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US shale magnate Harold Hamm has accused the Biden administration of leaving the nation “unusually vulnerable” to a Middle East oil price shock by draining its strategic petroleum reserve, damaging domestic production and bungling foreign policy.
The Continental Resources founder told the Financial Times he was “very concerned” that Middle East conflict could disrupt global oil supplies while the US shale patch had been put in a “weakened condition”, unable to rapidly lift output.
“They have drained the SPR, and refinery inventories are at their lowest in America [in years]. And you just never know when you need it. It’s kind of like having gas in your car,” said the billionaire shale boss.
“We are in an unusually vulnerable position . . . everybody is looking in the direction [of the Middle East] right now — and has been for the last four years — but we had a president that frankly wasn’t at home.”
The comments from Hamm, a prominent donor to Republican candidate Donald Trump’s bid, echo campaign trail comments from the former president, who has accused the Biden administration of a “war on American energy” and taking the US to the “brink of world war three”.
Hamm, a pioneer of the shale revolution, spoke to the FT shortly before Iran fired a barrage of missiles at Israel, a response to Israel Defense Forces’ ground offensive against Hizbollah in southern Lebanon.
The Iranian attack sent oil prices up 5 per cent to $75.40 on Tuesday, amid fears of a wider conflict in a region accounting for about a third of global oil production capacity.
Geopolitical analysts have warned any conflict involving Tehran could threaten Gulf oil and gas exports through the Strait of Hormuz, a narrow chokepoint bordering Iran through which 20 per cent of the world’s crude supplies pass.
Further fuel price rises would be uncomfortable for the Biden administration and vice-president Kamala Harris, who is running for the White House with a pledge to drive down the cost of everyday goods.
US petrol prices currently average about $3.40 a gallon, down about a third from their price in mid-2022, when a surge in crude markets after Russia invaded Ukraine pushed up fuel costs.
The Biden administration began releasing oil from the US’s SPR in 2021 — which was created in the wake of the Arab oil embargo in the early 1970s — ahead of the invasion in a bid to keep down domestic petrol prices.
It released another 180mn barrels of oil from the reserve in 2022 after sanctions on Russia brought fears of supply disruptions.
The US has been buying back some of the oil but has 382mn barrels — about half of capacity — left in the SPR, enough to meet about 19 days of consumption, according to the US Energy Information Administration.
Hamm also accused the Biden administration of trying to restrict US oil and gas investment by pursuing “short-sighted” policies including curbs on some drilling and a pause on new liquefied natural gas plants, compromising energy security at a time of mounting geopolitical risk.
“It’s very important that we don’t crash this industry any further than the administration has crashed it already,” said Hamm, adding that he expected Harris to maintain curbs on the industry if she won the election in November.
A US official rejected Hamm’s criticisms of the Biden administration, saying the US played an active role in ensuring that conflicts overseas had not damaged Americans.
“We’ve done this by accelerating the energy transition, on the one hand reducing fossil fuels demand in the process, and making strategic releases from the SPR,” the official said.
“People said this would break the market, but it didn’t. People then said we would have $100 oil this year, but we haven’t. People said we wouldn’t be able to fill up the SPR. But we are filling the SPR. We put a plan together in January of 2022 and we have stuck to it without deviation, despite all the dire predictions.”
US oil and gas production has hit record highs under President Joe Biden, while crude and LNG exports have soared.
Kevin Book, managing director of ClearView Energy Partners, said the US was in a better position now to weather supply disruptions than in the 1970s, when some Arab Opec members imposed an embargo on shipping crude to western countries that triggered a sudden price spike.
“We’ve battened down a lot of hatches,” he said, giving the US “limited industrial exposure to high crude prices”.