The chart breaks down the 2022 emergency sales from the U.S. Strategic Petroleum Reserve (SPR) by purchaser type. The Biden Administration announced several rounds of emergency sales beginning in November 2021 and ending in November 2022, nominally targeting 180 million barrels with actual announced sales at or above 200 million barrels. The releases were made in response to steeply rising transportation fuel prices and the failure of U.S. producers and OPEC+ members to increase crude oil production in response to Administration requests.
During 2022, the U.S. Department of Energy published details of each SPR contract award, including purchaser and committed quantity. The overwhelming majority went to refiners (185.4 million barrels, or 93.3% of the total), with a smaller share to trading organizations (13.4 million barrels, or 6.7%). Unipec America, Inc., the U.S. trading arm of China’s Sinopec, purchased almost 2 million barrels, or about 1% of total contracted sales.
Notification of the Sinopec-related purchase prompted alarm in Congress. On January 11, 2023, shortly after the 118th Congress was sworn in, the House passed H.R. 22, “The Protecting America’s Strategic Petroleum Reserve from China Act,” by a vote of 331-97, with 113 Democrats joining all 212 Republicans. A similar Senate measure introduced in June 2022 by Senators James Lankford (R-OK) and Ted Cruz (R-TX) has not gained comparable traction.
Under current law, the federal government is prohibited from directing where companies export the oil they purchase, and SPR crude is sold to the highest registered bidder. Because crude trades in a global market, barring China from bidding does not remove the benefit it derives from added supply and lower prices: barrels that might have gone to a Chinese buyer are sold to another purchaser, freeing up other supply for China to acquire directly or indirectly. For context, U.S. commercial crude oil sales to China totaled 176 million barrels in 2022 and 67 million barrels in 2021.
The measure’s practical effect on China’s access to oil is therefore limited. Critics of H.R. 22 noted that broader passage would have been possible had the legislation considered a more expansive set of prohibitions.
From the EPRINC Chart of the Week archive.