On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss Joe Biden inflating currency and deflating a Chinese spy balloon (after it completed its mission).
Links:
Biden’s EV Fantasy Crumbling As EV Costs Surpass Gas-Fueled Vehicles
February 7, 2023 by Leave a Comment
A recent study by the Anderson Economic Group found the cost to fuel certain electric vehicles to be higher than similar gasoline-powered cars for the first time in 18 months. In the fourth quarter of 2022, drivers fueling a typical mid-priced Internal Combustion Engine (ICE) car paid $11.29 to fuel their vehicle for 100 miles of driving. That cost was $0.31 cheaper than the amount paid by drivers in mid-priced electric vehicles charging mostly at home, and over $3 less than the cost borne by comparable EV drivers charging commercially. This occurred because gasoline prices were declining and electricity costs were increasing. It fundamentally undermines the Biden Administration’s “whole of government” push for the electrification of transportation in the United States, exemplified in this argument for electric vehicles by Energy Secretary Jennifer Granholm.
For luxury cars, the opposite is still true. During the fourth quarter of 2022, luxury EV owners paid $12.4 to drive every 100 miles on average if they charge their cars mostly at home or $15.95 if they charge their cars mostly at commercial charging stations. The fuel costs for luxury gasoline-powered cars totaled $19.96 per 100 miles on average. Assuming mostly home charging, the cost benefit to fuel a luxury EV vs. a luxury ICE car dropped from $11.20 per 100 miles to $7.56. The fuel costs are based on real-world driving conditions including the cost of underlying energy, state taxes charged for road maintenance, the cost of operating a pump or charger, and the cost to drive to a fueling station.
The analysis calculates four categories of costs for fueling EVs and ICE vehicles across benchmarks representing real-world driving conditions, including:
- The cost of the underlying fuel (gas, diesel, electric)
- State excise taxes charged for road maintenance
- The cost to operate a pump or charger
- The cost to drive to a fueling station (deadhead miles)
All cases reflect 12,000 miles per year, with the cost of residential charging equipment amortized over five years. Calculations are based on energy prices and taxes in the state of Michigan. Benchmarks for ICE vehicle drivers assume the use of commercial gas stations. For EV drivers, there are two calculations: drivers who routinely charge at home and those who rely primarily on commercial chargers.
The information is depicted below by class of vehicle. There is insufficient market information for a comparison of electric trucks and of entry priced electric vehicles.
The Biden administration has been pushing hard for drivers to purchase electric vehicles supposedly in an effort to reduce emissions. However, since about 60 percent of the nation’s electricity comes from fossil fuels, the electricity sector is still emitting greenhouse gases and thus so do electric vehicles.
The Anderson Economic Group used data based on Michigan’s electricity and gasoline prices. Michigan has the eleventh highest electricity prices in the nation with residential electricity prices averaging 18.18 cents per kilowatt hour, which are 13 percent higher than the national average and 72 percent higher than the lowest residential state electricity price (based on October 2022 data). Michigan is also the seventh largest producer of electricity in the nation and similar to the nation’s generation statistics, it gets about 60 percent of its generation from fossil fuels: coal, natural gas and petroleum coke. Below is the generation data for Michigan in November 2022.
In the fourth quarter of 2022, gasoline prices were decreasing as President Biden used the Strategic Petroleum Reserve to bring gasoline prices down before the mid-term election on November 8. Gasoline prices across the nation dropped from an average of $3.912 per gallon in early October 2022 to a low of $3.091 per gallon by the end of the year.
Other Issues with Electric Vehicles
Electricity prices have been increasing steadily over the past few years, especially in states such as California where utility companies are having trouble keeping up with demand. When states like California replace coal and natural gas generators with renewable energy and storage batteries, the costs are passed on to consumers. In states where electricity prices are high, driving an electric vehicle could cost more than driving a gasoline-powered car. Plus, the initial cost of an electric vehicle is much higher than an ICE vehicle due to higher manufacturing costs and battery technology. Since electric motors have fewer moving parts than traditional combustion engines, they require less regular maintenance but still do require repair. Also, some public charging stations may also charge additional fees which can add up quickly depending on how much those charging stations are used.
In fact, Tesla’s electric vehicles are so expensive to repair that insurers are writing off low-mileage Tesla Model Ys and sending them to salvage auctions after determining that many are too expensive to repair. Of more than 120 Model Ys that were totaled after collisions, then listed at auction in December and early January, the vast majority had fewer than 10,000 miles on the odometer. The retail prices of the cars ranged from about $60,000 to over $80,000. Insurance companies generally “total” a vehicle when the estimated cost of repair is deemed too high. The insurance companies include State Farm, GEICO, Progressive and Farmers.
For example, a 2022 Model Y Long Range involved in a front collision and listed at auction in early January had a retail price of $61,388 and estimated repair cost of $50,388. Another Model Y involved in a side collision had a retail price of $72,667 and estimated repair cost of $43,814. Chief Executive Elon Musk indicated that Tesla is making design and software changes to its vehicles to lower repair costs and insurance premiums.
Conclusion
The Anderson Economic Group found that for a certain class of vehicle, electric vehicles were more costly to operate than their gasoline vehicle counterparts because of decreasing gasoline prices and increasing electricity prices. However, the report notes that the costs of charging an electric vehicle vary considerably depending on whether the user must rely on more expensive commercial charging services or can rely upon a residential charger.
Because electric vehicles are more expensive to purchase than a corresponding gasoline vehicle, they currently are not a good buy for consumers, particularly when other factors are considered such as range and availability of charging stations. The Biden administration claims that electric vehicles are “cleaner” than gasoline vehicles, but electric vehicles still emit greenhouse gases since about 60 percent of the electricity produced in this country is generated by fossil fuels, mainly coal and natural gas. Despite much media attention, EVs face considerable hurdles penetrating the market, not the least of which is that even their energy costs in some cases are proving higher than their conventional counterparts. Toyota is recognizing some of the shortcomings and is moving towards an approach they believe is more science-based.
*This article was adapted from content originally published by the Institute for Energy Research.
Exposing Biden’s Lies On Gas Prices
February 6, 2023 by Leave a Comment
Joe Biden’s administration and certain elements in Congress have a plan for American energy: make it harder to produce and more expensive to purchase. Our friends at the Institute for Energy Research have shown the juxtaposition between the administration’s words and deeds on this topic in their latest video short.
Since Biden took office, his administration and allies in Congress have taken over 125 actions deliberately designed to make it harder to produce energy here in America. The full list can be found here. Share this with the next person who says the president’s actions don’t determine gas prices!
The Unregulated Podcast #118: February
February 6, 2023 by Leave a Comment
On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the latest headlines from the first week of February.
Links:
Key Vote H.R. 21 and Amendments
January 26, 2023 by Leave a Comment
The American Energy Alliance urges all members to support H.R. 21, The Strategic Production Response Act, which would require plans to increase leasing on federal lands in order to draw down the Strategic Petroleum Reserve during non-emergencies.
The SPR was meant to serve as an emergency reserve of oil in the event of major events like the Arab oil embargo or natural disasters. It was never meant for attempts to micromanage gas prices, and presidents of both parties have misused the SPR in this manner. The way to reduce gas prices in a sustainable way is by increasing domestic oil production, which not only provides additional supply to ease prices, it promotes American national security as well as increasing economic growth. This legislation recognizes that obvious fact and requires plans for sustainable long term production increases in exchange for allowing short term releases from the SPR.
While AEA objects to some of the amendments offered that would limit where production increases can occur, the ultimate goal of this legislation is correct. Reducing gas prices requires long term increases in production. By requiring that short term political uses of the SPR be matched by increased potential for longer term production increases, this legislation would ensure longer term stability in gas prices, as well as boosting domestic energy security and economic growth.
AEA will be scoring against amendments which seek to limit where production can be increased and other amendments which would harm domestic energy production or security.
The AEA urges all members to support free markets and affordable energy by voting YES on H.R.21. AEA will include this vote and votes on select amendments in its American Energy Scorecard.
The Unregulated Podcast #116: Extraterrestrial
January 20, 2023 by Leave a Comment
On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the deliberations at Davos, the impending debt limit crisis, and more.
Links:
Subsidy-Fueled EV Bubble Likely To Pop
January 19, 2023 by Leave a Comment
Electric car manufacturers in Europe are slowing down production because battery cars have proven too expensive for the middle class and the supply of lithium for their batteries is too uncertain. Production in Europe this year is expected to be 12 million cars—a million less than previous estimates. Tesla, for example, is cutting prices to boost demand. Of more than 900 auto executives surveyed internationally, 76 percent believe that inflation and high-interest rates will slow sales and that EV adoption will take longer. In the United States, that figure was 84 percent. The median expectation for EV sales by 2030 dropped to 35 percent in the United States, from 65 percent a year earlier. Longer-term impediments cited by the executives include the availability of raw materials for batteries, as well as stricter rules around federal incentives for buying electric vehicles. Also, consumers see touted fuel savings not materializing. Britain’s Daily Mail reports: Electric vehicles can be more expensive to fill up on the open road than their petrol and diesel equivalents as the cost of utilities continue to spiral.
Britain
It is now expected that the UK will produce 280,000 fully electric cars and vans in 2025, down from a previous estimate of 360,000. That forecast means only a quarter of car output will be electric within the next two years, lower than prior forecasts of more than a third. Declining production threatens to wreck a key government plan to cut greenhouse gas emissions by banning sales of new petrol and diesel cars by 2030. A recovery in EV sales by 2030 is ‘uncertain’ due to ongoing supply chain issues, particularly of lithium needed for electric car batteries, as well as political tensions across the globe.
BMW announced in October that it would stop production of the electric Mini at its plant in Oxford, England and transfer that operation to China. Jaguar, owned by India’s Tata Motors, has not produced further details on plans to become fully electric by 2025.
UK consumers are also concerned about operating costs with the average cost of charging an electric car increasing by 58 percent since last May. Also, UK councils are planning double-digit increases in parking fees. Charges will increase by around 10 percent from April in various areas. An all-day ticket in Dudley will shoot up by 43 percent to £5 and fees will rise by 29 percent at the most popular sites in Cornwall, to £2.20 an hour. Local authorities have defended the increases because they are under financial pressure, but others worry that higher parking fees will hurt town businesses.
Slowing U.S. Auto Market despite Rising EV Sales
U.S. auto sales fell about 8 percent last year to fewer than 14 million cars and trucks, the lowest level since 2011, due to shortages of computer chips and rising borrowing rates that made customer financing more expensive. While auto sales declined, sales of electric vehicles increased 66 percent to over 808,619, according to Kelley Blue Book.
Tesla’s Price Cut and Outlook
Tesla cut prices on most of its electric cars in the United States and Europe by as much as 20 percent to boost demand as stiff competition and rising interest rates have reduced the demand for electric vehicles. By cutting the prices of its current models, Tesla is conceding some profit in order to increase sales volume. The company typically shows gross profit margins of 26 percent — more than double that of some competitors. Tesla’s high-end Model 3 Performance compact is now selling in the United States for just under $54,000, down from $63,000, a price cut of 14 percent. The most affordable version of the Model 3 now sells for just under $44,000—a reduction of about $3,000 or 6 percent. The Model Y now starts at $53,000—a cut of 20 percent from the previous price of $66,000.
Tesla’s websites for Germany, France and other European nations showed similar price cuts. The base Model 3 is now listed at 44,000 euros—a reduction of about 12 percent from the previous price.
In the United States, Tesla’s price cuts will allow some of its lower-priced models, depending on optional features, to qualify for federal tax credits of $7,500 that were made available starting January 1 under the Inflation Reduction Act. The credit is available on electric cars priced under $55,000. In the past, Tesla’s sales were aided by a $7,500 tax credit provided by an earlier federal program. Despite those credits disappearing after Tesla sold 200,000 vehicles in the U.S. market, the company’s sales continued to grow, in some cases aided by state incentives. Tesla expects its sales to grow about 50 percent a year for the next few years.
Tesla offers only four models—two are luxury models out of reach of most mainstream consumers. Tesla last introduced a car in 2020, when the Model Y went into production. Since 2019, Tesla has promised to introduce a pickup, called the Cybertruck, but has delayed its production several times. The company hopes to begin making it this year. The Cybertruck has an angular, futuristic design and is expected to be sold as a luxury vehicle, which could limit its appeal. At one time, Elon Musk indicated a desire to produce an electric car that can sell for around $25,000, but there are no formal plans available. In December, Tesla began delivering a small number of battery-powered semi trucks to PepsiCo, its first truck customer.
Tesla sold 1.3 million cars in 2022—a 40 percent increase from the year before but short of the 50 percent target. Tesla’s fourth-quarter production of 440,000 cars was 34,000 more than the company delivered. The company weathered the computer chip shortage early in the COVID pandemic better than most automakers because it rewrote software that could run on substitute chips that were in more plentiful supply. Other automakers temporarily idled plants because of shortages of certain electronic parts.
While Tesla dominates EV sales, several automakers are gaining ground. Ford, Volkswagen and several other automakers posted sizable increases in EV sales last year, offering many models that were significantly more affordable than Tesla’s. Hyundai and its affiliate Kia together sold more than 43,000 electric vehicles in the United States in 2022—up from a just few hundred in 2021. This year, General Motors is supposed to start making electric versions of its Chevrolet Silverado pickup and Chevrolet Blazer and Equinox sport utility vehicles.
Tesla also faces major competition in China, its largest market, where a local manufacturer, BYD, is now the number 1 electric vehicle brand. Tesla recently lowered prices in China and reported a global sales total for 2022 that was below analysts’ expectations.
Conclusion
The EV mania may be over or at least slowing as interest rates increase, inflation and supply chain shortages continue and restrictions remain on tax credits. While some politicians are following in California’s footsteps by banning gasoline-powered vehicles and President Biden has a goal for 50 percent of new car sales in 2030 to be electric, those feats may not be attainable due to problems in manufacturing and selling of electric vehicles. Range and performance problems still exist making consumers wary. And with escalating electric rates, operating costs may not be less than those for gasoline vehicles as Europe is seeing. Despite some manufacturers such as Tesla lowering purchase costs, competition from other manufacturers and consumer awareness may keep goals from reaching fruition.
*This article was adapted from content originally published by the Institute for Energy Research.
Biden Administration Announces Intent To Ban Gas Stoves
January 17, 2023 by Leave a Comment
A Commissioner of President Biden’s Consumer Product Safety Commission (CSPC) wants a ban on indoor gas stoves. Richard Trumka Jr., a Biden commissioner on the CSPC, told Bloomberg the ban is justified because gas stoves increase respiratory problems such as asthma among children, which is a myth promoted by environmentalists whose real agenda is not to reduce asthma but to ban natural gas. The American Gas Association notes that neither the CSPC nor EPA has cited gas stoves as a significant contributor to adverse air quality or as a health hazard. And, millions of Americans actually prefer gas stoves to electric ones for several reasons, including food tastes better when cooked on gas rather than electric and gas stoves are cheaper to install and operate. Gas stoves are used in about 35 percent of households nationwide, or about 40 million homes. The household figure is closer to 70 percent in some states, such as California and New Jersey. Other states where many residents use gas stoves include Nevada, Illinois and New York.
Opposition Was Plentiful
The American Gas Association pushed back against the natural gas ban saying it makes housing more costly because “electric homes require expensive retrofits.”
Senator Joe Manchin joined in opposition saying, “The federal government has no business telling American families how to cook their dinner. I can tell you the last thing that would ever leave my house is the gas stove that we cook on.”
Tucker Carlson, on his Fox News television show, featured a restaurateur who indicated that his costs would go up and productivity go down by using electric stoves. “This will destroy our industry,” the restaurant owner, Stratis Morfogen, said. “Electric can work for fast casual. However, with fine dining, it’s impossible to function with an electric kitchen,” said Morfogen, director of operations for the Brooklyn Chop House and founder of the Brooklyn Dumpling Shop eateries. “Imagine a guest ordering a 2- to 3-pound whole fish. It usually takes 40 to 50 minutes to cook. Now it will take two hours.
Andrew Rigie, executive director of the NYC Hospitality Alliance, which represents more than 24,000 eating and drinking establishments, said “Putting aside if chefs prefer cooking with gas or not, the cost to open up a new restaurant would skyrocket if someone had to convert existing gas equipment into electric, which could be further complicated by whether or not the building had an adequate electrical load.”
The ban would affect old-timers and millennials who are obsessed with cast-iron pans, which are tricky to use on electric stoves. “This is plain stupid,” said a 70-year-old resident of Sea Gate, Brooklyn. “We lost electricity before, during Hurricane Sandy. The only thing we had to heat up our food was gas. What if that happens again?”
According to the Association of Home Appliance Manufacturers, cooking food produces emissions and harmful byproducts no matter what type of stove is used. “Ventilation is really where this discussion should be, rather than banning one particular type of technology. Banning one type of a cooking appliance is not going to address the concerns about overall indoor air quality. We may need some behavior change, we may need (people) to turn on their hoods when cooking.”
Mr. Trumka tried to quell the firestorm that resulted from his announcement, indicating “To be clear, C.P.S.C. isn’t coming for anyone’s gas stoves,” adding that any regulations would only apply to new products. At an October meeting of the commission, Mr. Trumka asked the staff to begin writing rules regarding gas stoves but could not get support from the other four members. Instead, the commission agreed to obtain input from the public.
The Inflation Reduction Act includes $4.5 billion for states to provide rebates to consumers for the purchase of electric appliances, including stoves. Consumers can get a rebate of up to $840 for an electric stove or other electric appliances, and up to $500 to help cover costs of converting from natural gas to electric. This is happening at a time when the grid is already stressed from increased intermittent renewable energy sources, mainly wind and solar power.
Natural Gas Becomes a Battleground for States
Natural gas use has become a hot topic over the last several years in many states with some U.S. cities banning natural gas from being used in new buildings. Berkeley did so in 2019, followed by San Francisco in 2020 and New York City in 2021. This followed an organizational meeting in 2019 sponsored by the Rocky Mountain Institute (RMI), the Energy Foundation and the World Resources Institute. “On July 18, the group met for a panel discussion called ‘Natural Gas Lock In’ which set its sights on natural gas home appliances like stoves, washers, and dryers.” This campaign is against the use of natural gas promoted by activist groups as an email invitation to the event details: “We are asking lead energy policy advisors to attend from a dozen states with supportive, and in many cases, new governors and legislatures interested in accelerating the transition to a clean, low-carbon economy. You are invited because you are the, or one of the lead policy advisors to your governor on energy and climate policy,” the agenda stated.
Despite this campaign, 21 state legislatures have put in place “preemption laws” which forbids cities from banning the use of natural gas. Most households in these 21 states, however, cook with electric stoves, not natural gas, according to a 2020 analysis from the Energy Information Administration. States with the highest percentage of households that use natural gas for cooking include California, Nevada, Illinois, New York and New Jersey.
Recently, Governor Kathy Hochul proposed that the N.Y. legislature phase out the sale of fossil fuel heating equipment in existing residential buildings beginning in 2030 and require new residential and commercial buildings be all-electric by 2025 and 2030, respectively. If passed, New York would be the first state to ban natural gas heating and appliances in new buildings. Hochul called during her state-of-the-state address to ban the use of fossil fuels by 2025 for newly built smaller structures and 2028 for larger ones. New York would also prohibit the sale of any new fossil-fuel heating systems starting in 2030. The Real Estate Board of New York trade association did not endorse Hochul’s proposal.
California is weighing its own statewide proposal that would take effect in 2030.
The Move to Electrification
The widespread shift to running power plants on natural gas instead of coal helped reduce carbon dioxide emissions in the generating sector during the last decade. But now, environmentalists are attacking natural gas. They want all energy use to be electric, produced by wind and solar power—intermittent and unreliable energy sources.
This push to electrify all energy demand ended up with blackouts in North Carolina during the recent Arctic blast as there was insufficient firm power to meet growing electricity demand. States are pushing their utilities to generate electricity with wind and solar power that have low capacity factors and require the sun to shine and the wind to blow, while they shutter their reliable coal plants. As a result, firm electricity supply is lacking. Now that many states want to switch from petroleum cars to electric vehicles, transition from natural gas to electric heating and cooking, and to shutter all fossil fuel generating plants, the United States will clearly be short of electricity supply. In California alone, the forced move to electric vehicles is estimated to double the state’s electricity demand. Meanwhile, electricity prices are spiking for consumers to pay for an increasingly fickle and complicated electrical distribution system. California’s average residential electricity prices are the fifth highest in the nation and 63 percent higher than the national average.
Conclusion
There is talk of banning natural gas in new buildings, including gas stoves. The gas stove proposed ban is causing much opposition, particularly from restaurants that indicate they cannot produce meals as quickly with electricity as with natural gas. They also mention the phenomenal cost from purchasing new equipment to upgrading the facility’s electrical load. Clearly, with environmentalists wanting all energy demand to be electric, produced by mostly wind and solar power, the United States will be running out of electric supply facilities and at risk of becoming a third-world country, where power is insufficient as a normal part of the day’s activities. Americans should be aware that this is a well-orchestrated campaign, driven by “green power” advocates, investors and the foundations who support them.
Send A Message To Lawmakers Demanding They Rein In Biden’s Rouge Regulators:
*This article was adapted from content originally published by the Institute for Energy Research.
Democrats Double Down On Costly SPR Policies
January 13, 2023 by Leave a Comment
Biden’s Department of Energy will not be refilling the nation’s emergency reserves, the Strategic Petroleum Reserve, any time soon as the agency has rejected bids received for the February fill since the bids are above $70 a barrel. Today’s price for Texas Intermediate oil is $75.87 a barrel. Biden depleted the emergency oil reserve of 260 million barrels to keep gasoline prices down going into the mid-term election last year. Biden promised to refill the reserve starting this February. But, apparently, his energy department did not like the bids. His Department of Energy (DOE) was to refill up to 3 million barrels for delivery to the Strategic Petroleum Reserve in February, but stated “DOE will only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers.” Never mind that the reserve was set up to be used for national emergencies, not for reducing gasoline prices during an election year–prices that his climate policies needlessly raised.
Biden’s SPR Releases
In November 2021, Biden released 50 million barrels from the petroleum reserve and on March 1, 2022, Biden announced the release of a further 30 million barrels. Then on March 31, 2022, Biden announced another 180 million barrels would be released over the remaining 9 months of the year to reduce gasoline prices—prices that he raised due to his energy policies. Over the 9 month release period of the last announcement, DOE sold 180 million barrels of oil at an average price of $96.25 a barrel, well above the recent market price of $75.87—meaning that the U.S. government should be over $3.6 billion ahead. Biden’s SPR sales were the largest since the reserve was created after the Arab oil embargo from 1973 to 1974. Because SPR oil is sold to the highest bidder, including foreign companies, China was allowed to buy almost 6 million barrels.
But the Biden administration appears to be in no rush to buy oil to refill the reserve. It believes the SPR’s remaining holdings—about 382 million barrels—leave it well-positioned to weather potential supply shocks. The SPR held about 593 million barrels of oil at the beginning of this year, down from a peak of 727 million barrels in 2009.
In March of 2020, President Trump wanted to stabilize the domestic oil industry after Covid-19 hit and global petroleum demand tanked by spending $3 billion to fill the reserve when oil sold at about $24 a barrel. Because the Democrats in Congress voted against it, billions in potential profits were lost and tens of millions of fewer barrels were at President Biden’s disposal. It will now take more oil to fill the reserve than two years ago. In March 2020, the reserve had 634 million barrels stored out of a capacity of 727 million barrels. The reserve is now at its lowest level since 1984, which is a problem since U.S. consumption is much higher today than it was in 1984. In 1984, the United States was using 20 percent less oil.
SPR’s Congressionally Mandated Sales
DOE requested Congress to pause or cancel previously scheduled SPR sales of about 140 million barrels between 2024 and 2027. The $1.7 trillion omnibus spending bill cancels most of the congressionally mandated oil sales through fiscal year 2027. The legislative changes in the spending bill would effectively redirect nearly $10.4 billion generated from this year’s emergency sales to offset the estimated future revenue from the 140 million of oil sales that would be canceled. According to the Biden Administration, it would also avoid an outcome that would make “no sense,” of refilling the SPR and selling its oil at the same time to comply with past congressional mandates, despite those sales being specifically attached to funding specific projects.
Congress in prior years ordered the sale of 147 million barrels of oil from SPR in fiscal years 2024 to 2027 to raise revenue for debt reduction, infrastructure and other priorities. The omnibus bill cancels all those sales, with the exception of 7 million barrels that would be sold in fiscal years 2026 to 2027.
The Biden Administration is casting its emergency drawdown of 180 million barrels of oil from the SPR as a good deal for taxpayers because it brought down fuel prices and SPR oil was sold at an average price of $96 per barrel, resulting in a supposed profit. The omnibus spending bill shows the oil sales being canceled only if needed to raise $74.25 per barrel to comply with budgetary rules, indicating a paper profit of $22 per barrel from the emergency sales.
The bill would not cancel another congressionally mandated sale of 26 million barrels of SPR oil that is required to be sold by the end of this fiscal year on September 30. The measure would also keep intact previously enacted sales of 92.6 million barrels of SPR oil scheduled for fiscal years 2028 to 2031.
Conclusion
The Strategic Petroleum Reserve was set up to be used for emergency purposes, but this administration has politicized it, using it to lower gasoline prices during a political season, rather than letting oil and petroleum markets work. Having depleted the reserve of 260 million barrels of oil, President Biden announced that the refill will begin this February. However, the price and crude specifications of the bids were not to his administration’s liking, thus delaying the refill process. His administration feels that the remaining barrels in the reserve are sufficient for an emergency.
Rather than using the SPR as a political tool to lower gasoline prices, President Biden should review his energy and climate policies and make changes to his lease and permit approval program for drilling oil and natural gas on federal lands. If he were to go back to President Trump’s energy program, energy prices would be much more affordable for Americans and food and other costs would also be lowered as transportation costs to produce and move the products would also be less.
*This article was adapted from content originally published by the Institute for Energy Research.