President Joe Biden sold off nearly half the federal government’s oil reserve last year to stanch rising fuel prices after Russia invaded Ukraine. Republicans now argue that the drawdown has left the country vulnerable to a disruption of global oil supplies as violence between Israel and Hamas threatens regional conflict, writes Ben Lefebvre. But will it? For now, this is a hypothetical situation, as the conflict — which has left thousands of Israelis and Palestinians dead and many more injured and displaced — has not spread to any major oil-producing countries. And while the Strategic Petroleum Reserve is at its lowest level since the early 1980s, it still holds 351 million barrels — and is not, as former House Speaker Kevin McCarthy recently lamented, “down to nothing.” That is nearly equivalent to 56 days of total U.S. oil imports last year. The administration has said that’s more than enough to protect the nation’s strategic needs. “I am not worried about the reserve levels at all,” Energy Secretary Jennifer Granholm told a House committee in September, adding: “It is the largest strategic reserve in the world.” Does the reserve really matter?
The U.S. crude stockpile, which lies in half-filled salt caverns along the Gulf Coast, was initiated after the 1973 Arab oil embargo — announced 50 years ago this Thursday — sent prices soaring, triggered rationing and energy shortages, and left Americans waiting in hourslong lines at gas pumps. Back then, U.S. oil production was failing to keep up with the country’s voracious demand. Today, the United States is the world’s biggest oil producer, exporting more crude and petroleum products than it imports. Yet the country remains part of a global oil market — and even a fully stocked oil reserve wouldn’t fully insulate the nation from price shocks. Last year’s emergency release — the largest ever — drove down gasoline prices by between 17 cents and 42 cents per gallon, according to the Treasury Department, but didn’t keep them from hitting an all-time peak that June. In past years, some conservatives have called for abolishing the reserve, complaining that presidents use it as a political tool. Congress has repeatedly authorized sales from the reserve for non-emergency reasons, such as highway spending and reducing the federal budget deficit. Bob McNally, president of the energy and geopolitics consulting firm Rapidan Energy, argued the reserve is important for lessening oil-related geopolitical shocks, but said both parties are to blame for draining it. “This is the third wake-up call in four years that maybe it’s not a good idea to mindlessly sell off our strategic reserve,” said McNally, who served on the National Security Council during the George W. Bush administration, referencing the 2019 Iranian drone strikes against Saudi oil fields and Russia’s invasion of Ukraine last year.
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