Biden Revives Effort to Replenish US Oil Reserve with 6 Million-Barrel Purchase
President Biden Reboots Effort to Replenish US Oil Reserve
President Joe Biden has announced plans to refill the depleted US oil reserve. The Department of Energy has revealed two separate offers to purchase a total of 6 million barrels of crude oil. The deliveries are scheduled between December of this year and January 2024.
Previous Purchase Announcement for Strategic Petroleum Reserve (SPR)
This is the first time since July that the Biden administration has expressed intentions to purchase oil for the Strategic Petroleum Reserve (SPR).
Details of the Purchase Offers
The Department of Energy’s offer documents state that they require approximately 3 million barrels of sour crude oil for delivery in December 2023. The other document is identical except for the delivery period, which is specified as January 2024.
Interested parties must submit their responses by October 24 for the December purchase, and by November 1 for the January purchase.
The government plans to evaluate proposals without discussions, except for clarifications. Therefore, offerors should present their best terms in terms of price and technical aspects.
Background on SPR Usage
The Biden administration previously relied heavily on the SPR to alleviate tight crude supplies and mitigate rising fuel costs for Americans. As a result, the crude balance of the SPR has dropped to its lowest level in 40 years, with approximately 200 million barrels released by the administration.
Controversy Surrounding Biden’s Use of the SPR
Biden’s use of the SPR has sparked controversy among oil bulls and his political opponents. Critics argue that he released large quantities of oil from the stockpile to manipulate crude prices and gain political favor. The SPR is intended for emergency use during times of severe oil shortages.
These releases coincided with the midterm elections, where Democrats aligned with Biden regained control of the Senate but conceded the House. Both Biden and the Democrats are facing re-election in November 2024.
Biden defended his actions, stating that he aimed to reduce record-high pump prices, which reached over $5 per gallon last June and have remained around $3.50. The administration also attributed high crude oil prices to the soaring US inflation rate, which exceeded 9% in June 2020.
