The Republican-led House of Representatives on Thursday voted 331-97 in favor of a bill that would block U.S. Strategic Petroleum Reserve releases from going to China, with 113 House Democrats joining all of the chamber’s 218 GOP lawmakers in backing the measure.
The bill isn’t expected to find traction in the Democratic-controlled Senate. What’s more, analysts have suggested that the legislation isn’t offering a smart approach.
“It’s a great opportunity to be perceived as tough on China, but I think Chinese policy and energy policy is much, much more nuanced than you see by these bold strokes and fits of pique,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. OPIS is a unit of Dow Jones, publisher of MarketWatch.
“It’s kind of a silly little exercise,” Kloza said in an interview on Wednesday. “The reality is when you sell SPR, you’re going to sell it to multinational companies, and they’re going to tend to go to the places where it’s needed, and that may be India or China in a lot of different instances.”
In a similar vein, other analysts told FactCheck.org last year that whether SPR releases remain in the U.S. or go elsewhere isn’t that relevant, and what is more important is whether the releases add supply to a global market and thereby help keep prices in check for Americans.
The bill approved Thursday is the Protecting America’s Strategic Petroleum Reserve from China Act. It would prevent the U.S. Energy Department from selling SPR products to any entity tied to the Chinese Communist Party, unless the products won’t be exported to China.
“House Republicans have a plan to stop President Biden from sending our emergency fuel supply to China,” said the office of House Majority Leader Steve Scalise, a Louisiana Republican, in a news release.
“We cannot allow the Biden administration to bolster China’s national security at our own expense.”
It’s probably not possible to know how much of the SPR releases ended up in China, according to Kloza of OPIS.
Data from the U.S. Energy Information Administration, for example, show the U.S. exported 10 million barrels of crude CL00, +0.87% BRN00, +0.64% to China in October overall, with that figure including more than just SPR oil. About 12 million barrels went to Canada in October, 13 million went to South Korea in that month, and large amounts were also exported from the U.S. to other countries, but there is often then additional transportation from one nation to yet another destination, Kloza said.
Read more: Why crude released from U.S. oil reserves may have ended up being exported overseas
Analysts have emphasized that there is bipartisan interest in finding ways to maintain a tough posture toward China MCHI, +1.23%. The House on Tuesday voted 365-65 in favor of establishing the new committee aimed at Beijing — the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party.
The Biden administration rolled out a release from the SPR in November 2021, then went big in March 2022 with what the White House touted as “the largest release of oil reserves in history.”
Oil futures CLG23, +0.87% BRNH23, +0.64% rose Thursday, helped by a report showing U.S. inflation softening and optimism over China’s reopening of its economy. They were up again Friday morning.
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