Oil

Republicans Push To Ban Future Oil Sales From Strategic Reserve To China

Republicans in Congress have campaigned on the need to “unleash American energy,” and last week the House took what some see as a first step toward that goal by passing legislation to ban future sales of oil from the Strategic Petroleum Reserve to America’s biggest economic adversary.

The bill got a lot of Democrats’ votes, but it clearly was an attempt by the new House majority to send an early and clear message that, not only are they strong supporters of domestic oil and gas production, but they are going to be tough on China.

At a GOP leadership news conference last week, Rep. Elise Stefanik (R-NY) noted that members would be voting first to create a select committee on China, and “we will also vote to stop the Biden administration from selling our Strategic Petroleum Reserves to China.”

Republicans have repeatedly slammed President Biden for his decision last April to release 180 million barrels of crude oil from the nation’s Strategic Petroleum Reserve to the global market. At the time, shortly after Russia invaded Ukraine, gasoline prices were spiking, the U.S. and other nations were refusing to buy Russian oil, and the president said tapping the SPR would help stabilize prices.

But in the context of total global oil consumption — about 95 million bbls/day — many analysts saw the impact of adding 1 million bbls a day from the SPR as almost negligible and Republicans were convinced it was nothing more than a political stunt.

“It was politics,” said Rep. Josh Brecheen (R-OK2) in a recent interview, “even though it was a minimal amount of the consumption of the oil that our nation utilizes.”

The criticism only intensified when Republicans learned that a couple of million barrels of the SPR oil were sold to Unipec, the Houston-based subsidiary of China’s state-run oil and gas company, Sinopec.

“China is building up their own strategic petroleum reserve and have the largest in the world,” said Rep. Stephanie Bice (r-OK5) in an interview last week. “Why we are selling our own oil and gas reserves to them doesn’t really make a lot of sense to most Americans.”

But during floor debate on the bill last week, Democrats were quick to point out that it was in 2015 when Congress was under Republican control. that the nation’s longstanding ban on exporting U.S. oil was lifted, and that of all the American crude oil that was sold to China in 2022, the vast majority — about 98 percent — was sold by large private energy companies, while two percent came from the SPR.

“If Republicans were serious about addressing this issue, they would’ve brought forward a bill that banned all exports of crude oil to China,” said Rep. Frank Pallone (D-NJ), ranking member of the House Energy and Commerce Committee. “If we truly want to address China using American oil to build its reserves, let’s actually take a serious look at that, rather than skirting around the issue, because Republicans are scared of big oil‘s wrath.”

The bill passed easily, 331-97, with 113 Democrats joining unanimous Republicans in support.

Next, House Republicans are looking to pass legislation that would condition any future releases of SPR oil on having a plan in place for more energy development on the nation’s public lands. Neither bill is likely to pass the Democrat-controlled Senate.

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