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Republican bill conditioning US Strategic Petroleum Reserve releases clears House


Republican-backed bill passes in 221-205 vote

Senate path unclear but president commits to veto

API calls on both parties to end their abuses of SPR

  • Author
  • Jasmin Melvin
  • Editor
  • Richard Rubin
  • Commodity
  • Natural Gas Oil

Republicans in the US House of Representatives Jan. 27 pushed through legislation tethering releases of crude oil from the US Strategic Petroleum Reserve to the creation of a plan to boost oil and gas production on federal lands.

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Republicans framed the Strategic Production Response Act (H.R. 21) as a means to end the Biden administration's politically motivated abuse of the SPR to cover up the consequences of its rush-to-green agenda, while Democrats saw it as a political stunt and handout to award Big Oil for their hefty campaign donations.

The bill, passed in a 221-205 mostly party-line vote after two days of debate on amendments, would limit the Department of Energy's ability to release oil from the SPR when a severe energy supply interruption is not underway. In those instances, the DOE would have to put forth a plan to increase the percentage of federal lands and waters leased for oil and gas production by the same percentage of oil that it seeks to release from the SPR.

Successful amendments to the bill require a list of parcels planned to be offered for lease to be included in the plan, which must be submitted to Congress, as well as assurances that nothing in the plan would result in oil from the SPR being sold to China, Iran, North Korea or Russia.

This is not expected to impede the DOE's ability to respond to supply disruptions that have occurred, for instance after a hurricane or a pipeline shutdown. But Height Capital Markets senior policy analyst Benjamin Salisbury contended "it would limit [the department's] more proactive expanded authority ... for situations that are likely to become a domestic or international supply shortage," jeopardizing the Biden administration's strategy thus far for addressing upheaval in global oil markets.

The emergency crude stockpile played heavily in President Joe Biden's efforts to mitigate global supply disruptions caused by Russia's invasion of Ukraine and help lower fuel costs. The DOE completed the largest-ever drawdown from the SPR, satisfying Biden's historic commitment to release 180 million barrels, and Biden has signaled further releases from the SPR are possible as his administration considers options for stabilizing global oil markets and addressing pain at the pump domestically.

Veto threat

The measure saw no House Republicans vote against it and only one Democrat, Jared Golden of Maine, cross the aisle to support it.

The bill now moves to the Senate, where Republicans in that chamber introduced similar legislation (S. 31) that puts the onus on the Interior Department to issue a plan with actions to increase oil and gas production on federal lands and waters beyond already scheduled onshore and offshore lease sales. That plan and any subsequent updates would have to be submitted to energy-focused committees in the House and Senate within 60 days of an SPR drawdown.

If the legislation were to pass the Senate, the White House said in a Jan. 23 statement of administration policy that it strongly opposed H.R. 21, and that Biden would veto it if Congress passed the bill.

American Petroleum Institute CEO Mike Sommers lamented during the US Energy Association's State of the Energy Industry Forum Jan. 26 that "the SPR has been completely politicized by both political parties over time," pointing to congressionally mandated sales from the SPR promoted by Democrats and Republicans alike to pay for other government priorities.

"I think what this bill does is it actually highlights some of the key problems with using the SPR not as a strategic petroleum reserve but as a strategic political reserve, and it has been abused by both political parties," Sommers said. "This bill, while it's unlikely that it's going to get enacted into law, highlights the importance of making sure that we have enough product in the SPR in case of a national emergency. ... So we're encouraged by the focus on this important national security issue, and we're hopeful that both political parties refrain from continuing to use the SPR for political purposes."

'Tool of last resort'

Republicans have criticized Biden for draining the country's emergency oil supply to its lowest level since December 1983, asserting it weakened US energy and national security. They also contend the drawdown was unwarranted and pursued as a political bailout for Biden's failed energy policies and anti-oil-and-gas approach.

"The SPR should be used as a tool of last resort," Energy and Commerce Committee Chair Cathy McMorris Rodgers, Republican-Washington, said on the House floor Jan. 26 before the vote.

Yet, more than 250 million barrels of oil, or about 40% of the reserve, has been released from the SPR under Biden "to cover up historically high [gasoline] prices in an election year," said Rodgers, who introduced the bill. "This is irresponsible. The Biden administration has undermined our nation's ability to respond to true energy emergencies by mismanaging our nation's strategic energy stockpile."

The top Democrat on the House energy panel, Representative Frank Pallone of New Jersey, countered that Biden's use of the SPR brought average gasoline prices in the US down about $1.60/gal from last summer's peak, while H.R. 21 would raise prices at the pump.

"It would prevent the [DOE] from using the [SPR] to respond to price hikes until Big Oil is given open access to drill on public lands," Pallone said. "Now restricting the federal government's best tool for decreasing [gasoline] prices in the middle of a global energy crisis defies any logic."

Republicans blocked Pallone from offering his Buy Low and Sell High Act, which would empower the DOE to buy oil when prices are low and sell when prices are high, as an amendment to H.R. 21.

"Republicans aren't interested in lowering [gasoline] prices or engaging in serious legislating," Pallone said in a Jan. 27 statement. "For all the Speaker's talk about opening up the floor to more debate, when push comes to shove, Republicans aren't willing to hear out dissenting opinions on their bills and aren't secure enough in their ideas to even let amendments like mine come up for a vote."