r/PoliticalDiscussion • u/Party_Dentist_821 • 6d ago
Non-US Politics Should Europe drain its emergency diesel reserves to help with US midterm gas prices?
Diesel prices are surging and the EU held emergency talks this month. Meanwhile Washington is pushing Europe to release its reserves “immediately”, and some analysts argue the timing has a lot to do with the US midterms in November.
So: is releasing reserves now a smart move for European consumers too, or is Europe being asked to spend its safety net on someone else’s election? And what are you paying at the pump right now?
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u/Omotai 6d ago
Speaking as an American: no. Europe has no obligation to fix our fuck-up, especially not for the Republicans' political benefit.
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u/Fargason 5d ago
Problem is Biden severely depleted our own Strategic Petroleum Reserve for the 2022 and 2024 elections that was designed for wartime. He essentially declared tough elections as a national crisis to tap our strategic reserves.
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u/Moccus 5d ago edited 5d ago
The Strategic Petroleum Reserve wasn't "designed for wartime." It was created in response to the 1970s OPEC embargo to allow us and allied countries to coordinate global responses to oil supply shocks. Russia's 2022 invasion of Ukraine and subsequent oil supply problems were exactly the kind of thing the reserve was designed for.
The Biden Administration was buying oil to refill the reserve throughout 2024. They didn't drain it around the 2024 election.
Edit:
As noted in your article, the sale in May 2024 was mandated by Congress because they were going to close that one storage facility, so they needed to either sell the oil or transfer it elsewhere.
The move, which the department said is intended to help "lower costs for American families and consumers,″ follows a mandate from Congress to sell off the 10-year-old Northeast reserve and then close it. The language was included in a spending deal Congress approved in March to avert a partial government shutdown.
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u/Fargason 5d ago
The 1970s oil embargo that was due to the US involvement in the Yom Kippur War. An embargo level event doesn’t happen lightly outside of some major conflict, and a years long fuel shortage is nothing compared to simply having elevated prices in an election year.
Yes, the 2024 oil sell was from a redundant reserve of which the SPR has never been filled to necessitate and second storage site in the first place. It was wasteful, but also unconstitutional as it was unilaterally created by the Obama administration that was drawing significant wasteful funds from the Treasury that had never been authorized by Congress. The point here is they absolutely should have transferred the it given Biden depleted 4 decades worth of reserves in 2022, but instead they sold it off at a loss to lower prices again in an election year. Of course mainly referring to this part of the article above:
Biden significantly drained the Strategic Petroleum Reserve in 2022 following Russia's invasion of Ukraine, dropping the stockpile to its lowest level since the 1980s. The election year move helped stabilize gasoline prices that had been rising in the wake of the war in Europe but drew complaints from Republicans that the Democratic president was playing politics with a reserve meant for national emergencies.
You don’t seem to understand the SPR takes decades to replenish and we are a a 4 decade low now.
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u/gonz4dieg 5d ago
I didn't know Dems could do something nakedly partisan before election
Good on them
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u/Fargason 5d ago edited 5d ago
But also bad on them and everyone else if a crisis happens in the next decade or longer that causes an actual fuel shortage. It takes decades to replenish the SPR and Biden severely depleted it as a campaign tactic.
Democrats did have better than expected outcomes in the 2022 election, but also came at the price of giving false confidence to an infirm President’s chances in seeking reelection at 82. The latter was quite disastrous and was not worth the price on many levels.
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u/gonz4dieg 5d ago
shrug
Being forthright and forward thinking only works when both sides are agreeing to do it.
As we can see here, trump would've wanted to drain the reserves anyway in an election year.
Just another sign we need to run not walk away from fossil fuels
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u/Fargason 5d ago
So just burn your own house down so nobody else can do it? We are in a conflict with a OPEC nation which is exactly why the SPR was created in the first place. Using it now would be a legitimate use, but like maybe a quarter of it to undermine OPEC’s leverage. Now they have a ton of leverage from it being heavy depleted as a campaign tool to mitigate midterm losses because Biden’s reckless “Spend Big” policies sent the inflation rate soaring to 9%.
https://fred.stlouisfed.org/graph/?g=1Yy2e
That is the “affordability crisis” which represents a roughly 25% loss in purchasing power in the last 6 years, and 90% of it was a product of the Biden administration. The one point bump in the CPI rate now is what we should have experienced during the beginning of the Russia/Ukraine war if the other inflationary factors were not in play. This MIT research project even shows excessive federal spending as the overwhelming main factor of the inflation surge, and doubling the long term deficit certainly qualifies:
Biden politicalized the Strategic Petroleum Reserve to cover for his highly inflationary policy choices at the cost of greatly harming a critical national security safety measure.
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u/gonz4dieg 5d ago
So if you create a war in the middle east that causes a oil shortage you can then use the SPR however you please to avoid the consequences, got it.
If you think Biden spending was crazy, wait till you hear about trump 1 spending (especially trump 1 spending when were in a non recession period) and trump 2 spending so far. But im sure that exorbitant overspending didnt effect the economy at all
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u/Fargason 4d ago edited 4d ago
Trump 1 was a decade ago, so we already know:
https://www.cbo.gov/publication/62105#_idTextAnchor018
Trump started out with a Republican trifecta and kept spending stable below the historical average of 21.2% of GDP until COVID hit. Biden had a trifecta too and took long term spending at 24% of GDP which doubled the deficit. Nobody remembers Democrats telling Biden to “go big or go home” when it came to stimulus and the budget? Well, he did it and it was highly inflationary which is 90% of the “affordability crisis” we are suffering through today.
Iran caused a war in the Middle East on Oct 7th and Trump doesn’t play this proxy war game that everyone other administration has played for the last half century. Iran’s combatants they fund and train have been terrorizing the region, but they absurdly get to claim it is not really them doing it. Absolutely that is what the SPR was built for when an OPEC nation is the top state sponsor of terrorism starts a war and is on the verge of developing nuclear weapons. It wasn’t for a political campaign tool to deplete 4 decades of strategic reserves critical for national security just to mitigate an administration highly inflationary “Spend Big” policies before an election.
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u/AlamutJones 6d ago
Europe's being asked to pay for America's mistake so Trump won't have to. The answer should be no
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u/Not_offensive0npurp 5d ago
The funny part is, they may have helped if the current admin hadn't treated them like shit for the past decade.
Soft power is important.
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u/airbear13 6d ago
Hmmm let’s see
Should Europe wish to help the guy who is threatening to invade nato member countries, subjecting them to moral lectures, openly beefing with Zelenskyy and friends with Putin, putting tariffs on them, and basically undermining their whole security and economic situation?
I mean I wouldn’t
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u/kju 6d ago edited 6d ago
So, this isn't a complicated question in most ways, but if you look for nuance you will find it
Obviously Europe shouldn't be draining their reserves for the elections, that's not what it's there for. European reserves are for European energy security and while it would be better for everyone is prices were lowered, right now is exactly when you shouldn't be raiding reserves, right now is a time of energy insecurity, the current instability makes having the reserves right more now important. I don't blame trump for asking, no harm in that, but making threats goes too far
The nuance though, comes from European emissions regulations. Europe has previously mandated that vehicles be diesel to minimize pollution, which sounded great to the green parties. In effect what that meant was European car companies not being competitive and going out of business or cheating the regulations testing, so European car manufacturers cheated the regulations. All of them. It started with some air quality testing and finding that there was more acid rain than expected, which diesel produces. So the regulators looked at Volkswagen and found them cheating the regulations, you might remember the court case around it. Well later all of the other manufacturers were investigated too and they were all cheating the regulations but there was no reason to hold more court cases, they were all guilty, they all settled and the regulation was dropped and abandoned, it created more harm than good despite its intentions.
This caused a glut of diesel.
When Europe announced their diesel mandate it was an announcement that they would be buying a lot of diesel, so producers started building refineries to service this upcoming demand. This happened mostly in Russia, Russia built out a substantial cracking spread to output diesel to supply the European regulations, but the middle east substantially built out their cracking into diesel too. A huge amount of supply was produced and then the regulations were abandoned and there was an over supply, no one was building diesel anymore and this caused the unstable concentration (or crack spread) that we would later see either destroyed by war in Russia or constrained by war in the middle east.
If Europe hadn't tried and failed these green initiatives we would likely have a more stable crack spread around the world that wasn't still prone to these disruptions. Europe did cause market distortions that concentrated the refining of diesel to the regions that would fall into war.
The good and bad news of this is that Russian supply is gone, it's never going to come back at the same quantities so there's incentive to build out elseware, like in the United States, which is happening slowly. Russian refineries are getting bombed and they're being run without safety checks or sufficient maintenance because there's no reason to rebuild something when it will just be bombed again next week. Russia will rebuild all of these bombed refineries after the war into different configurations. The bombing forces them to rebuild anyways, why not move away from diesel for the rebuild? The European demand it was built for is gone. The middle eastern supply isn't gone though, it's just constrained, so producers have to consider the middle east becoming unconstrained and not building out too much for fear of the middle east coming back online and driving the price down. We're all in a bad spot because of some decisions that politicians made and it sucks for everyone.
Releasing reserves during such an unstable time would be incredibly reckless though and Europe shouldn't do it. The reserves are held exactly for that unstable times so they can continue to operate if supply stops. It would benefit European consumers, yes, just as much as it would benefit American consumers, but these reserves aren't there to benefit consumers, they're there to provide 61 days of energy security in the event that supply stops arriving to service European countries
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u/Inquisitor_ForHire 6d ago
Fuck no. What are we doing for Europe other than attempting to fuck them over? Let this administration BURN.
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u/ptwonline 5d ago
Europe actually agreed back in March that they would be doing releases of stockpiles of oil and refined products. I think the most recent announcement that Trump is taking credit for was just confirming the release.
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u/billpalto 5d ago
The EU should release their reserves if they think it will lower prices in the EU, if prices are high enough to warrant it.
Why should the EU give up their reserves to bail Trump out? I doubt anybody in the EU is for that. Everybody knows that even if you do bail Trump out, he will attack you anyway if the mood hits him. Trump is easy to bribe, but he doesn't stay bribed.
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u/Sarmq 5d ago
Why should the EU give up their reserves to bail Trump out?
Given geopolitics, probably in exchange for a firmer commitment to NATO.
They should probably get that in writing though... and probably an embarassing picture of Trump to release if he renegs.
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u/HappyBarbarian 5d ago
No. It’s an emergency strategic reserve for a reason and that reason is not to bail out the US. Further the reason we’re in this mess is not just the war, it’s a market absurdity that we created ourselves. We’re a net exporter of fossil fuels. The reason we have a crisis is threefold. 1) we don’t have sufficient tankers or pipelines to ship between US ports/refineries. This is in part due to the law that a non-US tanker can’t ship between US ports (repeal/replace the Jones Act!). 2) our refinery capacity is built around the type of crude oil that comes from the Middle East because it was cheaper than building infrastructure for our own fossil fuels. 3) oil companies base their prices on international market values, not strict supply and demand. Oil companies could keep prices significantly lower but refuse to because it wouldn’t maximize shareholder value. Which another reason Europe shouldn’t use their fuel reserves, it would be mostly just market manipulation, and has no guarantee that it would work
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u/Moccus 5d ago
our refinery capacity is built around the type of crude oil that comes from the Middle East because it was cheaper than building infrastructure for our own fossil fuels.
It's because the US wasn't a significant producer of oil when those refineries were built. Obviously they didn't build refineries for oil that we weren't producing. They were built for the oil that was available at the time, which was the imported stuff.
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u/HappyBarbarian 5d ago
We produce more fossil fuels than we use since around 2008 I believe. I need to find exact sources but our refining was primarily built around US sources up through WWII. That’s one of the reasons we won, we absolutely dominated world oil production. A series of holdings in Texas owned by one guy produced more than the entire Japanese empire at the time. BPs efforts in the Persian Gulf didn’t even get started until the mis 1930s. We switched because they could produce relatively easier cheaper, because of exploitative labor practices, and consolidating the supply chain. That why I call it an absurd market, because it’s kinda like how states switched from wheat where it naturally grows, to corn which doesn’t, or how it’s often cheaper to get an item shipped from China than shipped between states
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u/neverendingchalupas 5d ago edited 5d ago
The majority of oil processing was switched from light sweet crude, which is what most of the oil produced in the US is, to heavy sour... This change happened in the 70s and 90s. Light sweet crude is more expensive than heavy sour, so the US produces it for export... Not use.
From that point to now, oil refining in the US has been consolidated heavily to increase profits for the oil and gas industry.
Currently the US imports most of the oil it uses from Canada and Mexico.
When Biden and Trump release oil for sale from the US national reserves, it had and has limited to no impact on fuel prices within the US, because it is primarily light sweet crude, that gets sold to China and Europe. Not sold domestically for domestic fuel consumption.
Europe primarily processes medium sour and light sweet crude, it really wouldnt have much of an impact on US fuel prices if Europe releases more oil or not.
What would lower fuel costs in the US, is removing Trump and Republicans from office.
Trump is a violent shit eating moron, who needs a scapegoat for his fuckbrained policies. He will blame literally anyone but himself for high fuel prices. Including Europe.
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u/HappyBarbarian 5d ago
That was good additional context. Since OPEC and the major oil companies largely set prices couldn’t they just decline to adjust them? i.e. if BP is the one selling European oil couldn’t they just keep the prices the same regardless of supply?
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u/Sea-Chain7394 1d ago
I wouldn't if I were them. But they decided to do so because they have made themselves dependent on the US in many ways. They might want to reconsider because it honestly is a bandaid on a gunshot wound for the US and our government is completely out of control and needs som external chack on its power to avoid situations like this in the first place
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