


The Biden administration sharply reduced stocks of oil in the national Strategic Petroleum Reserve to the lowest levels in decades at the same time China is bolstering its reserves of oil and ratcheting up tensions over a potential conflict with Taiwan.
U.S. government-oil held in the reserve decreased by nearly half after the administration adopted a plan to curb soaring domestic gas prices. U.S officials say the soaring fuel prices of 2022 were the result of supply shocks caused by the Russian invasion of Ukraine, and not Mr. Biden’s own push for clean energy and discourage the use of fossil fuels.
China, meanwhile, is stockpiling large amounts of low-cost crude oil from Russia as it prepares its military forces for a potential military move against Taiwan.
Energy Secretary Jennifer Granholm said recently the administration has no plans to replenish the Strategic Petroleum Reserve anytime soon. Ms. Granholm told CNN the United States has enough oil in the reserve to deal with any emergencies over the next few couple of years.
However, the contrasting policies toward oil stockpiling come amid growing fears of a conflict with China over Taiwan. Diminished U.S. oil supplies pose national security concerns because of the U.S.-China tensions, critics of the administration approach say.
Army Maj. Gen. Joseph P. McGee, the Joint Staff’s vice director for strategy, plans and policy, told a House hearing last week that despite Chinese military shortcomings, fears of a war in the region are real.
The two-star general told the House Armed Services Committee that “the risk of a [People’s Republic of China] attempt at forceful unification with Taiwan is a significant threat against which we must be prepared.”
The SPR contained more than 638 million barrels of oil when President Biden took office in January 2021. Today, according to Energy Department statistics, the reserve holds about 347 million barrels — a reduction of nearly 300 million barrels that analysts say are needed as protection against the anticipated disruption of critical oil supplies during a conflict or natural disaster.
The last time the reserve was that low was the early 1980s.
Born in crisis
The SPR was set up in response to the oil crisis of 1973 when the Arab nations cut off oil to the United States to protest American support for Israel during the Yom Kippur War.
The federally owned reserve includes four huge underground salt caverns located along the Gulf of Mexico coast and can hold up to 714 million barrels of oil. The Energy Department website said the reserve is “a significant deterrent to oil import cutoffs and a key tool in foreign policy.”
The White House in July 2022 announced plans to release 180 million barrels of oil from the reserve over six months, together with 60 million barrels from allies through the International Energy Administration. The Treasury Department estimated at the time that the combined release would lower gas prices by between 17 cents and 42 cents a gallon.
Gas prices, however, continue to remain high. Prices grew by more than 10% from July to August, according to inflation data from the Bureau of Labor Statistics. Industry analysts blame the elevated prices on production cuts in Saudi Arabia and Russia.
The average price for a gallon of regular unleaded gas was $3.849 as of Sept. 25, according to AAA. The price peaked in June 2022 at $5.016 per gallon.
The U.S. military used 73 million barrels of fuel last year, 50% of it purchased from overseas suppliers, according to the Pentagon’s office of energy, installations and environment. Military fuel usage, mainly for aircraft and ships, would increase during a Taiwan conflict and likely set in motion the use of oil from the SPR.
Ms. Granholm, the Energy secretary, said in July that the reserve will be replenished. Doing so will take years and is unlikely to be refilled before Mr. Biden’s term ends in January 2025.
“The first term’s over in a year and a half. So, I’m not sure it’ll be fully replenished. But certainly, the plan is this term and the next term to be able to do that,” she said on CNN.
Ms. Granholm and an Energy spokesman did not respond to multiple requests for comment on the delays in oil replenishment.
The SPR and Taiwan
Retired Navy Capt. Jim Fanell, a former intelligence director for the Pacific Fleet, said the lack of oil reserves bears directly on the U.S. military’s ability to respond to any Chinese invasion of Taiwan. Failing to refill the reserve also could undermine the U.S. ability to deter China from attacking Taiwan, he said.
“The decision by the Biden administration to tap into America’s Strategic Petroleum Reserve for the short term gain of lowering gas prices is a strategic mistake when compared to our long-term national security requirements,” Capt. Fanell said. “Specifically, the depletion of the SPR could adversely impact the operations of the U.S. Pacific Fleet in the event of a [Chinese] invasion of Taiwan.”
Fuel shortages could result in delays of Navy forces responding to a Chinese attack. U.S. forces could also find themselves left stranded or forced to transit to areas that pose greater risk of PLA navy attacks, he said.
“Additionally, the lack of a fully stocked SPR sends a signal to our allies that we are not serious about our national defense interests in Asia,” Capt. Fanell said. “Worse, this message could contribute to Beijing’s decision-making to conduct just such an operation.”
Mr. Biden announced in November 2021 that the Energy Department was releasing 50 million barrels of oil from the reserve in a bid to lower gas prices. Then in October 2022, the administration released another 15 million barrels , again in response to rising gas prices that Mr. Biden said were the result of the war in Ukraine.
Mr. Biden said further releases are planned as part of what he called a “ready and release” plan.
The president defended the releases, saying the more than 400 million barrels still in the SPR in October 2022 were “more than enough for any emergency drawdown.”
Energy Deputy Chief of Staff Bridget Bartol told NPR in August that the department “remains committed to its replenishment strategy for the SPR, including direct purchases when we can secure a good deal for taxpayers.”
Getting by with less
The administration has been seeking to reduce the use of oil as part of a larger climate agenda to promote non-oil burning sources of energy.
The Pentagon, for its part, has launched an initiative to reduce fuel demand as part of its green agenda. The plan calls for reducing use of fossil fuels mainly in transport and refueling aircraft, ships and ground vehicles.
“To ensure that Joint Forces have access to the energy needed to fight and win while operating within contested environments, the department will reduce operational energy demand, diversify our energy sources, improve supply chain resilience, and enhance the enterprise-wide visibility of energy supply and demand,” said William A. LaPlante, defense undersecretary for acquisition and sustainment, stated in a May 2023 energy strategy report.
By contrast, China’s stockpiling of crude oil sharply increased to the highest level in three years in June, according to Clyde Russell, an Asia commodities and energy analyst with Reuters. Mr. Russell stated in a July 26 report that Beijing increased the stockpiling taking advantage of discounted Russian crude oil purchases. China is the world’s biggest importer of oil and added 2.1 million barrels per day to commercial or strategic stockpiles in June.
Chinese oil reserve flows for strategic or commercial stockpiles are not disclosed publicly. Mr. Russell said he calculated the increases from official data.
The increase last summer rose from the 1.77 million barrels per day that were added in May, and represents the largest jump since June 2020, he stated. The Chinese added 950,000 barrels per day to inventories, an increase of 28% from the 740,000 barrels per day added for the entire year of 2022.
The increased oil storage could be what one security analyst said is an intelligence indicator that Beijing is preparing for a potential disruption in its oil supplies. Chinese oil exports could be cut off during a conflict by an international blockade in response to a Taiwan invasion.
Some of the oil from the U.S. SPR has been offered for sale, leading to fears American reserves could soon be filling Chinese reserve tanks. That prompted the Senate in July to pass an amendment to the fiscal 2024 defense authorization bill banning any strategic reserve oil from being sold to the nation’s adversaries.
“We know China has been amassing the largest stockpile of crude in the world,” Sen. Ted Cruz, a sponsor of the legislation said. “Nevertheless, last year, the United States sold off part of our reserves to China.”
The amendment will block the federal government from selling oil from the strategic petroleum reserve to China, Russia, Iran or North Korea.
“We should not be selling our emergency oil reserves to our adversaries,” said Mr. Cruz, Texas Republican.
The pending House version of the 2024 defense authorization bill calls on the Pentagon to study imposing a naval blockade of China that would prevent oil shipments from reaching the country. A section added during markup of the bill in June would direct Defense Secretary Lloyd Austin to produce a report to Congress in six months on how the military can conduct one or more naval blockades on shipments of fossil fuels bound for China during a war.
The reporting requirement must survive the House-Senate conference to get into the final bill, but stands as a clear signal many in Congress want the military better prepared for a war with China.
Contradictions
The proposed Pentagon study would examine how China would meet its large energy and fuel demands after a blockade is imposed. Naval forces that would be used in a blockade and how China could circumvent the blockade, such as through alternate air and land routes, also would be studied.
The U.S.-led study also would examine blocking strategic chokepoints used by Chinese tankers, including the Strait of Malacca; the Taiwan Strait; the Sunda Strait, located between the Indonesian islands of Java and Sumatra; and the South China and East China Seas.
Benjamin Zycher, a senior fellow at the American Enterprise Institute, said past administrations have used SPR drawdowns in futile attempts to lower fuel prices for American consumers. But unlike previous administrations that looked on domestic fossil fuel production positively, the Biden administration has adopted contradictory policies on energy use and production, he said.
They include a combination of “net zero” climate policies seeking an end to fossil-fuel use and desperate efforts to avoid high gas prices that would have the effect of driving down demand for fossil fuels.
“These goals are impossible to reconcile. That is how we wind up with constraints on domestic oil production combined with supplication to the Saudis for increases in output,” Mr. Zycher stated in a 2022 article.
Mr. Zycher believes the strategic petroleum reserve drawdown could assist emergency preparedness. Commercial oil companies also have stocks of an estimated 400 million barrels per day, he stated.
• Bill Gertz can be reached at bgertz@washingtontimes.com.