Energy

Releasing oil from reserves is ‘bad policy choice’ says Ex-Trump energy secretary

Releasing oil from reserves is ‘bad policy choice’ says Ex-Trump energy secretary

Highlights:

  • Former US Energy Secretary Dan Brouillette said on Wednesday that the Biden administration’s decision to release oil from US reserves was a “mistake”
  • On Tuesday, President Joe Biden announced the release of 50 million barrels of oil from the country’s Strategic Petroleum Reserve
  • In the United States, the SPR is a national security asset designed to defend the country and its population from supply disruptions, which are emergency conditions, but Brouillette says the only current emergency is a political one

The Reaction of Biden’s Decision

Former US Energy Secretary Dan Brouillette said on Wednesday that the Biden administration’s decision to release oil from US reserves was a “mistake.”

President Joe Biden announced the release of 50 million barrels of oil from the country’s Strategic Petroleum Reserve the day before. “I believe that is a poor policy decision.” “There’s no doubt about it,” he said to reporters.

China, India, Japan, South Korea, and the United Kingdom will all release oil reserves as part of a worldwide initiative by high-energy-consuming countries to bring down energy prices.

Objectives of the Strategic Petroleum Reserve

The SPR is a national security asset in the United States that is designed to defend the country and its population from supply disruptions. Emergencies are among them, according to Brouillette, who served as energy secretary under former President Donald Trump.

“It’s not a supply crisis, and the only crisis I can see in this case is a political one,” he explained. According to Brouillette, the Biden administration’s actions demonstrate that they are apprehensive about the 2022 midterm elections.

“This is driving the decision — perhaps more than anything else — since, as I stated earlier, there is no supply emergency,” he explained. According to the Energy Information Administration, oil producers in the United States pump roughly 11 million barrels per day.

He went on to say, “It’s a mistake; we shouldn’t be using it for these purposes.”

According to the Office of Fossil Energy and Carbon Management, three presidents have utilized the SPR as an emergency response mechanism in the past. During the Libyan civil conflict, Hurricane Katrina, and the Persian Gulf War, the drawdowns were ordered to help stabilize the market.

Inflation is seen in Energy Sector

Oil prices have climbed more than 60% so far this year as economies have reopened and demand has risen sharply.

The US requested that OPEC and its partners raise output to lower prices, but the oil cartel kept to its plan of gradually increasing supplies.

Brouillette believes that increasing production is a better approach to influence pricing, noting that the United States was a swing producer for many years and virtually set global oil prices.

“Our ability to produce 13 million barrels of oil per day for three to four years significantly shaped the markets,” he remarked. “It’s critical that we go back to that method rather than relying on a national asset like the Strategic Petroleum Reserve to influence pricing.”

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