This purchase is in continuation of the Biden-Harris Administration’s replenishment plan and is the third solicitation that DOE has issued this year to repurchase oil for the SPR
DOE announces plans to purchase another 6 million barrels of oil for strategic petroleum reserve replenishment. (Credit: Harry Stilianou from Pixabay)
Today, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that it plans to purchase about 6 million barrels of oil for the Strategic Petroleum Reserve (SPR), with receipts scheduled for October and November 2023. This purchase is in continuation of the Biden-Harris Administration’s replenishment plan and is the third solicitation that DOE has issued this year to repurchase oil for the SPR. DOE will pursue additional repurchase opportunities as market conditions allow. Today’s solicitation is for crude oil for delivery to the Big Hill SPR site. Bids for this solicitation must be received by DOE no later than 10:00 a.m. Central Time on July 19, 2023.
Today’s announcement advances the President’s replenishment strategy following his historic release from the SPR to address the significant global supply disruption caused by Putin’s war on Ukraine. Analysis from the Department of the Treasury indicates that SPR releases last year, along with coordinated releases from international partners, reduced gasoline prices by up to roughly 40 cents per gallon compared to what they would have been absent these drawdowns.
The Administration’s replenishment strategy has secured a good deal for the American taxpayer. During the first two solicitations, for a total of 6.3 million barrels, the average price paid was $72.67 per barrel – much lower than the average of about $95 per barrel that SPR crude was sold for in 2022.
The Administration’s ongoing three-part replenishment strategy includes: (1) Direct purchases with revenues from emergency sales; (2) Exchange returns that include a premium to volume delivered; and (3) Securing legislative solutions that avoid unnecessary sales unrelated to supply disruptions. DOE has already secured cancellation of 140 million barrels in congressionally mandated sales scheduled for Fiscal Years 2024 through 2027. This cancellation has led to significant progress toward replenishment.
The SPR continues to be the world’s largest supply of emergency crude oil, and the federally owned oil stocks are stored in underground salt caverns at four sites in Texas and Louisiana. Through scheduled maintenance periods and the Life Extension 2 program, DOE continues to prioritize the operational integrity of the SPR to ensure that the SPR can continue to meet its mission as a critical energy security asset. The SPR has a long history of protecting the economy and American livelihoods in times of emergency oil shortages.
Source: Company Press Release