The Department of Energy will purchase 3 million barrels of oil to replace withdrawals from the Strategic Petroleum Reserve (SPR) amid high energy prices, it announced Friday.
The Biden administration presented the purchase, which follows a bidding process that began in October, as an opportunity to buy the oil at a fixed price and repurchase it for less than the average of $96 per barrel it sold for.
“Relative to conventional purchase contracts that expose producers to volatile crude prices, this new approach, when used at scale, can give producers the assurance to make investments today, knowing that the price they receive when they sell to the SPR will be locked in place,” the Energy Department said in a statement. “Today’s notice will pilot this new approach by starting with a purchase of up to 3 million barrels of crude oil.”
After oil prices soared earlier this year following Russia’s invasion of Ukraine, the Biden administration withdrew a record 180 million barrels from the SPR. The administration announced a plan in May to solicit bids to buy back about one-third of the barrels withdrawn.
Energy Secretary Jennifer Granholm said in the spring that the buyback process would be timed to decreased oil prices.
“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,” Granholm said in May.
The buyback to replenish the withdrawals is distinct from congressionally required SPR sales to raise revenues. The Energy Department has projected it will sell around 265 million barrels through those sales by fiscal 2031.
Republicans have signaled the House Oversight and Reform Committee will scrutinize the SPR releases under the new GOP majority next year, with 13 Republican committee members in October requesting documents relating to the releases.