On Monday, the Biden administration announced yet another sale of oil from the Department of Energy’s Strategic Petroleum Reserve (SPR). The 26 million barrels of oil are scheduled to be delivered to the market between April 1 and June 30, which will cause the number of barrels in the reserve to dive to a new low, marking the lowest level since 1983.
The latest release is in response to a requirement included in two laws Congress enacted during the administration of Barack Obama under the Fixing America’s Surface Transportation (FAST) Act and Bipartisan Budget Act of 2015. The drawdown of the SPR is another significant withdrawal following the largest-ever announced by Biden in response to Russia’s war on Ukraine.
The most recent announcement comes before an expected seasonal uptick in fuel prices as the U.S. nears the summer driving season.
‘Biden is front-loading SPR barrels to avoid a summer gasoline price spike,” said analyst and Fox Business Network contributor Phil Flynn. “There are growing concerns among the Biden administration that gas prices are heading back to $4.00 a gallon, and the president is fearful of the political heat he will have to take.”
“By pushing barrels forward from previously announced sales, he is robbing Peter to pay Paul but is discouraging future U.S. oil and gas investment. There should be some backlash from Republicans who are getting tired of using the SPR for political purposes and creating short-term price relief in exchange for much higher prices down the road,” he added.
When the president took office in January 2021, the SPR held 638 million barrels out of the maximum capacity of 713 barrels, which Congress authorized. Following a series of releases totaling over 260 million barrels, the Strategic Petroleum Reserve is at around 371.6 million barrels as of this month — the lowest level since December 1983, according to data provided by the Energy Information Administration (EIA).
Selling an additional 26 million barrels from the SPR without adding any new barrels of oil to offset the withdrawals will take the SPR down to about 346 million barrels, equaling the lowest level since August 1983.
Lawmakers have used SPR sales to fund proposals
Lawmakers from both parties have used sales from the SPR to fund spending proposals — frequently through mandates that the deal will take place years in the future, as was the case with the most recent sale. Presidents have also often withdrawn from the SPR to provide short-term relief for high gas prices.
However, the significant decrease in the number of barrels in the SPR has made lawmakers question any further reductions. The omnibus spending bill passed by Congress in December canceled ordered sales of around 140 million barrels that were to happen in fiscal years 2024 through 2027.
The GOP House recently passed two bills putting conditions on any future sales from the SPR. The requirements include prohibiting selling SPR oil to the Chinese government or any companies under its control, as well as legislation requiring the development of a plant to make more federal land accessible for gas and oil leasing before any non-emergency drawdowns of the SPR. The first measure passed on a broadly bipartisan vote of 331-97, while the second moved forward along party lines after a 220-205 vote.
The Department of Energy (DOE) issued a statement announcing the sale stating, “The Administration is focusing on replenishing the SPR in a way that provides the best deal for taxpayers for aiming to repurchase crude at a lower price than it was sold for while providing certainty to the industry in a way that helps encourage near-term production.”
The DOE seeks to replenish the SPR over the long term through direct repurchases, exchanges, returns, and legislative solutions. However, nothing has been decided.