The Biden administration will release 15 million barrels of oil from the Strategic Petroleum Reserve in December in a bid to drive fuel prices down, senior Biden administration officials said on Tuesday, October 18.
The release will account for the last of the 180 million barrels President Joe Biden authorized the Energy Depart to disburse in March, leaving another 400 million barrels in the reserve, the officials said. The administration will also look into a possible new authorization to ship more barrels after that depending on market conditions.
One official said that the government “remains very able and very vigilant,” and “If we need to deal with additional challenges with supply, with affordability, we will have additional opportunity with the SPR if we need to do more sales into the future beyond December.”
The officials pushed back on questions about whether announcing the December move was redundant with March’s approval, saying that “it was not a given“ that they would have carried it out if the oil market had stabilized. The administration will also soon set up a process to purchase oil from companies to refill the SPR at a price of $67 to $72 a barrel, the officials said. That level is more than $10 below current benchmark prices.
The official said: “In terms of protecting taxpayer funding and being responsible stewards of the SPR, you want to sell when the prices are high and you want to buy when they’re low. And we wanted to put the marker out there at this point that we will buy when they’re low.”
The move comes as the administration has been meeting with oil company executives to negotiate ways to lower fuel prices ahead of the midterm elections in which inflation, partly driven by high energy prices, will be a key issue.
The administration is also considering another release that would be separate from the previously authorized one, though a decision hasn’t been made on whether to do so. One of the officials said: “It’s on the table, but they haven’t made a go or no-go decision.”
The administration also intends to announce plans to refill the reserve, two people familiar with the talks said. Details such as how much the administration would pay for the oil and when it would buy were still being worked out in one-on-one meetings with industry representatives.
Oil prices shot higher in the week beginning October 10, after the oil producing cartel OPEC and its allied countries announced they would cut their collective production by two million barrels a day.
Biden had promised a response to OPEC’s decision, though the administration’s options to lower fuel prices are limited. Prices had already come down from a recent high of $5.02 a gallon this summer but started to increase in September amid refinery outages in California and Ohio.
The Department of Energy has also raised the possibility of limiting fuel exports in a bid to force domestic gasoline prices lower, but the administration has in recent days toned down its rhetoric, according to two industry insiders.
Oil company executives and analysts have said the move could backfire as it might cause producers to slow their drills if they no longer have access to foreign markets, increasing domestic prices.
One of the people said: “The temperature appears to be coming down on the export control threat. They still haven’t taken it off the table but said it wouldn’t happen before the midterms.”
Officials at the White House and Department of Energy did not comment.
For more information visit www.energy.gov
