Biden administration buys nearly 5 million barrels of oil to replenish Strategic Petroleum Reserve

(Bloomberg) — The Biden administration wants more money to purchase oil as it seeks to expand its efforts to refill the depleted U.S. emergency cache.

The Energy Department has been slowly replenishing the Strategic Petroleum Reserve, which reached a four-decade low following an unprecedented drawdown in the wake of Russia’s invasion of Ukraine. Two years ago, the Biden administration ordered the release of a record 180 million barrels from the emergency oil supply in the face of surging retail gasoline costs. 

Since then, the administration has purchased some 43.25 million barrels of oil to help replenish the emergency cache, including 4.65 million barrels announced Monday. 

But the administration only has about $1.2 billion left in the account it maintains to purchase oil for the reserve, Deputy Energy Secretary David Turk said in an interview. That’s roughly enough for 15 million more barrels. 

“We would like to, of course, do more than that,” Turk said. “But we do need additional funds to buy back even more and we’re in continuing contact with Congress to make sure that everyone is doing their part there.” 

Turk declined to give a dollar figure being sought for additional crude oil purchases. 

In addition, Turk said the Energy Department was asking Congress to cancel additional reserve sales it has mandated, a strategy successfully employed by the administration to halt some 140 million barrels in sales that Congress had scheduled through fiscal year 2027 as a means of funding unrelated legislative initiatives. An additional 100 million barrels in sales remain on the books, Turk noted. 

“We’ll be working with Congress to get more of those removed,” Turk said. 

New appropriations by Congress for additional oil purchases “seem unlikely with today’s Congress and today’s market balances,” Kevin Book, managing director of ClearView Energy Partners, said in an email, though he noted that the situation can change. 

While it’s possible lawmakers may have more of an appetite to cancel required reserve sales, deficit hawks in Congress would probably want offsets to make up for forgone revenues, a potential complication, Book said. 

Turk’s remarks come as the administration is seeks to take advantage of a dip in crude prices, which have fallen about 10% since early April and below the White House’s stated buying range of $79 a barrel and below. 

The Energy Department has been refilling the reserve at an average purchase price was $77 a barrel, it said on Monday. In addition, the agency said it has accelerated the return of 5.5 million barrels it loaned to oil companies. 

Exxon Mobil and Macquarie were awarded the contracts announced on Monday. The oil will be delivered to the reserve’s Bayou Choctaw storage site from October 1 through December 31, the Energy Department said. 

The reserve currently holds 375 million barrels of oil, according to Energy Department data. It held approximately 600 million barrels at the start of 2022. 

“We will keep buying back,” Turk in the interview. “We will keeping going into next year and try to buy back as much as we are capable of buying back.”