The White House on Tuesday signaled “additional significant” drawdowns from the U.S. Strategic Petroleum Reserve (SPR) beyond the 180 million barrels announced in March. But an expert says these drawdowns “failed to control oil prices.”
The final 15 million barrel tranche of the total 180 million barrel SPR drawdown is expected to be announced Wednesday, according to the White House.
“This sale will complete the historic, 180-million-barrel drawdown the President [Joe Biden] announced in the spring, which has helped to stabilize crude oil markets and reduce prices at the pump,” a White House fact sheet states.
Biden has also called on the Department of Energy (DOE) to be ready for “additional significant SPR sales this winter if needed due to Russian or other actions disrupting global markets.”
The SPR is at its lowest level since 1984, with around 400 million barrels remaining. At its peak, in 2010, there were over 726 million barrels.
On Wednesday, Biden will also announce that the U.S. government intends to repurchase crude oil to replace the depleted SPR inventory when prices are at or below $67 to $72 per barrel.
The White House said the DOE is finalizing a new rule to allow fixed-price contracts through a competitive bid process for oil delivered at a future date, which the Biden administration hopes will create certainty for the oil markets.
“This repurchase approach will protect taxpayers and help create certainty around future demand for crude oil. That will encourage firms to invest in production right now, helping to improve U.S. energy security and bring down energy prices that have been driven up by Putin’s war in Ukraine,” the White House fact sheet states.
Biden ‘Failed to Control Oil Prices’
The Biden administration is coming to grips with “the reality” that its SPR drawdowns “failed to control oil prices,” according to Phil Flynn, a senior account executive at The Price Futures Group and author of “The Energy Report.”