Is the US Government selling our oil reserves overseas?
The answer is simple. And the answer is no.
Lately, there have been memes like this going around.
#MAGA oriented peeps on the internet are happily circulating it, while cheerfully ignoring any and all actual facts.
#1. This meme is intentionally misleading. This is not what the Reuters article actually says.
The U.S. government does sell oil reserves, but only to a limited number of U.S.-based companies. It may also loan reserves, with the expectation that companies must replace the oil they borrowed back into the reserves.
But as the actual Reuters article points out, it is not the government selling reserves of crude oil overseas. It is the recipients of the reserve bids. Phillips 66, the fourth largest oil refiner in the U.S., won one of the bids, and immediately exported nearly half-a-million barrels to Italy.
Atlantic Trading, which is owned by the French oil firm TotalEnergies, exported two cargoes of 560,000 barrels each, for a total of 1.1 million barrels, presumably to France.
Other cargoes are headed for the Netherlands, India, and China, although there was no word yet on which companies were selling them.
“Crude and fuel prices would likely be higher if (the SPR releases) hadn’t happened, but at the same time, it isn’t really having the effect that was assumed,” said Matt Smith, lead oil analyst at Kpler.
#2. The US government releases oil reserves only to a tiny number of registered buyers.
In order to bid on a monthly release of oil from the Strategic Petroleum Reserve, companies must register to bid. Typically, less than two dozen companies, all located or based in the U.S., are allowed to bid and/or awarded contracts to purchase oil from the reserves.
#3. The latest release of oil reserves, in July 2022, was purchased by these nine companies:
Combined with 3.3 million bbl of SPR crude oil scheduled for delivery in June from emergency exchanges authorized earlier this year, a total of 17 companies responded to the notice, submitting 124 bids for evaluation.
Contracts were awarded to the following companies:
- Atlantic Trading & Marketing Inc. (1.85 million bbl)
- Chevron USA (900,000 bbl)
- Equinor Marketing & Trading (2.05 million bbl)
- ExxonMobil Oil Corp. (5.15 million bbl)
- Marathon Petroleum Supply and Trading LLC (8.51 million bbl)
- Motiva Enterprises LLC (4.20 million bbl)
- Phillips 66 Co. (1.30 million bbl)
- Shell Trading (US) Co. (700,000 bbl)
- Valero Marketing and Supply Co. (11.65 million bbl)
These are the companies that then decide when and where to market their barrels of crude oil and their resulting products, like gasoline, diesel and jet fuel.
A few of these names may be unfamiliar to many, so let’s fill in some background.
Atlantic Trading, which is owned by the French oil firm TotalEnergies, is a Houston-based company that engages in trading and shipping of crude oil and refined products. It is best known as a third-party blender of gasoline products.
Equinor, formerly Statoil, is a Norwegian-owned oil producer with a heavy footprint across North America. They are the 5th largest producer of oil and gas in the U.S. Gulf of Mexico, with additional drilling and refinery operations in Ohio and the Great Lakes region.
Marathon Petroleum is the parent company of BP. It is based in Ohio and Texas, and is the largest buyer of Russian oil in the US.
Motiva is a wholly-owned subsidiary of Saudi Aramco based in Houston, Texas. It is a distributor of Shell gasoline and 76 other brands of gasoline and diesel in the US.
These nine companies, and others who win bids in other months, are the entities responsible for your pain at the pump!
#4. But why?!? Why do oil companies export oil and gas we need?
Because they’re greedy bastards. Profit.
Several European countries pay north of $7 or $8 per gallon, including Germany, France, Italy, Spain and the United Kingdom. At the top of the expensive list is Hong Kong, where prices per gallon are higher than $11, followed by Norway at more than $10.
The U.S. isn’t even in the top ten for wallet-draining gas prices.
Our pain in the U.S. is nothing to the pain they can cause consumers elsewhere — and the profits they can reap for CEO’s and shareholders.
#5. Why did Biden recently cancel oil drilling lease sales?
Again, the answer is simple. There was no interest in the offering.
The U.S. oil industry already has 9,000 unused oil drilling leases. Of those, 5,000 leases were snapped up in 2021, Biden’s first year in office. Now, it seems, the U.S. oil industry is losing interest in sinking more money into leases it has no current interest in developing.
U.S. companies haven’t bothered to develop drilling sites or tool up refineries in over a decade, preferring to keep gas prices high and shareholders happy.
The oil industry can decide to produce more oil whenever it wants. In fact, the oil industry already possess more than 9,000 approved — but unused — drilling permits on federal lands. Nearly 5,000 of those permits were approved in 2021 alone — the highest figure since the second Bush administration.
So while it’s tempting to yell “But Biden!” and plaster “Go Brandon!” stickers on fuel pumps, the truth is that the federal government has very little power to alleviate our pain at the pumps.
The true villains are our own American oil oligarchs, and the oil lobby that pays politicians to convince us that fossil fuels are our ticket to “energy independence” while literally sitting on resources that they refuse to develop.