The case for refilling the Strategic Petroleum Reserve
Halfway through this essay, I went back to the top to make sure it was Matt who was the author. The tone sounded so much more like political spin rather than the usual policy analysis. Only when I got to the end did I realize today's column is intended for a specific audience rather than the rest of us. Hope it works.
Does the debt limit matter here at all? Like are they delaying spending to improve cash flow?
I would pause before celebrating Biden's use of the SPR for political gain. He may have outfoxed republicans politically, but there was a cost. To name two: From now own both parties will use the SPR for their political ends when they are in the WH; Depleting the SPR put the country at increased risk if there had been an actual oil shortage. I think we should mourn each instance (from either party) when politicians break longstanding norms to act in the country's best interest in order to meet short term political ends.
Lastly, you seem to assume that the SPR can be filled and emptied without problem. But, the SPR is in salt caves not storage tanks, and was never intended to be emptied and filled repeatedly. Below is an article from the American Association of Petroleum Geologists. While not exactly an unbiased group, they have expertise, and as it was written in 2016, would seem to not be posted because of the current political environment.
Totally agree. Biden should revive the Iran nuclear deal while he’s at it. Would be a nice eff-you to the Saudis as a plus.
Let’s see how much pull Matt has with senior white house staff. Popcorn anyone?
> What will Joe Biden’s response be if the governments of Russia, Saudi Arabia, and the United Arab Emirates spend the summer of 2024 curtailing oil production in order to spike gasoline prices and help restore Trump to power?
Solid opening with this nightmare fuel. Yet, after hearing it laid out so clearly, this seems like a self-evident concern that someone in the administration should have identified and appropriately escalated. Just the geopolitical and national defense concerns should be sufficiently alarming, let alone the domestic politics and reelection ones.
Can institutional inertia alone fully explain this? I'm not questioning Yglesias' sources or his capacity to elucidate the issue's structure based on them. This just seems like something the administration could easily identify and correct on their own due to the high stakes of an OPEC+ oil price surge at such an inopportune time.
Could there instead be something of a disagreement within the Biden administration about balancing the rivalrous concerns of geopolitics, climate, economics, and electoral politics? Perhaps this article is primarily written to lend support to the more pragmatic, technocratic faction within that fight. I mean, it’s not even particularly subtle with the, “I hope that someone in the White House reads this newsletter”.
As has been my pattern lately, I actually am going to note something that isn't really the point of this article.
"America’s emergence as a major producer has changed the game — we are less dependent on the goodwill of the Gulf monarchies than we used to be, but they are less interested in cultivating a positive relationship with us. They like Donald Trump, personally, because in exchange for large cash bribes paid directly to his family, he’s been willing to completely subordinate American interests to Gulf interests when it comes to Iran policy."
I just need to say that it's absolutely horrifying that Matt can write this sentence. I don't mean that he's wrong. Quite the opposite. It's just sort of casually known that Trump is completely in the pocket of a murderous dictatorship and that if he came to power there's a good chance that MBS would basically dictate our foreign policy.
One of the tragedies of the "Russia stuff" is that as bad as that is (we still don't have a great explanation as to why Trump is so fawning of Putin. We still have unanswered questions about financial ties between the Trumps and Russia generally), it likely distracted us from the much more concrete corruption that clearly exists between Trump, Kushner and various Middle East dictatorships. There's so much awfulness with the man, that it can be hard to keep track of all the ways Trump returning to power could be so unbelievably awful for America and the world.
The biggest reason not to refill the SPR is that oil prices are still higher than people in Georgia and Wisconsin want them to be. Buying oil would be an admission that oil will never be cheaper than it is today, and that would upset alot of us provincials. The $70 floor was definitely an improvement on Matt’s idea, and still high enough to encourage American hydrocarbon heroes to frack for freedom.
I don't know what the case against Matt's proposal is, but it's looking pretty shabby right now.
I'm counting on the contra-contrarians of the SB commentariat to well actually up a response.
The Obama administration did a lot of things right in support of American commercial interests in the 21st century. Four years of Trump going back to tarriffs and 80s style trickle-down economics and the Biden administration pushing unions and other 70s era progressive themes like "oil companies are bad" have over-politicized our economy and destroyed the win-win approach between government and US businesses we had under Obama.
As long as anyone is still oxidizing carbon atoms, I'm all for letting US producers supply the demand. The US is not doing enough and most of the rest of the world less to reduce _demand_ for carbon atom oxidation when the resulting CO2 get released into the atmosphere. Preventing US producers from supplying those carbon atoms at a profit just means someone else will supply them and profits of US producers will be a little lower. Maybe that makes some environmental activist happy, although it should not, but it doe not prevent the oxidation of the carbon atoms and release of theCO2 into t he atmosphere and the economic losses that will entail.
Putting words to action quickly!
I’m not sure about the claim that the ME monarchies like Trump so much more than Biden than they’d manipulate oil prices to help him get elected.
With inflation still around 4% and the ongoing debt debacle maybe one line of thought is they’ll look like heroes filling at < $60 a barrel when a recession hits. Average this out with the let’s fill < $80 team and a trigger price of $70 remains a decent compromise (given that possible internal split).
Your first graph shows US petroleum production at 20,000,000 barrels per day, but your second graph shows a more correct figure of 12,000,000 barrels per day. We do not produce 9,000,000 barrels per day more than Saudi Arabia.
What about sourcing from American producers at the spot price?