Biden Administration Makes Final Purchase for Strategic Petroleum Reserve

The U.S. Energy Department on Nov. 8 announced that 200 million barrels of crude oil have been delivered or contracted at an average price of $74.75 per barrel with the conclusion of the latest solicitation to procure 2.4 million crude oil barrels for the Strategic Petroleum Reserve, or SPR.

The Biden administration’s aggressive buyback strategy has led to the procurement of 20 million barrels in excess of the 180 million barrels sold under the emergency declaration approved by the administration during 2022, following the Russian invasion of Ukraine. The department at various points of the year has encouraged the refill of SPR stocks at a favourable price for taxpayers. The SPR is the world’s largest supply of reserve crude oil. The federally owned oil stocks are deposited in underground salt caverns at four sites across Texas and Louisiana. SPR releases in 2022, along with coordinated releases from international partners, lowered gasoline prices by up to 40 cents per gallon, according to an analysis from the U.S. Treasury Department.

As it stands, the department has directly procured 59 million oil barrels for the SPR at an average price of under $76 per barrel. The direct purchase average price is around $20 per barrel less than the average sale price of $95 per barrel during 2022’s emergency sales. Moreover, the department procured 140 million barrels by liaising with the Congress to call off mandated sales between fiscal year 2024 and 2026, at around $74 per barrel. Combined, this equates to around 200 million barrels which have been procured or retained in the SPR since 2022.

Emergency revenue made from the 2022 sale equating to $16.95 billion was utilized to procure these barrels, except $2.05 billion that was used by Congress for deficit offset. The department fast-tracked the purchase of around five million barrels in exchange returns, to further enhance the SPR replenishment.

The Biden administration’s effective three-part refill strategy planned to get the best price for taxpayers while increasing SPR stocks. The strategy incorporated direct procurement with proceeds from emergency sales, exchange returns that contain a premium of oil above the volume delivered, and securing legislative resolutions that evade unnecessary sales that are not related to supply disruptions.