The Biden administration announced plans Thursday to refill the Strategic Petroleum Reserve (SPR) two years after Democrats blocked the Trump administration’s similar, but cheaper proposal.
The Department of Energy (DOE) said it would initiate a long-term SPR replenishment plan involving a purchase of 60 million barrels of oil that would likely occur in 2023, according to the announcement. President Joe Biden has ordered a 50-million-barrel SPR release in November, a 30-million-barrel release on March 1 and a 180-million-barrel release on March 31 to combat rising gasoline prices.
The SPR, designed to store 714 million barrels of crude for emergencies, is currently at less than 600 million barrels, its lowest level since 2002, according to the Energy Information Administration. A release of 180 million barrels is expected to take the stockpile to about 400 million barrels, its lowest level since the 1980s, by the end of the year.
“As we are thoughtful and methodical in the decision to drawdown from our emergency reserve, we must be similarly strategic in replenishing the supply,” Energy Secretary Jennifer Granholm said in a statement Thursday.
However, Democrats proudly rejected an effort from former President Donald Trump in March 2020 — when the WTI benchmark declined to just $14.10 per barrel — to buy 77 million barrels of oil for $3 billion to replenish the SPR. On March 25, the Trump administration canceled the plan after its required funds weren’t appropriated in the 2020 coronavirus stimulus package.
“Given the current uncertainty related to adequate Congressional Appropriations for crude oil purchases associated with the March 19, 2020 solicitation, the Department is withdrawing the solicitation,” the DOE said at the time. “Should funding become secure for the planned purchases, the Department will reissue the solicitation.”
On the same day that the DOE canceled the replenishment plan, New York Sen. Chuck Schumer, the top Democrat in the Senate, said that he had successfully removed the “$3 billion bailout for big oil” from the legislation.
But global oil prices have remained far above historic levels amid the ongoing Ukraine crisis which has disrupted energy and commodity markets. The global Brent oil benchmark increased 1.03% to $112.20 a barrel while the U.S. WTI benchmark spiked 0.86% to $109.53 per barrel on Friday.
While the DOE said Thursday that the purchase of 60 million barrels of oil would take place when oil prices are expected to be “significantly” lower, experts noted that it is virtually impossible to project future market fluctuations.
“To be clear: the SPR needs re-filling, and today’s statement in part reassures Washington plans to do so,” Javier Blas, an energy and commodities columnist for Bloomberg, tweeted. “But to pretend the DoE can anticipate future oil prices and demand, particularly over a one-year-plus horizon is quite far-fetched.”
If prices remain at current levels, the 60-million-barrel purchase ordered by the Biden administration Thursday could cost taxpayers more than $6.5 billion.
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