Biden Faces Historic Low Oil Reserves: Will Prices Soar Higher?

Summer’s coming, and gas prices go up.

It’s all about the iron laws of supply and demand — people drive more in the summer. They go on vacations, take local trips to the lake, and just want to be out more.

More gas is demanded, and if supplies tighten, the price goes up.

And all that petrol doesn’t magically appear at the pumps.

Whether imported — sometimes by long ocean voyages — or pumped domestically, crude oil has to be refined, then shipped by pipeline, train, and most assuredly truck to your local gas station.

Lots of choke points in such a long and complex supply chain. Lots of risk.

Worldwide oil markets are interconnected, and oil prices are being affected by drone attacks on Russian refineries, according to the U.K.’s Daily Mail.

Some oil has to be shipped from the volatile Middle East, already being swept in the winds of war.

It’s all risky business, with all that transport and international turmoil

Ah, for the days not too long ago when the Trump Administration achieved what for decades was thought to be impossible — energy independence.

Which, of course, Joe Biden, almost literally from the first day of his administration, banished by restricting different aspects of energy production.

What was that all about? Was it to get back at the Trump accomplishments?

Whose side is Joe Biden on?

Certainly not that of the American consumer. Just ask Californians, who are paying up to $7.29 a gallon in some areas, per the Daily Mail.

Biden will have to tap into the strategic petroleum reserve to keep gas prices from going out of control this summer. Anti-automobile urban Democrats like those high prices, but there are the realities of this as an election year.

And don’t look now, but the SPR is at the lowest it’s been since 1983.

In October of that year, the SPR was at 367 million barrels. In January of this year it was 358 million, half of its authorized capacity.

And Biden isn’t replenishing it. The U.S. Department of Energy has cited high oil prices as reasons for not buying oil for the SPR.

Yet Biden will have to tap into it in order to meet summer demand, Vikas Dwivedi, international oil and gas strategist for Macquarie Group, told Bloomberg.

“The government will have to release oil from the SPR with a lot of aggressiveness to tame prices,” Dwivedi said. “There are not many tools available, and this is one of the most effective.”

Gas prices are up 17 percent this year, en route to a possible $4 per gallon. National average price for a regular gallon of gas on Wednesday was $3.66, AAA said.

Dwivedi believes high mortgage interest rates keeping consumers from buying new homes will prompt them toward more summer travel this year.

And we know what happens when summer travel increases.

Meanwhile, high temperatures in Texas may cause power problems, which will reduce oil refining capability in that state, according to Bloomberg. Less refining, less gas.

Given volatile oil supplies in the 1970s, the SPR was created to ensure adequate U.S. oil supplies.

The Biden administration has used it as sort of a price-balancing piggy bank to check inflation — the administration grabbed 180 million barrels out of the SPR in 2022 as a result of Russia attacking Ukraine.

With the SPR at half capacity it begs the question of how to meet industrial and consumer demand and literally fuel U.S. military capability if there is increased U.S. involvement in conflicts in Ukraine and Israel and, for that matter, Taiwan.

So is the administration concerned about long-term strategic energy issues? Or are they focused on their own re-election prospects by tapping the SPR?