OPINION:
President Biden’s decision to pump 1 million barrels a day from the Strategic Petroleum Reserve will do nothing to reduce oil prices and will likely lock in the current gasoline costs for years to come. There are real, hard reasons at work and the ignorant political left, Mr. Biden and the mainstream media are demonstrating just how clueless they are on energy’s workings.
First, the pipelines are at capacity, and there’s no room for the 1 million barrels to get to the refineries that can use them. The only alternative to transport the oil is by rail car, and 94% of the railroad tank cars are already engaged in moving oil, such as the Alberta heavy crude. Some of the pipeline projects Mr. Biden canceled were intended to remove pipeline bottlenecks that are now choke points. Just look at the previous two releases by Mr. Biden. I am told the majority of the February release never even left the reserve because they could not move to the refineries.
Second, the grade of oil is not of the type that is driving up prices. In fact, there is a surplus of the lighter grades of the type in the reserve. The media loves to quote the Brent North Sea as the benchmark, but the more critical grades right now are the heavy ones needed by many refineries to balance out the light oils. That is the shortage issue as well as the price driver and we have zero heavy in the Reserve.
Third, the delays and bottlenecks will prevent the oil from affecting prices. It is the nature of the industry. The vast majority of oil moves under long-term contracts, which rarely come close to the spot-market pricing the media loves to quote.
Worldwide oil buyers are interpreting these moves by Mr. Biden as politically motivated, short-term fixes. Mr. Biden is still trying to damage the U.S. natural gas and oil industries with policies designed to choke them to death. And his ignorance of how the market works has just locked in the current gas pricing through the end of the year, which will push inflation 3 to 4% over where we are today.
JAMES BARENDS
Wayne, Pennsylvania
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