Releasing oil from reserves is a ‘bad policy choice’: Dan Brouillette

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The Biden administration’s decision to withdraw oil from U.S. reserves was a “mistake,” former U.S. Energy Secretary Dan Brouillette said Wednesday.

“I think it’s a bad policy choice. There’s no question about that,” he told CNBC’s “Capital Connection” a day after President Joe Biden announced that 50 million barrels of oil would be released from the country’s Strategic Petroleum Reserve. .

China, India, Japan, South Korea and the UK will also release their oil reserves as part of the global efforts of high -energy countries to cool energy prices.

The SPR in the U.S. is a national security asset intended to protect the country and its citizens from supply disruptions, such as in emergency situations, said Brouillette, who served as energy secretary under the former President Donald Trump.

“It’s not a supply emergency, and the only emergency I see in this case is a political emergency,” he said.

The Biden administration’s action shows they are concerned about the 2022 midterm elections, Brouillette said.

“This is what drives the decision probably more than anything because as I said earlier, it’s not a supply emergency,” he said.

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

Dan Brouillette

Former US Energy Secretary

U.S. oil producers pump about 11 million barrels per day, according to the Energy Information Administration.

“The issue for the United States is not [oil] supply, it’s politics, ”Brouillette said.“ I don’t want to see these kinds of decisions using the Strategic Petroleum Reserve in this way. It’s sad. “

“It’s a mistake, we shouldn’t use it for these purposes,” he added.

Three presidents have used the SPR as an emergency response tool in the past, according to the Office of Fossil Energy and Carbon Management. Drawdowns were ordered that helped stabilize the market during Libya’s civil war, Hurricane Katrina and the Persian Gulf War.

Energy inflation

Oil prices have risen more than 60% so far this year due to the reopening of economies and there has been a sharp rebound in demand.

The US has asked OPEC and its allies to increase production to reduce prices, but the oil alliance is sticking to its plan of gradually increasing supply.

Brouillette said using the SPR to “strike” at OPEC was “completely the wrong approach,” and there were other levers available to the US.

Instead of tapping reserves, the U.S. should allow projects like the Keystone XL pipeline, a major U.S.-Canada oil pipeline that is expected to bring approximately 830,000 barrels per day of Alberta crude oil sands to Nebraska. It was officially canceled in June after Biden revoked a basic permit needed for a U.S. stretch of 1,200-mile project.

Washington could also allow oil production on federal land, the former energy secretary said.

One of the first things Biden did when he was inaugurated in January was to sign a series of executive actions on climate change, including one to stop new oil and natural gas leases in the public land and water. The suspension has been blocked so far, and a record offshore lease sale opened this month.

Increasing production is a better way to influence prices, Brouillette said, noting that the U.S. has been a swing producer for years and essentially sets world oil prices.

“Our ability to produce 13 million barrels a day of oil has really shaped the market in three to four years,” he said. “It’s important we go back to that approach of not using a national asset like the Strategic Petroleum Reserve to affect pricing.”

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

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