Washington’s Dilemma in Trying to Refill Petroleum Reserves After 220 Million Barrel Drawdown

News Analysis

Washington now faces a dilemma as it tries to restore the SPR after the Biden administration released 180million barrels of oil from its Strategic Petroleum Reserve (SPR). This was in an effort to control gasoline prices.

$17.3 billion was generated by the $17.3 billion proceeds from the 180 million barrels of crude oil released last year, at a price of $96 per barrel.https://www.theepochtimes.com/t-department-of-energy”>Department Energy According to an Analyse The Wall Street Journal. The department doesn’t have the funds to replenish the SPR. The $17.3 billion in funds was rescinded to make way for the new spending bill. The department is left with $4.8 billion.

Complicating matters is that the total drawdown of SPR in 2013 was not 180,000,000 barrels but 221.7 Million barrels. According to Data Source: DoE. The SPR contained 372.4 million barrels, the lowest level since 1979.

The agency previously stated that it would only make oil purchases when WTI crude oil prices are below $67-$72 per barrel.

Even if WTI oil is available at $70 per barrel for the DOE, $4.8 billion won’t buy 70 million barrels. This is 110 million fewer than the 180,000,000 barrels that will be released in 2022. The SPR will increase by 70 million barrels. This is the amount it had in 1984.

SPR Resupply

Last month, DoE announced that it would purchase as many as three million barrels oil to deliver to the SPR by February. The department decided to reject such bids.

“Following review of the initial submission, DOE will not be making any award selections for the February delivery window,” An agency spokesperson In a statement sent to Reuters

“DOE will only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers.”

WTI trades at $78 per barrel as of 10:27 AM. ET on Jan. 12. ET on Jan. 12.

WTI oil prices fell below $70 per barrel from October 2024 contracts as of Jan. 9, 2019, which is approximately 20 months away. To attract more bids to resupply SPR in near-term contracts the DoE will need to offer a lower purchase price.

SPR and China

Rep. Cathy McMorris Rodgers, R-Wash., has now introduced the legislation. “H.R. 22” bill aimed at preventing the misuse of SPR for China’s benefit.

The bill “prohibits the Department of Energy (DOE) from selling petroleum products (e.g., crude oil) from the SPR to any entity that is under the ownership, control, or influence of the Chinese Communist Party. Further, DOE must require as a condition of any sale of crude oil from the SPR that the oil not be exported to China.”

Jan. 12 Post Rodgers noted on Twitter that the bill will prevent the Biden government from “draining” America’s strategic petroleum reserves and selling oil to China—a country that now has the “world’s largest government-controlled stockpile” Oil.

Some of the SPR Emergency Sales from last year were sold to China-owned companies such as Unipec America. Unipec America is 100% owned by Chinese state-run Oil Firm Sinopec.

Naveen Atrappully is a reporter for The Epoch Times covering world and business events.