Running on Fumes: Petroleum Reserve Depleted as Prices Begin to Rise
There has been an on-going energy crisis facing European nations due to low domestic energy production, the near-total destruction of Nord Stream 1 and 2 pipelines, strict “green energy” laws, and European dependency on Russia for natural gas. During this time, Americans have seen gas prices skyrocket, reaching over $6 per gallon in many states, and reaching an average of $5 per gallon nationwide just a few months ago.
The current White House Administration has chosen a risky and temporary solution to band-aid the problem, at least until the end of this year. President Biden has been steadily emptying the Strategic Petroleum Reserve (SPR) for months, which has artificially lowered domestic prices at the pump, but at what cost?
The SPR was created for emergency use — e.g., natural disasters or times or war. Instead of increasing domestic production, the White House Administration has depleted our emergency supply of oil, leaving the US vulnerable, reducing our ability to handle future crises that may arise.
Selling fuel from the SPR will increase the global supply of oil, which means the prices will temporarily fall domestically because there is more of the product available. This is again a temporary measure. The artificial increase in supply (meaning, this is not newly drilled oil, but rather an influx of oil that was already created) causes companies like The Organization of the Petroleum Exporting Countries (OPEC) to reduce their production amount. Now, running on fumes, the SPR is at its lowest point since 1984.
The problem persists when taking into consideration the fact that the oil from the SPR will need to be replenished eventually. This could mean that the government will have to repurchase oil at a higher price point than before.
Rather than draining our emergency supply while simultaneously asking oil companies to continue producing the same amount of oil or even increase production, we could have simply resumed domestic production. Being energy independent is one of the best national security strategies, it prevents other nations from holding oil hostage until demands are met. European nations are currently facing that very problem, as the EU has decreased oil imports from Russia as part of many sanctions placed on the country following its invasion of Ukraine.
“The European Union has banned Russian coal and plans to block most Russian oil imports by the end of 2022 in a bid to deprive Moscow of an important source of revenue to wage its war in Ukraine.”
Oil Price
As California experiences rolling blackouts, and European countries prepare to jail citizens who heat their homes this winter, the need for domestic, American oil production is greater than ever. The temporary relief is slowly wearing off, and the rose-colored glasses aren’t working as well as they were previously. When oil costs hit record-highs last summer, Americans were thrilled to see prices fall below $4 per gallon nationally in early August — but that price is steadily ticking upwards once again.
