U.S. To Buy 3 Million Barrels for The SPR, But There’s A Problem
By Alex Kimani - Oct 29, 2024, 2:00 PM CDT
The U.S. Department of Energy (DoE) is seeking to purchase 3 million barrels of crude oil for the Strategic Petroleum Reserve (SPR), the latest in a string of contracts aimed at refilling emergency inventories following a record release of 180 million barrels in 2022.
The DoE has since repurchased over 56 million barrels at an average price of around $76/barrel, considerably lower than its sale price of $95/barrel.
The DoE has also worked with Congress to cancel a previously planned sale of 140 million barrels of oil from the reserve, also counting toward the refilling of the stockpile.
However, this might be the last big purchase by the Biden administration, or even the next administration, with the funds allocated by Congress almost depleted.
Whereas it remains unclear exactly how much money the DoE has left in its fund to buy more oil, a department source said earlier in the month that it had only $150 million left, or about enough to buy a little over 2 million barrels at current oil prices.
The SPR had ~384.6 million barrels of crude oil as of October 18, the highest level since the end of 2022 but still well below the typical 600-700 million the SPR held when the country used to rely more heavily on oil imports.
The DoE has repeatedly reassured observers that it will continue with the exercise.
‘‘The DOE will continue to purchase crude at a good price for taxpayers with available emergency revenues," a department spokesperson said on Monday.
Not everyone is convinced it’s going to be a walk in the park going forward.
"Imminent depletion of the SPR petroleum account puts the onus on Capitol Hill for further replenishment, but politicization of the SPR could make it hard for lawmakers to agree," Kevin Book, a policy analyst at ClearView Energy Partners, a non-partisan research group, told Reuters. According to his estimates, "theoretically" there would still be some money left if the latest solicitation was fulfilled, but that it would not be much.