Yahoo Finance Biden Pulls Back on Replenishing US Oil Reserves Amid Inflation — How Gas Prices Will Be Impacted
The Department of Energy (DOE) said it would not buy up to 3 million barrels of oil for delivery in August and September to a Strategic Petroleum Reserve (SPR) site in Louisiana as initially planned, as S&P Global reported.
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“Keeping the taxpayer’s interest at the forefront, we will not award for the Bayou Choctaw SPR site in August and September and will continue to solicit available capacity as market conditions allow,” a department spokesperson told S&P in an email on April 3. “As always, we monitor market dynamics to remain nimble and innovative in our successful replenishment approach to protect this critical national security asset.”
As USA Facts explained, the SPR is the world’s largest supply of emergency crude oil, contained in four federally owned sites along the Gulf Coast, and was founded in response to the 1973 oil embargo by some members of the Organization of Petroleum Exporting Countries.
Following Russia’s invasion of Ukraine, the Energy Department has been refilling the emergency oil supply after it reached a 40-year-low, as Bloomberg reported, adding that it currently holds about 363 million barrels, according to Energy Department data, down from almost 600 million at the start of 2022.
“The DOE has said it’s aiming to buy back oil for the SPR at $79 per barrel or below, less than the average of about $95 it received for the 2022 sales,” according to Moneywise. “However, amid increasing prices — currently hovering at around $85 per barrel — the DOE has decided to pull back on further purchases until market conditions improve.”
Indeed, when the DOE announced it would buy the 3 million barrels of oil for delivery to the SPR, it said it was “a continuation of DOE’s strategy of consistent solicitations aimed at purchasing oil when it can purchase at a good deal for taxpayers,” according to an announcement in March.
USA Facts, citing an analysis from the Department of the Treasury from July, reported that the release of oil from the SPR helped lower the price of gasoline in the U.S. by an estimated range of 13 to 31 cents per gallon. This report covers the period from March to July of 2022. This means that, without the release of crude oil from the SPR, gasoline prices could be anywhere between 13 to 31 cents higher per gallon, USA Facts added.
On April 9, the national average gas gallon cost increased to $3. 608 gallons, according to AAA.
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This article originally appeared on GOBankingRates.com: Biden Pulls Back on Replenishing US Oil Reserves Amid Inflation — How Gas Prices Will Be Impacted