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Politics

House Votes to Block China from Buying Oil from US Reserves

January 12, 2023

WASHINGTON — The Republican-controlled House on Thursday voted to block oil from the country’s emergency stockpile from going to China.

The bill, one of the first introduced by the new GOP majority, would prohibit the Energy Department from selling oil from the Strategic Petroleum Reserve to companies owned or influenced by the Chinese Communist Party. It passed easily, 331-97, with 113 Democrats joining unanimous Republicans in support.

Rep. Cathy McMorris Rodgers, R-Wash., the new head of the House Energy and Commerce Committee, said the bill would help end what she called President Joe Biden’s “abuse of our strategic reserves.”

Biden withdrew 180 million barrels from the strategic reserve last year in a bid to halt rising gasoline prices amid production cuts by OPEC and a ban on Russian oil imports following Moscow’s invasion of Ukraine. The monthslong sales brought the stockpile to its lowest level since the 1980s. The administration said last month it will start to replenish the reserve now that oil prices have gone down.

McMorris Rodgers accused Biden of using the reserve to “cover up his failed policies” that she said are driving up energy prices and inflation.

“Draining our strategic reserves for political purposes and selling it to China is a significant threat to our national and energy security. This must be stopped,” McMorris Rodgers said.

The measure is the first in a series of GOP proposals aimed at “unleashing American energy production,” McMorris Rodgers said as Republicans seek to boost U.S. production of oil, natural gas and other fossil fuels.

“There’s more to come. This is just the beginning,” she said.

Democrats, including former Energy and Commerce Chairman Frank Pallone of New Jersey, said Republicans were trying to fix a problem of their own making. China is among numerous potential adversaries that buy U.S. oil after the GOP-led Congress lifted an export ban in 2015.

“If Republicans were serious about addressing this issue, they would have brought forward a bill that banned all oil exports to China,” Pallone said, adding that sales from the strategic reserve amounted to about 2% of U.S. oil sold to China last year.

“If we truly want to address China using American oil to build its reserves, let’s actually take a serious look at that, rather than skirt around the issue because Republicans are scared of Big Oil’s wrath,” Pallone said.

The current process allows for crude oil sales from the strategic reserve to companies that make the highest offer, which includes U.S. subsidiaries of foreign oil companies, and they could then export that crude oil overseas. Last year, millions of barrels of oil from the U.S. reserves wound up being exported to China, including to a subsidiary of China’s state-run oil company, Sinopec.

The Energy Department said in a statement Thursday that Biden “rightly authorized emergency use” of the strategic reserve, also known as the SPR, to address supply disruptions and “provide relief to American families and refineries when needed the most.”

The Treasury Department estimates that release of oil from the emergency stockpile lowered prices at the pump by up to 40 cents per gallon. Gasoline prices, meanwhile, averaged about $3.27 per gallon on Thursday, down from just over $5 per gallon at their peak in June, according to the AAA auto club.

“By law we are required to select the highest value bid to ensure the best return for taxpayers, and since 2017 the vast majority of oil sold from the reserve is sold to American entities,” the Energy Department said. Over the last five years, less than 3% of oil from the strategic reserve has gone to China, officials said.

The House bill now goes to the Democratic-controlled Senate. Sen. John Barrasso, R-Wyo., has introduced a similar measure.

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