SPR Oil Shipped to China, India & Europe

Guest “No Schist Sherlock” by David Middleton

Why Biden Sent American Oil To China
Reuters reports that the U.S. sent 5 million barrels of oil to China, India, and Europe last month. Why?

Michael Shellenberger
Jul 6

For weeks, President Joe Biden has pointed to his release of oil from the Strategic Petroleum Reserve as proof that he is doing all he can to lower gasoline prices for Americans. The Strategic Petroleum Reserve is a stockpile of oil maintained by the United States Department of Energy, the largest of its kind in the world, held in underground tanks in Texas and Louisiana.

On June 22, Biden said, “I know my Republican friends claim, we’re not producing enough oil and I’m limiting oil production. Quite frankly, that’s nonsense,” said Biden. “I’ve added to that supply of oil by releasing a record 1 million barrels of oil per day from what’s called the Strategic petroleum reserve.”

But now it turns out that over 5 million barrels of that oil went to China and other nations last month, even as gasoline prices hit record highs. Some shipments went to India and others went to Italy.

It almost sounds like a conspiracy theory. Why in the world would Biden be sending American oil to China, America’s greatest geopolitical rival, at a time of oil and gasoline shortages?

But it’s not a conspiracy theory. Reuters broke the story using official data as well as anonymous sources. And the Biden administration confirmed it.

Not only that, but the shipment of U.S. oil overseas may have contributed to higher gasoline prices. “The export of crude and fuel is blunting the impact of the moves by U.S. President Joe Biden to lower record pump prices,” noted Reuters. “Crude and fuel prices would likely be higher if (the SPR releases) hadn’t happened,” said an oil industry analyst, “but at the same time, it isn’t really having the effect that was assumed.”

The revelation will no doubt be fodder for Biden’s “Republican friends” who have been attacking Biden for restricting oil and gas production, which he has, in fact, done. Every drop of oil in the Strategic Petroleum Reserve (SPR) is considered precious. And Biden has been rapidly draining it: last month, the SPR fell to its lowest level in over 35 years.

What exactly is going on? Why is Biden taking actions that not only appear contrary to America’s national interest but also to Biden’s political interests?

[…]

Substack – Subscription required to read the rest of the article

Even though I’m a fan of Michael Shellenberger, I’m not a Substack subscriber, so I can’t read the rest of the article; but The Daily Caller article isn’t pay-walled.

REPORT: Oil That Biden Released From US Strategic Reserves Ended Up In China

BRIANNA LYMAN
NEWS AND COMMENTARY WRITER
July 06, 2022

Millions of barrels of oil released last month from the Strategic Petroleum Reserve by President Joe Biden went to foreign nations, including China, according to Reuters.

Biden ordered the release of 50 million barrels of oil from Strategic Petroleum Reserve in November,  30 million barrels on March 1 and 180 million barrels on March 31, saying the “historic” actions would ease the pressure faced at pumps. The Strategic Petroleum Reserve will continue to release one million barrels a day through October, even as the Strategic Petroleum Reserve has fallen to its lowest level since 1986, according to Reuters. U.S. crude inventories are at their lowest since 2004, according to the report.

“These releases will put more than one million barrels per day on the market over the next six months, and will help address supply disruptions caused by Putin’s further invasion of Ukraine and the Price Hike that Americans are facing at the pump,” Biden said in April when announcing the release.

But it turns out millions of barrels have been sent to China and other nations, according to Reuters. (RELATED: Is Biden’s Mass Release From The Strategic Oil Reserves Even Legal)

[…]

“China ramped up its purchases of crude oil from Russia and the United States to boost its own reserves, even as oil prices surged and President Biden called for a coordinated release,” Republican leaders wrote. “China is reportedly in talks with Russia to buy even more oil for its strategic reserves, while the United States and the E.U. pledged to ban Russian imports.”

“As a result, China may now control the world’s largest stockpile of oil, with total crude inventories estimated at 950 million barrels,” the letter continued.

The Daily Caller

As a petroleum geologist, my first thought was: Of course some of the SPR oil was exported.

US crude oil production is currently around 11.6 million bbl/d.

Crude Oil Production (Thousand Barrels per Day) EIA

We import just over 6 million bbl/d and export a bit more than 3 million bbl/d of crude oil.

Crude Oil Weekly Imports & Exports (Thousand Barrels per Day) EIA

Why do we export 3 million bbl/d while we’re importing 6 million bbl/d?

Why importing and exporting oil makes sense

[…]

First, there is economics. Decisions to import or export are typically based on supply and demand for a product at that location, as well as transportation costs. Products are often both exported and imported when it makes economic sense. For example, the United States is also the world’s leading producer and exporter of corn, yet in 2014, we still imported 635,000 metric tons of corn. Other products that are commonly both imported and exported include gasoline, cars, computers and aircraft parts, as detailed in data compiled by the Massachusetts Institute of Technology.

Second, not all crude oil is the same. It ranges from light to heavy, high to low sulfur and sour to sweet. The bulk of the oil currently produced in the United States is light oil. And not all refineries are the same. Many Gulf Coast and Midwest refineries were designed to process heavy oil from Canada, Venezuela and Mexico. To use more light crude domestically, refineries would need to pay less for their oil feedstock and would run in a suboptimal fashion, or require a significant investment in new infrastructure.

“There’s a mismatch between the new production we’re developing as an industry and our country’s existing refining capacity,” said Ryan Lance, ConocoPhillips Chairman and CEO. “To process this new, lighter oil, refineries would have to operate inefficiently or at a reduced rate. They need to buy oil at a discount in order to make it economic to refine it, which hurts domestic producers and ultimately, consumers.”

Third, the United States has an abundance of light oil resources. Light crude production already exceeds refiners’ ability to process it at certain times of the year and that is expected to get worse as more oil is produced. Experts agree the United States should export to refineries set up to process light oil in other countries and import heavy oil to refine at home. Exports would consume only part of U.S. production. Refiners would still have all the light oil they can process, and would still enjoy a competitive advantage over foreign refiners due to the $2- to $6-per-barrel cost of transporting U.S. oil overseas.

The United States is producing more light oil today than at any point in recent history. Over the past few years, the United States has virtually eliminated imports of light oil. These light oil imports were replaced by domestically produced light oil, mostly from shale formations.

[…]

Content from ConocoPhillips

US refineries are approaching full utilization.

JUNE 10, 2022
EIA expects high refinery margins to contribute to increasing fuel production this summer

In our June 2022 Short-Term Energy Outlook (STEO), we forecast that U.S. refinery utilization will be relatively high this summer in response to strong wholesale prices for petroleum products, such as diesel and gasoline, which have increased more than the price of the crude oil used to make them.

The price difference between the price of crude oil and the wholesale price of a refined petroleum product reflects the value of refining crude oil. This difference, known as the crack spread, can indicate refining margins and profitability. Crack spreads for both diesel and gasoline increased in the first several months of 2022.

Gasoline and diesel prices and crack spreads are well above historical averages in response to several factors including:

Low inventories for both petroleum products in the United States and globally

Fuel demand increases to near pre-pandemic levels

Relatively low refinery production of both fuels compared with pre-pandemic levels

Reduced petroleum product exports from Russia

In response to these high prices, we expect that refinery utilization will reach a monthly average level of 96% twice this summer, near the upper limits of what refiners can consistently maintain. We expect refinery utilization to average 96% in June, 94% in July, and 96% in August.

We estimate U.S. refinery inputs will average 16.7 million b/d during the second and third quarters of 2022. This average is lower than the 2019 refinery inputs average of 17.3 million b/d despite high utilization rates because of reductions in refinery capacity since early 2020. U.S. refinery capacity has fallen by almost 1.0 million b/d since early 2020 because several refineries were closed or converted.

We expect wholesale prices for gasoline and diesel will begin decreasing in the third quarter of 2022, as refinery production increases. Despite our forecast price decline, we expect that wholesale fuel prices will remain well above previous years through the summer, based on higher crude oil prices as well as the ongoing impact of low global inventories. Low international inventories are likely to face additional tightness in response to the recently announced European ban on Russia’s energy imports.

Principal contributors: Kevin Hack

EIA

Adding 1 million bbl/d to this equation doesn’t alter the fundamental equation, even if the barrels came from the SPR.

While I’d like to pin this on the Biden crime family, It most likely gets chalked up to Biden incompetence. He had no idea where the oil in the SPR came from or where it would go when he started dumping it on the market. Dumping SPR oil onto the market to try to boost his miserable poll numbers was just a really dumb thing to do. It might even be an impeachable offense… But I don’t think it’s a nefarious Hunter Biden scheme… However, if anyone has any evidence that it is… Please post it! I’d love to be wrong about this one.

via Watts Up With That?

https://ift.tt/jzp2QBy

July 8, 2022 at 04:22PM

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