In response to record-breaking gas prices at the pump, President Biden announced he is planning to release 180 million barrels of oil from the Strategic Petroleum Reserve over the next six months. This represents the largest release in the history of the reserve and will take it down to levels not seen since the early 1980s.
While this action may provide some degree of short-term relief, analysts predict it will cause even greater problems in the long run. The release will artificially lower prices, which will immediately increase demand. Unless the administration addresses the true cause of supply constraints, then this increase in response to the artificially lower prices will create an even bigger supply shortage in the future.
If President Biden were serious about addressing increased gas prices, he would immediately reverse course in his approach to domestic energy. Specifically, he could open up the federal lands for which he’s banned oil and gas development. He could also streamline the process for approving pipeline infrastructure instead of designing questionable metrics meant to permanently stall them. Importantly, he could also halt the barrage of red tape that is creating barriers to energy development through increased costs and legal liabilities.
Instead of embracing the obvious solutions, the Biden administration is doubling down on the bad policies that got us to where we are today. He’s using the power of the federal government to deter production and investment. Just a few weeks ago, his administration released a proposed rule from the Securities and Exchange Commission (SEC) that sent a very clear signal to capital allocators that their funds should no longer be invested in U.S. oil and gas. This rule is not surprising given constant anti-fossil fuel rhetoric from his top officials, but it is increasingly tone deaf given the financial hardships American families are now experiencing.
This release – a strategic blunder – will be the third time the Biden administration has tapped into the petroleum reserve. Prior emergency releases have been in response to the Gulf War in 1991, Hurricane Katrina in 2005 and in 2011 when the Libyan civil war significantly disrupted supply. In these instances, the SPR proved an effective insurance policy in the face of legitimate supply disruptions caused by forces largely outside the control of our nation’s leaders.
Unfortunately, under President Biden, he’s looked to this vital oil reserve as a political tool to mitigate the consequences of his anti-U.S. energy policies. Beyond the obvious harm to families paying exorbitant prices at the pump, depletion of this strategic resource without any degree of replenishment is creating even more of a national security risk if a true disruption occurs.
The solution to this situation is obvious – unleash American energy. As we saw in the Trump administration, this approach lends itself to record-low gas prices, a vibrant economy and enhanced national security.