Energy Department Scraps Oil Purchase Plans for Strategic Reserve as Prices Surge – American Faith

The Biden administration has decided to forego its recent plans to procure oil for the Strategic Petroleum Reserve as crude prices continue to climb.

The Energy Department cited its commitment to “keeping the taxpayer’s interest at the forefront” in its announcement not to proceed with the purchase of up to 3 million barrels of oil for a Strategic Petroleum Reserve site in Louisiana. Initially disclosed in mid-March, the plan aimed to have the barrels delivered in August and September.

“We will not award the current solicitations for the Bayou Choctaw SPR site and will solicit available capacity as market conditions allow,” the department stated. “We will continue to monitor market dynamics.”

This decision comes in response to a surge in crude prices, with the U.S. benchmark West Texas Intermediate surpassing $85 a barrel on April 2 for the first time since October. While the Biden administration’s target for purchasing oil for the reserve is $79 or lower, it spent an average of about $81 a barrel in its most recent purchase of 2.8 million barrels late last month.

The Energy Department has been gradually replenishing the emergency oil supply following a record drawdown of 180 million barrels in the aftermath of Russia’s invasion of Ukraine, which had depleted the reserve to its lowest level in 40 years. According to Energy Department data, the reserve currently holds approximately 363 million barrels, down from nearly 600 million at the beginning of 2022.

“Domestic crude prices are likely to remain too high for the remainder of the year for DOE to resume its refilling program,” stated Bob McNally, president of consultant Rapidan Energy Group and a former adviser to President George W. Bush. “If pump prices keep rising, the Biden administration will shift gears and reconsider SPR releases, though we currently do not think they are imminent.”

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