DOE to purchase 3M oil barrels for strategic reserves.

The U.S. Department of Energy Plans to Replenish Strategic Petroleum Reserve

The U.S. Department of Energy (DOE) has announced its plan to replenish the country’s Strategic Petroleum Reserve (SPR), which has reached multi-decade-low levels. This move comes after the DOE’s Request for Proposal (pdf) issued on May 15, seeking to purchase up to three million barrels of sour crude oil produced in the United States.

Lowest SPR Level Since the 1980s

As of the week ending May 5, the SPR stood at just 362 million barrels, a decline of 43 percent from when Biden assumed office. This is the lowest SPR level since the 1980s. Since 2000, the SPR has usually remained above 600 million barrels.

Biden Administration’s Three-Part Replenishment Plan

The DOE’s three million barrels of oil purchase is part of the Biden administration’s “three-part replenishment plan,” which includes:

• Direct purchases with revenues from emergency sales
• Exchange returns that include a premium to volume delivered
• Securing legislative solutions that avoid unnecessary sales unrelated to supply disruptions so as to strategically maintain volume

The DOE claims that it is aiming to repurchase crude at a lower price than the average of roughly $95 per barrel the SPR reserves were sold in 2022.

Cancellation of Congressionally Mandated Sales

The department has also secured the cancellation of 140 million barrels of oil per congressionally mandated sales scheduled for fiscal years 2024 through 2027. “This cancellation has already led to significant progress toward replenishment and will allow the SPR to have the same number of barrels in reserve by the end of FY 2027 that it would have had emergency barrels not been sold in 2022,” the DOE said.

DOE Mismanagement of SPR

On May 8, House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) and Senate Energy and Natural Resources Committee Ranking Member John Barrasso (R-Wyo.) sent a letter (pdf) to the Government Accountability Office (GAO) asking that the agency evaluate the DOE’s management of the SPR.

Overall, the DOE’s plan to replenish the SPR is a step in the right direction to ensure the country’s energy security and stability.