US ramps up oil reserve refill with new 6 mln barrel crude purchase
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Oil futures trading on Monday showed benchmark US West Texas Intermediate crude for September delivery hovering just around $79.50 per barrel.
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Crude oil pipes at the Bryan Mound site near Freeport, Texas ( Undated, US Department of Energy via Associated Press)
The Biden administration is not giving up on its efforts to replenish the dangerously depleted US Strategic Petroleum Reserve (SPR), announcing plans on Monday to purchase an additional six million barrels while market crude oil prices remain below the $80-per-barrel threshold it has set for purchasing.
The Department of Energy (DoE), relying on the administration's permission, has already purchased around 43 million barrels to refill the SPR during the last two years, including a 3.5-million-barrel acquisition announced last week.
Both that and the next procurement will be delivered to the SPR's Bryan Mound site in Freeport, Texas, which has undergone considerable modifications to accept oil that the department has previously routed to the SPR's Bayou Choctaw location in Iberville Parish, Louisiana.
The Department of Energy "has a requirement to conduct a purchase of approximately six million barrels of United States-produced sour crude oil for January, February, and March 2025 delivery to Bryan Mound at a price no higher than $79.99 per barrel," according to a statement posted on the SPR's website.
Oil futures trading on Monday showed benchmark US West Texas Intermediate crude for September delivery hovering just around $79.50 per barrel.
The SPR had experienced an outflow of more than 200 million barrels of oil under the Biden-Harris administration, which took office in January 2021. The administration had depended significantly on the reserve to counter oil supply shortages, which resulted in high fuel costs.
President Joe Biden's use of the SPR was condemned by his opponents, who accused him of using the reserve as a political instrument to lower petrol costs to improve his popularity among American voters. They argue that the reserve was established to meet emergency demands and ensure the availability of oil during times of catastrophic shortage.
Biden, who has favored sustainable energy resources above fossil fuels like oil, stated that he utilized the SPR exactly at times of need, when gasoline pump prices reached record highs of more than $5 per gallon, spiking inflation.
Oil released from the SPR has kept gasoline prices below $3.50 per gallon for most of the last two years.
US Vice President Kamala Harris has also vowed to be more friendly to the fossil fuel business in order to lower expenses for Americans.
The DoE acquired 43 million barrels for the SPR for an average price of $77 per barrel, compared to $95 per barrel sold in 2022, citing a "good deal for taxpayers."
