Is Biden an oil trader extraordinaire as one Wall Street Journal article posed him, or the opposite as he removed 235 million barrels of oil out of the Strategic Petroleum Reserve (SPR) to hold gasoline prices down? We at IER believe the latter, particularly since he began to sell 180 million barrels of oil out of the emergency reserve, the largest sale ever, just 5 months before the midterm election in 2022 when gas prices reached $5 a gallon. The Wall Street Journal article claims that he is an oil trader extraordinaire because he sold the oil from the SPR at around $95 a barrel and that he is buying it back at around $75 a barrel, a net gain of around $20 a barrel. However, the oil in the SPR was originally bought at around $30 a barrel, so he actually lost around $65 a barrel of taxpayers’ funds due to his political stunt.

Further, the buyback is going very slowly. Biden’s energy department has bought back just 13.8 million barrels at an average price of $75.63 a barrel and is getting an early return of almost 4 million barrels from loans to oil companies. That totals to 17.8 million barrels out of 235 million (7.6 percent) more than a year after the last SPR sale. Biden’s energy department will hold another solicitation for 3 million barrels on January 10 and plans to buy back another 22 million barrels.

The SPR is the world’s largest reserve of emergency oil supply and currently stands at 354.4 million barrels, a 40 year low, located in underground salt caverns in four locations on the coasts of Texas and Louisiana. The 354 million barrels is about half of its 714-million-barrel capacity. Much of the oil that remains in the reserve is not of the quality that U.S. refiners need for their refineries as they retooled decades ago, making Biden’s political stunt even worse.  The quality of oil sold during the run-up to the election is the type our refiners would need to quickly process in the event of a national emergency, whereas the type remaining is much harder to process in the U.S. refinery system.

Biden has no plans to bring the U.S. reserve back to the 577 million barrels it held in March 2022, a reduction of 39 percent, citing a series of spending bills passed by Congress in the late 2010s that called for selling off hundreds of millions of barrels. The energy department also indicates that they are limited in the amount they can buy back each month because some of the storage sites are currently undergoing maintenance.

Even getting to the Biden administration’s short-term goal of about 375 million barrels, a 6 percent increase from current levels, may not happen as the price of oil could escalate beyond the price that the energy department is willing to buy back barrels. The administration indicated that it would continue purchasing oil for the reserve through May, as long as prices stay below $79 a barrel. On January 2, the U.S. benchmark West Texas Intermediate was selling for less than $71 a barrel, but with tension in the Middle East following the Hamas attack on Israel in October and ensuing threats to shipping in the Red Sea, oil prices could exceed the administration’s price cap.

According to Kevin Book, managing director of consulting firm Clearview Energy Partners, the administration has funds available to buy more than 46 million barrels of oil at current prices as the energy department has about $3.45 billion left to buy more oil after the current deliveries are complete. But, as Kevin Book states, “The next solicitation could potentially come up dry in the event of further upside risk to crude price from an apparently escalating face-off of Western powers vis-à-vis Iran and its regional proxies in the Red Sea.” On December 31, U.S. military officials reported they had thwarted an attack by Iran-backed Houthi militants on a container ship in the Red Sea, sinking three boats and killing 10 militants.

U.S. Is the World’s Largest Oil Producer

Despite Biden’s actions to destroy the U.S. oil and gas industry, which he promised on the 2020 campaign trail, the U.S. remains the largest oil producer in the world and is even producing more oil since he took office. U.S. oil production has grown to about 13.2 million barrels a day as of November, up over 800,000 barrels a day from the same month in 2022. That increase and increases from other non-OPEC+ suppliers have kept global oil supplies more flush than traders expected months ago, subduing oil prices. In response, the Organization of the Petroleum Exporting Countries and its allies moved in November to cut output further to increase prices. U.S. oil prices declined about 21 percent in the fourth quarter 2023, and were down about 6 percent in December.

Oil tankers are carrying more U.S. oil to Europe as more of Russia’s oil has flowed to Asia following Western sanctions. U.S. oil shipments to Europe have increased 34 percent from a year ago and 82 percent from before Russia’s invasion of Ukraine. U.S. shale oil production is helping to stabilize markets, but its influence could diminish if Iran became directly embroiled in the Middle East conflict. According to Robert McNally, president of consulting firm Rapidan Energy, “Iran is a problem shale can’t solve, because Iran threatens the Strait of Hormuz, through which 18 million barrels a day flows.”

With oil prices lower than in late 2022, many shale drillers are planning to keep spending roughly flat in 2024, in line with investors’ preferences, which is expected to curtail production growth. Rapidan Energy projects that U.S. oil production will increase about 300,000 barrels a day in 2024, while the Energy Information Administration expects it to increase by 180,000 barrels per day. Spending by U.S. producers is expected to increase about 2 percent to a collective $115 billion in 2024, which compares with a 19 percent spending increase in 2023 and well below the annual average of $150 billion from 2010 to 2015.

U.S. shale companies have made some incremental improvements in efficiency, such as lowering the time it takes to drill a well. But the recent production increase is more the result of a large rig count in late 2022 and early 2023. The number of drilling rigs active in the United States has fallen by about 20 percent since the end of 2022. Continued consolidation may also curtail growth, as large oil companies purchase smaller rivals. In October, Exxon Mobil agreed to buy Pioneer Natural Resources for nearly $60 billion in stock, and Chevron announced it would purchase Hess for $53 billion in stock.


Biden’s department of Energy is slowly buying oil for the Strategic Petroleum Reserve, but expectations are that it will fall far short of the amount that Biden has removed from the emergency reserve before the mid-term 2022 election to keep gasoline prices down from June 2022 highs. The reserve is now at a 40-year low and recent purchases have added just 7.5 percent back. Locking in future purchases at today’s prices, however, could help turn U.S. stockpiles into a force for market stability and expand America’s clout as an energy superpower, which would be beneficial for the nation’s national security. With global conflicts afoot, including in the Middle East, oil is a necessary and needed commodity for national growth and well-being.

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