Releasing oil from reserves is a “bad policy choice”: Dan Brouillette

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Oil wells outside Midland, Texas pump water.

Joe Somme | American Vision | Universal Image Group | Getty Images

Former US Secretary of Energy Dan Bruyett said on Wednesday that the Biden administration’s decision to release oil from US reserves was a “mistake”.

“I do think this is a bad policy choice. There is no doubt,” President Joe Biden told CNBC’s “Capital Link” one day after he announced that 50 million barrels of oil would be released from the country’s strategic oil reserves. .

China, India, Japan, South Korea and the United Kingdom will also release their oil reserves as part of a global effort by countries with high energy consumption to reduce energy prices.

Bruyett, who served as the Secretary of Energy under former President Donald Trump, said that the US SPR is a national security asset designed to protect the country and its citizens from supply disruptions, such as in emergencies. .

“This is not a supply emergency, the only emergency I can see… in this case is a political emergency,” he said.

Brouillette said the actions of the Biden administration show that they are concerned about the 2022 midterm elections.

“This drove this decision—perhaps more important than anything else—because, as I said before, this is not a supply emergency,” he said.

This is a mistake, and we should not use it for these purposes.

Dan Bruyett

Former U.S. Secretary of Energy

According to data from the Energy Information Administration, US oil producers produce approximately 11 million barrels per day.

“The problem with the U.S. is not [oil] Supply, this is politics,” Brouillette said. “I hate to see these types of decisions…the strategic oil reserves are used in this way. Unfortunately. “

“This is a mistake, and we shouldn’t use it for these purposes,” he added.

According to the US government office, three presidents used SPR as an emergency response tool in the past.
Fossil energy and carbon management. During the Libyan Civil War, Hurricane Katrina and the Persian Gulf War, drawdowns were ordered to help stabilize the market.

Energy inflation

With the reopening of the economy and a sharp rebound in demand, oil prices have risen by more than 60% so far this year.

The United States asked OPEC and its allies to increase production to keep prices down, but the Petroleum Union insisted on its plan to gradually increase supply.

Brouillette stated that using SPR to “counterattack” OPEC is “absolutely…wrong way”, and the United States can also use other levers.

The U.S. should not develop reserves, but should allow projects such as the Keystone XL pipeline, a major U.S.-Canada oil pipeline that is expected to deliver approximately 830,000 barrels of Alberta oil sands crude oil to Nebraska every day. After Biden revoked the key permit required for a 1,200-mile project in the United States, the project was officially cancelled in June.

The former Secretary of Energy said Washington could also allow the production of oil on federal land.

The first thing Biden did when he took office in January was to sign a series of administrative actions on climate change, including the suspension of new oil and gas leases on public land and water. The suspension has now been blocked, and record offshore lease sales have begun this month.

Brouillette said that increasing production is a better way to affect prices, and pointed out that the United States has been a fluctuating producer for many years and basically determines world oil prices.

“Our ability to produce 13 million barrels of oil a day really shapes the market in three to four years,” he said. “The important thing is that we return to that approach – not use national assets such as strategic oil reserves to influence pricing.”

— CNBC’s Pippa Stevens, Matt Clinch, Natasha Turak and Emma Newburger contributed to this report.

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