Biden Administration Buys 6 Million Barrels of Oil to Replenish Reserves as Prices Dip

Biden Administration to Replenish Strategic Petroleum Reserve Amid Falling Prices

The Biden administration has announced plans to purchase an additional 6 million barrels of oil for the nation’s Strategic Petroleum Reserve (SPR) in an effort to replenish depleted stocks. This comes as oil prices dip, providing an opportunity for the Department of Energy (DOE) to make cost-effective purchases. The DOE has issued two solicitations—one for 1.5 million barrels for September delivery and the other for 4.5 million barrels for October, November, and December.

The deliveries will be made to the Bayou Choctaw site, located near Baton Rouge, Louisiana. The agency aims to make these purchases at $79 per barrel or less. This strategic move is part of the Biden administration’s strategy to maintain a sufficient oil reserve while taking advantage of favorable market conditions.

In 2022, the Biden administration made headlines by selling 180 million barrels of oil from the SPR over six months in an attempt to lower gasoline prices. The average price received for these sales was around $95 per barrel, and it was estimated that gas prices were reduced by up to 40 cents per gallon as a result. However, this move was met with mixed reactions.

Some praised it as a bold step to address soaring inflation, while others accused President Biden of using the SPR for political gain ahead of the 2022 midterm elections. Nevertheless, in October 2022, President Biden announced a plan to refill the depleted stockpile in the coming years. He aimed to replenish oil reserve stocks when U.S. crude prices were around $70 per barrel.

The SPR currently holds around 347.2 million barrels, which is a multi-decade low. In 2009, the stockpile reached its highest-ever level at 726.6 million barrels. The recent sales commitments have significantly reduced the reserve, which originally held around 588 million barrels at the beginning of 2022.

To address national security concerns surrounding the SPR, a bipartisan Senate initiative in March sought to strengthen the ban on selling crude from the reserve to China and other foreign adversaries. This concern arose when President Biden announced the historic sales in 2022, including selling 1 million barrels to UNIPEC America, a Houston-based arm of China’s Sinopec.

In response, a U.S. funding bill signed by President Biden in March 2024 blocked Chinese companies from buying oil from the SPR, with the exception of crude that is not exported to China. Sens. Joni Ernst and John Fetterman introduced a bill to further restrict SPR sales to China, Russia, Iran, Venezuela, Syria, and Cuba. The bill also aims to prevent sales to entities owned or influenced by the Chinese Communist Party (CCP).

These initiatives highlight the importance of energy security as a national security issue. It is crucial to safeguard the strategic supply of oil from benefiting potential adversaries. The proposed bill seeks to prioritize national security by ensuring that the SPR does not fall into the hands of those seeking to harm the United States.

The Banning Oil Exports to Foreign Adversaries Act has received overwhelming bipartisan support and was introduced in the Senate on March 21. It is currently under review by the Committee on Energy and Natural Resources.