Fact check: Republican outrage over petroleum reserve sales is overblown, experts say

Several high-ranking Republicans have criticized President Joe Biden’s administration for releasing oil from the Strategic Petroleum Reserve (SPR) internationally despite the fact that it has been a common practice under both Democratic and Republican administrations.

Last week, Sen. Ted Cruz (R-TX) sponsored a bill called the No Emergency Crude Oil for Foreign Adversaries Act that would prevent the Biden administration from selling crude oil to certain foreign countries including China. The bill was co-sponsored by Sens. James Inhofe (R-OK), Marsha Blackburn (R-TN), Josh Hawley (R-MO), Joni Ernst (R-IA), James Lankford (R-OK), John Kennedy (R-LA), and Roger Marshall (R-KS).

“At a time of skyrocketing inflation and record gas prices, and with SPR drained to its lowest level since 1986, it is reckless and inexplicable that President Biden would allow oil from the Strategic Petroleum Reserve to be exported to China,” Cruz said in a statement to the right-wing website Breitbart. “This practice poses a direct threat to American national security, not least of all because the Chinese Communist Party is currently stockpiling oil for strategic use, and the Biden administration is aiding their effort.”

The Department of Energy sometimes sells crude oil from the SPR to the free market in an attempt to alleviate global supply problems caused by wars, natural disasters, or other circumstances. The federal agency does this through its Crude Oil Sales Program, in which only registered companies can bid.

The Biden administration began releasing oil from the reserve onto the global market in April, the largest release of its kind in history, in an attempt to compensate for the supply disruption caused by Russia’s invasion of Ukraine. Russia provides about one-sixth of the global supply of oil and gas.

The most recent Republican complaints surfaced after a July 6 Reuters story noted that “cargoes of SPR crude were also headed to the Netherlands and to a Reliance (RELI.NS) refinery in India,” as well as “a third cargo headed to China.”

Following the Reuters report, the right-wing Washington Free Beacon repeated the claim that the Biden administration was selling oil to China, and even suggested that the sales were part of a nefarious plot to enrich the Biden family through their ties to the Chinese Communist Party.

The right-wing publication The Federalist also published a piece attempting to link the SPR sales to Hunter Biden and repeating claims that some of the oil “went to China where the president’s son has engaged in years of potentially criminal business activity embroiling the Biden White House in scandal since the 2020 campaign.”

Two days later, The New York Post published a piece claiming misleadingly that the White House had “diverted” oil sales to the Chinese, and, again, detailing Hunter Biden’s supposed role in the conflicts of interest with China.

Republicans have been increasingly strident in criticism of sales of oil from the SPR, and it is reaching a crescendo with calls for Biden’s impeachment from some conservative politicians and pundits including Rep. Marjorie Taylor Greene (R-GA) and Fox News host Tucker Carlson.

Earlier this week, Republicans on the House Oversight Committee including Rep. James Comer (R-KY) and 18 others sent a letter to U.S. Secretary of Energy Jennifer Granholm demanding to know why the department sold oil to Unipec, a subsidiary of the Chinese state-owned company Sinopec. They noted that Sinopec had dealings in the past with Rosemont Seneca Bohai (BHR), a company founded by Hunter Biden. Part of the letter reads: “The decision to sell to Unipec raises questions about why the Biden administration is selling oil from the SPR to China, especially when the sale may enrich Hunter Biden, the President’s son.”

A lawyer representing Hunter Biden told the New York Times that the President’s son no longer held any stake in BHR. The newspaper noted that Chinese records show that the President’s son was off the board as of April 2020.

The conservative news stories and politicians’ comments add up to a misleading right-wing narrative meant to gin up outrage among Republicans by implying that the Biden administration does not care about the United States’ energy interests. Energy experts say that it’s also a narrative that completely misconstrues the story.

“The claims are cynical at best, and expose a complete ignorance of how the SPR works,” Samantha Gross, director of the Energy Security and Climate Initiative at the Brookings Institution, told the American Independent Foundation. “It protects against disruptions — although we don’t really have disruptions as such anymore, you don’t see lines for gas, you just see very high prices, that’s how the market indicates it’s a little short.”

Rather than taking away from U.S. oil supply, energy experts said, the SPR is intended to inject more supply into the global market as a hedge against price fluctuations.

“This is exactly what the SPR is intended to be used for,” Gross said. “You see complaints politically that this oil is going somewhere other than U.S. refiners. But frankly, this is how the system is supposed to work. We do not have the refining infrastructure to handle all types of crude. So the oil goes where it is most appropriate for it to go.”

The issue of refining capacity is exactly why oil moves around the world. “This, for better or worse,” said Gross, “is the system we have decided to have. And when the government sells the oil it is no longer theirs, so they have no control over where it goes. It’s called the free market. It used to be the case that the Republican Party was generally in favor of a free market and global integration, and that’s how our oil markets work.”

Robert McNally, Rapidan Energy Group’s founder and a member of George W. Bush’s National Security Council staff, told the Washington Post that the concerns of Republicans over sales to China are “a complete nothingburger,” noting that “U.S. companies are permitted to place bids on SPR crude oil; DOE cannot dictate what selected bidders will do with the SPR crude oil after delivery.”

Mark Finley, at Rice University’s Baker Institute for Public Policy, told Factcheck.org that “Whether [the oil]  stays in the United States or goes somewhere else is less important than does it succeed in changing the global balance of supply and demand, because that’s what drives the price.”

Strategic Petroleum Reserve releases are not uncommon, and the Department of Energy has presided over international crude oil sales during both Democratic and Republican presidencies. President George H.W. Bush’s administration released oil from the reserves in 1991 during Operation Desert Storm, after U.S. warplanes bombed two Kuwaiti petroleum pipelines. President George W. Bush’s administration released oil from the reserves in 2005 following Hurricane Katrina, which damaged large parts of the domestic refining infrastructure in the Gulf of Mexico. And President Barack Obama’s administration released oil reserves in 2011 during the Libyan Civil War.

The July 6 Reuters article did not mention Hunter Biden. It did however quote one Department of Energy official who noted that “The SPR remains a critical energy security tool to address global crude oil supply disruptions,” and an industry analyst who said, “Crude and fuel prices would likely be higher if (the SPR releases) hadn’t happened.”

The SPR has sold almost 15% of its reserves since May.

Published with permission of The American Independent Foundation.