline prices were up to 40 cents per gallon lower for a few months.

The Whitehouse had pledged to begin refilling the SPR when crude oil futures fell to $67-$72 per barrel, but when that occurred in March of this year, DOE did nothing. With West Texas Intermediate closing at $71.55 per barrel last Friday, May 19, 2023, we will see if DOE actually buys 3 million barrels. Even if they do, such a meager amount does not increase U.S. energy security. It is clear that the Biden/DOE plan is NOT to refill the SPR.

Energy Secretary Granholm recently said: "We will begin that process (refilling) this year, but to refill the full amount is impossible.” She is right about that: It is impossible to actually refill the SPR if DOE only makes minuscule crude oil purchases from time to time and equates Congress not selling SPR reserves in the future with actual additions.

The Biden Administration clearly has no intention of supporting the U.S. oil and gas industry by buying domestic crude oil because that would be contrary to their donors’ wishes and their policy of a forced “energy transition” away from fossil fuels.