Biden administration to buy 3 million barrels of oil to replenish SPR

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The US Department of Energy announced Friday that it will purchase 3 million barrels of oil to replace withdrawals from the Strategic Petroleum Reserve (SPR) due to high energy prices.

The purchase, which follows a bidding process that began in October, was presented by the Joe Biden administration as an opportunity to buy the oil at a fixed price and repurchase it for less than the average of $96 per barrel it was sold for.

“Relative to conventional purchase contracts that expose producers to volatile crude prices, this new approach, when used at scale, can give producers the assurance to make investments today, knowing that the price they receive when they sell to the SPR will be locked in place,” the Energy Department said in a statement, The Hill reported.

“Today’s notice will pilot this new approach by starting with a purchase of up to 3 million barrels of crude oil,” it added.

Read next: SPR crude inventories hit their lowest since January 1984

Following the outbreak of the war in Ukraine earlier this year, the Biden administration withdrew a record 180 million barrels from the SPR. The administration announced a plan in May to solicit bids to buy back approximately one-third of the barrels withdrawn.

Energy Secretary Jennifer Granholm stated in the spring that the buyback would be timed to coincide with lower oil prices.

“As we are thoughtful and methodical in the decision to drawdown from our emergency reserve, we must be similarly strategic in replenishing the supply so that it stands ready to deliver on its mission to provide relief when needed most,” Granholm said in May.

The buyback to replenish withdrawals is distinct from the SPR sales mandated by Congress to raise revenue. The Energy Department expects to sell approximately 265 million barrels through these sales by fiscal 2031.

Republicans have indicated that the House Oversight and Reform Committee will investigate SPR releases under the new GOP majority next year, with 13 Republican committee members requesting documents related to the releases in October.