House passes bill aimed at restricting oil reserve sales to companies with Chinese influence

The House on Thursday passed a bill aimed at restricting sales from the country’s oil reserves to China.

The legislation bars sales of oil from the Strategic Petroleum Reserve (SPR) to entities under the control, ownership or influence of the Chinese Communist Party, unless that oil will not be exported to China. 

The bill passed in a bipartisan 331-97 vote. All 97 “no” votes came from Democrats, but 113 Democrats joined all Republicans who voted in passing the measure.

The bill’s prospects are uncertain in a Democrat-controlled Senate, but it still represents a significant window into Republican energy and foreign policy priorities for the new Congress. 

Tom Kloza, the global head of energy analysis at the Oil Price Information Service, has expressed skepticism about the approach in the legislation that passed on Thursday, recently telling The Hill that it sounded “pretty silly.”

While some of the oil that was sold from the strategic reserve ended up in other countries, including China, Kloza said the impact on the U.S. economy would have been the same regardless of where those barrels had ended up.

“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,” he said last week. 

Some of the companies that were able to buy oil from the release are U.S. subsidiaries of foreign companies. 

Republicans argued that the Biden administration’s move to sell off oil from the nation’s reserves last year was political — and said that if it benefitted China, it was harmful to the nation’s security. 

“America’s SPR is meant for true energy supply disruptions, like those caused by hurricanes and natural disasters, not to help China,” said House Energy and Commerce Chair Cathy McMorris Rodgers, according to a copy of her floor remarks. 

“Draining our strategic reserves for political purposes and selling portions of it to China is a significant threat to our national security,” she added. 

Meanwhile, Rep. Frank Pallone (N.J.) the energy panel’s top Democrat, said he also opposes exporting U.S. oil to China, but said the GOP measure did not adequately address that issue. 

“If Republicans were serious about addressing this issue, they would have brought forward a bill that banned all oil exports to China,” said a copy of his remarks. 

“SPR barrels sold to Chinese firms represented only 2 percent of all the oil we sent to China last year. If we truly want to address China using American oil to build its reserves, let’s actually take a serious look at that, rather than skirt around the issue because Republicans are scared of Big Oil’s wrath,” he added. 

Republicans are expected to soon take up a second bill targeting the country’s oil reserves after the party criticized Biden’s use of the reserves amid a supply crunch this year that followed Russia’s invasion of Ukraine. 

The Biden administration has defended its use of the SPR. 

“The Biden administration, like administrations of both parties have historically done, rightly authorized emergency use of the SPR mission to address supply disruptions –providing relief to American families and refineries when needed the most. Treasury estimated that the Biden administration’s releases reduced prices at the pump by up to $0.40/gallon,” the Energy Department recently told The Hill in an emailed statement. 

Meanwhile, the House has also been critical of China more broadly. House Republicans, joined by a large contingent of Democrats, this week passed a resolution to create a committee focused on competition with China.