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U.S. House Passes Bill Keeping China From Purchasing Oil From SPR

The U.S. House of Representatives passed on Thursday a bill that looks to ban the sale of crude oil from the nation’s Strategic Petroleum Reserve to China.

The new legislation bans all sales of crude oil from the United States’ SPR to any entity under the influence, control, or ownership of China’s Communist Party—unless that oil isn’t exported to China.

The bill—H.R. 22, Protecting America’s Strategic Petroleum Reserve from China Act, did more than just squeak by along party lines. The legislation passed 331 to 97, with 113 Democrats voting to ban crude SPR sales to China.

 The current process allows for crude oil sales from the nation’s SPR to companies who make the highest offer, which includes U.S. subsidiaries of foreign oil companies, which could then export that crude oil overseas.

Some of last year’s emergency SPR sales did go to Chinese-owned companies, including to Unipec America—which is wholly owned by Sinopec, China’s state-run oil company.

The practice drew criticism over the summer when domestic gasoline prices were running at uncomfortable highs, with some arguing that shipping crude oil from the SPR out of the country did little to bring down gasoline prices at home.

House Energy and Commerce Chair Cathy McMorris Rodgers argued that “America’s SPR is meant for true energy supply disruptions, like those caused by hurricanes and natural disasters, not to help China,” according to copies of her floor remarks, while Tom Kloza, head of energy analysis at the Oil Price Information Service told The Hill last week that the legislation sounded “pretty silly.”

“It is a world market and it’s like water seeking its own level and when you sold oil on the incremental market whether it moved to domestic sources or whether it moved overseas it did temper the enthusiasm for high-priced oil,” Kloza said.


Others, like Rep. Frank Pallone of New Jersey, criticized the bill for not outright banning all crude oil sales to China.

By Julianne Geiger for Oilprice.com

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