Biden officials plan large purchases to replenish oil reserve

The Department of Energy announced Wednesday it will solicit bids to buy 60 million barrels of oil to help start to replenish the record release from the Strategic Petroleum Reserve (SPR) that President Biden approved earlier this spring to address high gas prices.

The bidding process will begin in the fall, with a goal of replenishing about one-third of the 180 million barrels released in response to the Russian invasion of Ukraine.

The department said in a statement that it has timed the buyback and subsequent delivery for when it projects oil prices to have dropped significantly. It did not offer details on when delivery will take place. 

“The U.S. Strategic Petroleum Reserve, the largest emergency supply in the world, is a valuable tool to protect the American economy and consumers from supply disruptions — whether caused by emergencies at home or petro-dictators weaponizing access to energy resources,” Energy Secretary Jennifer Granholm said in a statement.

“As we are thoughtful and methodical in the decision to drawdown from our emergency reserve, we must be similarly strategic in replenishing the supply so that it stands ready to deliver on its mission to provide relief when needed most,” she added. 

The department said it will take steps to loosen buyback regulations to allow competitive bidding rather than the usual index-pricing system used for SPR sales. The buyback is separate from revenue-raising SPR sales mandated by Congress, which the department predicted will total around 265 million barrels between fiscal 2023 and 2031. 

Biden in late March announced the biggest-ever release from the SPR — 180 million barrels over six months — to offset price spikes that began months before and were exacerbated by the war in Ukraine. Before that, the administration had announced smaller SPR releases of 30 million barrels in March and 50 million in November.

The administration has sought to focus the blame on the invasion for oil prices while also taking a series of actions to alleviate the price at the pump, such as the SPR release and a waiver that will allow normally prohibited sales of ethanol-heavy fuels.