Joe Biden's SPR Caper-A Triple Bogey

Back in the day, the right strategy was two-fold:

• Let the free market find the least-cost solution to the nation's energy requirements, regardless of where those supplies were sourced
• Treat "energy security" like all matters of national security-as a fiscal investment

Over a 30-year period, the US achieved energy self-sufficiency

• Big Government via energy autarky schemes was defeated
• and a largely market-based energy economy propelled a sustained period of prosperity
• This was the work of Mr. Market pursuing least cost solutions, not Washington energy bureaucrats picking winners and losers

There was always the risk that politicians would use the Strategic Petroleum Reserve (SPR) as a political football

• one day some politician might release supplies for the sole purpose of bringing down domestic gas prices in the run-up to an election, even if there was no major global supply outage.

Biden announced a 180 million barrel release to be staged at a rate of 1 mb/d during the period running right up to the November election

• This was 10X to 90X larger than previous periods when there was an emergency, such as the first Gulf War and the temporary shutdown of Gulf Coast production in the aftermath of Hurricane Katrina

Bottom Line

• By election day, the 568 million barrel cushion extant on March 31st will have diminished to just 390 million barrels

The crude oil and petroleum markets are some of the most interconnected and thoroughly arbitraged markets on the planet

• Under normal circumstances, once you adjust for quality grades and transportation distance/cost, the same price per petroleum BTU prevails all around the world.
• The Biden Administration has not merely politicized the SPR, but has effectively weaponized the entire energy market in pursuit of its wrong-headed intervention in the intramural dispute between Russia and its former territories and vassal.

Russia exported 16.45 million tonnes of coal by sea in June, compared to 13.43 million tonnes in December, 12.28 million in January and 13.08 million in February

• In addition to higher gas prices at the pump, US consumers will pay sharply higher utility bills as even coal prices rise

 

https://www.lewrockwell.com/2022/07/david-stockman/joe-bidens-spr-caper-a-triple-bogey/