The US Congress has inserted a provision in the latest federal funding bill that would prohibit China from purchasing oil from the US Strategic Petroleum Reserve (SPR). This bipartisan move reflects mounting concerns in Washington over competition with China.
The funding legislation, unveiled on Sunday by congressional leaders, spans over 1,000 pages and allocates money for six key government agencies. The House of Representatives is expected to vote on the package first, potentially as early as Tuesday when it reconvenes. The Senate would then need to approve the bill before the Friday deadline to avoid a shutdown.
The China-related measure aims to block entities linked to the Chinese government from accessing the SPR, amid broader efforts in Congress to get tough on Beijing. Just last year, a subsidiary of state-owned China Petroleum & Chemical Corp, known as Sinopec, purchased 1 million barrels from the reserve. Back in 2017, PetroChina International, a division of PetroChina Co Ltd, also acquired SPR oil.
The SPR, maintained by the Department of Energy, currently holds around 360 million barrels of crude oil – the lowest level in decades. The reserves were tapped heavily in 2022 by President Biden to bring down spiking gasoline prices after Russia invaded Ukraine. In total, 180 million barrels were sold off last year as part of the drawdown.
Concerns over selling to China were heightened when the administration of former President Trump also sold some SPR oil to Chinese buyers. Last summer, the Senate overwhelmingly voted 85-14 in favor of prohibiting exports to China from the reserve.
Supporters argue the ban on SPR sales will send a strong message to Beijing and help refill reserves depleted by the recent large-scale releases. Critics counter that the overall impact may be limited, as China purchased just 83 million barrels from the US last year. The measure could also potentially raise gas prices if it constrains the market.
The broader funding package dubbed the “omnibus” bill lays out $1.7 trillion in government spending for fiscal year 2023. It includes money for defense, education, veterans affairs, energy and water projects. The omnibus aims to finalize unfinished business from last year and fund agencies through September.
Getting the bill passed by Friday is crucial to avoiding another government shutdown before the 117th Congress adjourns. Bipartisan support will be needed in both chambers. Efforts to pass full-year spending bills stalled last year due to disputes over issues like defense spending.
The sweeping legislation encompasses a range of priorities for both parties. However, the inclusion of the SPR provision indicates shared concern in Washington over competition with China’s expanding global influence. Issues like technology restrictions, Taiwan policy and trade are fueling a more hawkish posture toward Beijing.
