Back in November, Joe Biden released 50 million barrels of oil from the Strategic Petroleum Reserve in the hopes of reducing the inflated price of gasoline his anti-oil and anti-gas policies were responsible for. Americans were getting testy, you see, about elevated gas prices and the rising cost of goods and services which they brought about. And that frustration was eating into the president's approval rating and hurting the Democrats, with the midterm elections just a year away. But the plan failed. Gas prices weren't appreciably affected, the cost of living remained high, and discontent spread.
Then the world's third largest producer of petroleum products started a war, making itself a pariah state and jeopardizing the oil and gas market world wide. Prices soared even further, with gasoline setting a new record national average of $4.33 per gallon. Democrats' midterms hopes fell from Not Promising to Absolute Disaster.
Luckily the White House has come up with a plan to fix all their problems: tap into the Strategic Petroleum Reserve. Again. Only this time the plan is to really tap it. Instead of a mere 50 million barrels, Team Biden has announced a plan to release 180 million barrels over the course of three months, by far the biggest drawdown of the reserve since its creation in 1975. Moreover, this release will leave the reserve with fewer than 400 million barrels, their lowest level since 1984.
Will it work? It didn't last time. That's because, as the Wall Street Journal editorial board explains, "the oil will need to be replaced, which will push up future demand." They continue:
Markets don’t respond only to short-term demand and supply fluctuations. They also take into account long-term expectations and policy signals. And the Administration continues to signal that its goal is to bankrupt oil and gas producers. But before shooting them, Mr. Biden wants their political help.
The war in the Ukraine might be responsible for the recent price spikes. But Biden's war on the oil and gas industry set a higher baseline for prices to take off and have made it nearly impossible for the market to recover.
"I did that!"
It is also worth noting that this isn't really what the Strategic Petroleum Reserve is for. Its purpose is to defend against the kind of national crisis they had in the 1970s, when the fact that America imported more than 80 percent of our oil proved disastrous when the OPEC declared an oil embargo on the western nations that had supported Israel during the Yom Kippur War. Oil shortages and rationing followed, creating not just a national energy crisis but a potential national security crisis as well. The Strategic Petroleum Reserve was created to establish a cushion for just such a situation.
Thankfully, our present situation isn't like that at all, because we've developed our own natural-resource industry; the U.S. was a net energy exporter as recently as 2019. During the Trump administration we became less reliant on foreign dictators than ever. But Biden has worked hard to pull that all down, and now he's spending down the capital better leaders worked hard to build up. Thanks, Joe.