Today the House passed an amendment from Rep. Ron Estes (R-Kansas) that will ensure the Department of Energy refills the Strategic Petroleum Reserve using a competitive market rate. The amendment is to H.R. 1 – the Lower Energy Costs Act – and passed by voice vote. The House is expected to vote on H.R. 1 tomorrow.
Before the vote, Rep. Estes spoke on behalf of his amendment on the House floor.
"My amendment would protect our country and American families in the event of a national emergency by requiring the Department of Energy to refill the Strategic Petroleum Reserve at a competitive market rate," said Rep. Estes on the House floor. "Since draining the SPR to address an energy and inflation crisis of his own making, President Biden and his administration continue to abdicate their responsibility to replenish the reserve."
Watch Rep. Estes' remarks on the House floor
My amendment would protect our country and American families in the event of a national emergency by requiring the Department of Energy to refill the Strategic Petroleum Reserve at a competitive market rate.
We all remember that President Biden chose to tap into the SPR for political reasons as he tried to mask his failed energy policies that caused gas prices to soar. When President Biden took office, the average weekly price for a gallon of gas was $2.38. It was already at $3.53 prior to Putin invading Ukraine before hitting record highs last summer. Despite depleting our SPR, we still have a weekly average of $3.42.
Since draining the SPR to address an energy and inflation crisis of his own making, President Biden and his administration continue to abdicate their responsibility to replenish the reserve. In October 2022, the White House announced that it would implement a “first-of-its-kind rule” establishing a system of fixed-rate price contracts for replenishing the SPR. Per the administration’s policy, they intend to purchase “crude oil for the SPR when prices are at or below about $67-$72 per barrel.”
This untested fixed-price bid system imposed by the White House has allowed the administration to ignore its responsibility to resupply the SPR to the detriment of the United States’ economy and national security.
In January of this year, the DOE rejected bids from several producers to refill the SPR because the market rate for crude oil at the time was well above the administration’s arbitrary fixed price. This deceptive policy gives the DOE a convenient excuse not to refill the SPR and keep it at record lows – leaving our nation less safe and prepared.
My amendment would remedy this problem by requiring the DOE to use the commonly accepted index-based pricing bid process. Historically, the index-based bid process is used to solicit contracts to refill the SPR and is the standard pricing regime used in the global oil and gas market. Using this more accepted metric, DOE would competitively bid at the market rate for crude oil when buying for the SPR.
This bidding system will ensure that DOE will meet its obligation to refill the SPR and not circumvent that obligation with an arbitrary price ceiling.
Further, the federal government should not be a speculator in the crude oil market. The fixed-price scheme dreamed up by the White House ignores the basic economic realities of how petroleum products are traded in the marketplace. If the administration is concerned with the price of oil not being a good deal for taxpayers, it should end its war on safe and reliable American energy.
My amendment would ensure the SPR refill bid process reflects market realities rather than the price mandates of the administration, and restores our Strategic Petroleum Reserve, which is desperately needed for our national security.