As Newsmax Finance reported this week, oil from the U.S. Petroleum and Oil Reserves was sent overseas to China, our trading rival, which is stockpiling their resources.
More than 5 million barrels of oil that were part of an historic U.S. emergency oil reserves release aimed at lowering domestic fuel prices were exported to Europe and Asia last month, even as U.S. gasoline and diesel prices touched record highs.
About 1 million barrels per day are being released from the Strategic Petroleum Reserve (SPR) through October. The flow is draining the SPR, which last month fell to the lowest since 1986.
U.S. crude futures are above $100 per barrel, and gasoline and diesel prices above $5 a gallon for one-fifth of the nation. U.S. officials have said oil prices could be higher, had the SPR not been tapped.
Oil Reserves a Critical Security Tool
The truth is fuel prices are still high and the SPR remains a critical energy security tool to address global crude oil supply disruptions. The government still believes that releasing the emergency oil releases helped ensure stable supply of crude oil. However, supply has not increased, and demand remains high.
We have learned more on this and it will irritate you, too.
The SPR is a U.S. Government complex of four sites with deep underground storage caverns created in salt domes along the Texas and Louisiana Gulf Coasts. At its peak, the SPR was filled to its then 727 million barrel authorized storage capacity on December 27, 2009 — an inventory of 726.6 million barrels was the highest ever held in the SPR.
The SPR has been used for relief when Hurricane Katrina hit the Gulf Coast; Hurricane Gustav, followed shortly thereafter by Hurricane Ike, which all reduced the level by 5.4 million barrels. It’s interesting to note that the average price paid for oil in the reserve is $29.70 per barrel. So it makes sense to hold it for emergencies for our country.
Where is all the oil actually going? This may surprise you. According to U.S. Customs data, 470,000 barrels of crude oil was sent to Trieste, Italy, which is home to a pipeline that sends oil to refineries in central Europe. The data also showed that Atlantic Trading & Marketing, an arm of French oil major TotalEnergies, exported 2 cargoes of 560,000 barrels each.
Cargoes of SPR crude oil were also headed to the Netherlands and to a Reliance refinery in India. A third cargo load is headed to China and at least one cargo of crude from the West Hackberry SPR site in Louisiana is set to be exported in July. The latest exports follow three vessels that carried SPR crude to Europe in April helping to replace Russian crude supplies.
Wait a minute — didn’t President Biden frequently say that the release of one million barrels of oil per day was “unprecedented” and “historic” as Americans face surging prices at the pumps? As of July 7th, 2022, the national average price of gas in the United States is currently $4.81 per gallon, according to AAA, with the national average temporarily surpassing $5.00 per gallon last month.
Crude inventories in the United States are currently at their lowest levels since 2004, according to Reuters, as refineries along the gulf coast operate at nearly 98% capacity.
The Bottom Line
The U.S. government buys oil produced in our country in case of a domestic emergency. This could be a natural emergency or any other. But giving away our emergency reserves to another country so that they can stockpile it is an extremely foolish move.
We should all be angry about this poor choice. God forbid we do have an emergency and we need those strategic oil reserves, we will have less than half of the reserves that we need. This could be disastrous and impact every American.
There is so much more to discuss on this, put your comments below and let’s start the conversation.
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