Forum Editorial: Tapping our strategic oil reserves is not the way to help consumers
The Biden administration's decision to tap the Strategic Petroleum Reserve to soften gas price increases at the pump is a gimmick, not a solution. The administration should reduce regulations to encourage domestic oil production.
The United States and five other countries are opening the spigots of their national petroleum reserves to increase the flow of oil in the hope of restraining prices at the pump.
It’s the policy equivalent of a wish and a prayer. The U.S. Strategic Petroleum Reserve will release 50 million barrels. With contributions from Britain, China, India, Japan and Korea, the flow is expected to reach 65 million to 70 million barrels — half the daily world consumption of oil.
Any benefit to the gasoline prices consumers pay is therefore likely to be modest and short-lived. In fact, the price of West Texas Intermediate crude jumped after the announcement, following a slump in oil prices starting in late October in anticipation of the move.
The Biden administration’s actions prompted sharply worded objections from the North Dakota congressional delegation and Gov. Doug Burgum, who have been fuming about the administration’s energy policies.
And they have a valid point.
Among his first actions, President Joe Biden shut down the Keystone pipeline and issued a moratorium on oil and gas leasing on federal lands. Meanwhile, the administration has lately been calling upon America’s adversaries to boost production to bring down prices.
So, after halting the Keystone Pipeline, which would have helped North Dakota’s Oil Patch, the administration removed sanctions on the Nord Stream 2 pipeline, increasing European dependence on Russian natural gas.
The release of oil from the Strategic Petroleum Reserve is intended as a message to OPEC Plus, the Organization of Petroleum Exporting Countries along with Russia and others. But the response might not be welcome. OPEC could interrupt its 400,000-barrels-a-day production increase to blunt the effect of the reserve releases.
Biden has asked the Federal Trade Commission to investigate the petroleum industry for possible manipulation of markets to illegally increase prices.
That’s political gimmickry and a diversion from what the administration should be doing: reducing regulations that impede oil and gas production and opening federal lands to energy development.
North Dakota has proven that a light regulatory touch encourages companies to innovate and produce. It stimulates production that benefits consumers.
That approach has made North Dakota a leader in petroleum production and a hotbed of innovation in energy and agriculture, which are increasingly working together in ways that are environmentally friendly.
A partnership between Marathon Petroleum Corp. and ADM will use soybeans grown in North Dakota blended with diesel made from North Dakota crude to produce zero-emission fuel that will be sold in California, where low-emission fuels sell at a premium.
That’s just one example. Others include production of blue ammonia that will be produced in Grand Forks and major carbon capture initiatives for coal-fired power plants in the state. Ethanol producers in the Upper Midwest are building a $4.5 billion pipeline network to transport carbon dioxide for underground disposal in North Dakota.
These are the ways to environmentally friendly energy production. Not self-defeating policies and gimmicks like the release from the Strategic Petroleum Reserve.