Memo to Granholm in Late 2021 Indicates SPR Releases Timed to Coincide with Predicted Price Decreases

Administration’s decisions to tap SPR appear designed to take political advantage of projected declines in price

January 25, 2023

(Washington, DC) – Today, the Functional Government Initiative (FGI) released records obtained from ongoing litigation against the Department of Energy (DOE) to get to the bottom of the motivation behind the decision to release oil from the Strategic Petroleum Reserve (SPR) in late 2021 through late 2022. A memo FGI received in the case shows the Department had predicted declines in gas prices even before SPR resources were released to the market. The sales from the SPR stopped after the midterm elections and at one point included sales of more than a million barrels to a Chinese-government-tied energy company.

During Biden’s campaign in 2020, he explicitly promised to limit additional domestic oil and gas development. Upon coming into office, the Biden Administration lived up to that promise with several ongoing steps to restrict domestic energy production. The subsequent spike in average gas prices from January 2021 ($2.38) to mid-November 2021 ($3.41) – and ultimately climbing to more than $5 a gallon in June 2022 – lead many experts and the American public to directly link the higher prices to the President’s energy policy. Today’s average price per gallon is $3.27, 37 percent higher than the day before President Biden took office.

FGI filed litigation against the Department of Energy after it withheld records it is required to release under the Freedom of Information Act. Records obtained so far show that a non-public memorandum from the Energy Information Administration was provided to Secretary Granholm less than two weeks before the President announced the release of 50 million barrels of oil in November 2021. The heavily redacted memo indicates that DOE officials believed retail gas prices would decrease in the first few quarters of 2022 and provided an estimated retail price drop tied to a per barrel release from the SPR. This indicates the Administration recognized gas prices would decline regardless of any release from SPR but that the release was timed to be able to take maximum political advantage of the natural price drop while weakening the nation’s ability to call on the SPR to meet a real supply emergency.

However, the heavily redacted documents do not reveal the details of the projections. Neither do they show to what extent the decision to release 50 million barrels sought either to rely on those projections to reduce retail gas prices to Trump-era levels or claim credit for already-projected falling gas prices. Additional document productions made under supervision of the court will continue to shed light on DOE’s motivations and whether their actions in drawing down the SPR are just more evidence of dysfunctional energy policies.

Peter McGinnis, spokesman for FGI, issued the following statement:

“The decision by the Biden Administration to drain the Strategic Petroleum Reserve, absent a clear emergency and armed with the expectation of several quarters of falling retail gas prices, raises many questions about the legality and political nature of the decision-making. The timing and existence of the memo obtained by FGI only enhances the public’s concern that political motives may have played a role. In light of the economics of having to re-stock the reserves at today’s higher prices, the many SPR releases also appear to represent an extremely costly political contribution for the American taxpayer. This is the precise type of dysfunction the Administration’s so-called ‘return to normalcy’ was supposed to avoid.”