Jul 20, 2022 - Politics & Policy

Scoop: GOP's oil reserve amnesia

Photo illustration of President Biden, Donald Trump, Chinese currency, and oil textures.
Photo illustration: Shoshana Gordon/Axios. Photos: Chris Kelponis-Pool, Michael B. Thomas/Getty Images

The Trump administration sold oil from the U.S. strategic reserves to China's largest oil producer in 2017, according to government data reviewed by Axios.

Why it matters: Republicans in Congress are demanding investigations into the Biden administration's recent release of oil to a China-owned firm with which the president's son Hunter once had business dealings.

  • Former President Trump and conservative media personalities have also criticized the sale of 950,000 barrels of strategic petroleum reserves to Unipec, a subsidiary of China's state-owned Sinopec.
  • But documents show that, like the current administration, the Trump administration also sold to the highest competitive, non-sanctioned bidders, including Chinese companies, as is required by law.

Details: Data collected by the Department of Energy shows the Trump administration sold half a million barrels of oil from the U.S. strategic reserves to PetroChina in Trump's first year in office.

What they're saying: "Their hypocrisy — slamming the Biden administration for doing exactly what the Trump administration also did — isn't surprising, but it reveals just how eager they are to use lies to attack the president," said Ian Sams, a spokesman in the White House counsel's office.

Driving the news: Trump called the Biden administration's sale "terrible" and former Vice President Mike Pence called it "an outrage."

  • "When Republicans control the gavel, we will get answers," Rep. James Comer (R-Ky.), the ranking member on the House Oversight Committee, told Breibart, previewing a line of investigation if Republicans take control of the House.
  • Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Judiciary Committee, tweeted that the Biden administration's sale was a "misguided/harmful action" that needs "further scrutiny -esp if his sons China biz could benefit."
  • Sen. John Kennedy (R-La.) and Sen. Ted Cruz (R-Texas) introduced legislation to prevent future strategic petroleum reserve sales from going to China, Russia, North Korea or Iran.

The big picture: The Biden administration announced in April that it planned to release 1 million barrels of crude oil per day for six months from the Strategic Petroleum Reserve to lower the global price of crude oil by upping supply around the globe.

  • Since then, the Department of Energy has made public the companies awarded contracts and the volume of barrels involved.

Be smart: Bob McNally, founder and president of Rapidan Energy Group, who advised former President George W. Bush on international energy issues, told Axios that sales to a Chinese company as in the Biden and Trump's administrations' cases are a "nothingburger" because of how the law and global markets work.

  • Typically, the U.S. government either holds an online auction for energy companies to bid on the oil or conducts a swap — when oil companies take crude but are required to return it, plus interest.
  • "Whether a refiner turns it into gasoline in Louisiana or the Mediterranean or the East China Sea doesn't matter because oil sloshes around the world and it all kind of is one big market and one big price," McNally said.
  • "The price Americans pay at the pump depends on the global price of crude oil and the global price of gasoline."

Axios' Andrew Freedman and Ben Geman contributed to this report.

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