Writing after the announcement that the U.S. will be raiding the country’s Strategic Petroleum Reserve, Dominic Pino has fun with the uh, inconsistencies in the Biden administration’s energy policy. There are plenty of those to choose from, as you can see, but releasing some oil from the reserve is one that undoubtedly deserves its time in the spotlight. On the one hand, fossil fuel consumption (and, in the U.S., at least, production), is to be discouraged, but on the other, if the gas price looks like reaching a politically inconvenient level, then something must be done (or be seen to be done) about it, whether it’s begging our always-reliable friends at OPEC to increase production (they weren’t interested), trying to blame the higher prices on some sort of conspiratorial activity, or, now, dipping into the strategic stockpile.
As Dominic notes, only about 50 million barrels will be released, which is a little less than three days’ worth of U.S. oil consumption (the Financial Times gives the figure of 2.5 days), an amount which, even if it wasn’t going to be spread over a couple of months (it is), would have a negligible impact on the oil price. But the president wants to be seen to be doing something, and that’s the thing. The market knows that this means nothing, even if, as is the case, other countries are raiding their reserves too. In fact, in the aftermath of the announcement, the oil price moved, well, up.
Oil prices rose on the news, as traders calculated that the total volume to be released would be less than expected, and that Opec+ could retaliate by holding back more oil than planned. Opec did not respond to requests for comment.
Also from the Financial Times:
The US has only tapped SPR reserves on three previous occasions. Two related to wars. The third came in response to Hurricane Katrina. The only emergency Biden faces is a political one.
In a release announcing the move, it was emphasized that “the Administration remains committed to the President’s ambitious clean energy goals.” That may be true, but these goals incorporate an energy “transition” that would inevitably involve significantly higher energy prices for a very long time. Judging by the administration’s current behavior, those looking to implement this transition are clearly not unaware of the political problems that can come with more expensive energy and must be hoping that those prices increase at a considerably gentler rate than we have seen of late, giving voters the time to get used to a grim new normal — lobsters in a pot and all that. We’ll see.
Meanwhile, via the Financial Post:
Developers of Keystone XL are seeking to recoup more than US$15 billion in damages connected to President Joe Biden’s decision to yank a permit for the border-crossing oil pipeline even after construction began.
With a request for arbitration filed Monday, Calgary-based TC Energy Corp. formally opened one of the largest trade appeals ever against the U.S. and asked to put its long-running dispute over Keystone XL in front of an international arbitration panel. The legal claim is being mounted under provisions of the North American Free Trade Agreement that allow foreign companies to challenge U.S. policy decisions.
“The U.S. decision to revoke the permit was unfair and inequitable,” TC Energy said in its filing, blaming the U.S. for putting Keystone XL on a 13-year “regulatory roller coaster.”
The proposed pipeline, which would have transported up to 900,000 barrels per day of Canadian crude to U.S. refineries, was rejected by then-President Barack Obama after he concluded it would exacerbate climate change. Keystone XL was later revived by President Donald Trump, only to have Biden reject it again, on his first day in office. . . .
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