The Biden administration is unveiling new proposed rules for replacing the roughly 260 million barrels of oil that it plans to sell from the Strategic Petroleum Reserve to blunt high gasoline prices.
The administration does not expect to begin restocking the SPR, typically reserved for emergencies and national security purposes, for more than a year.
The Department of Energy wants to immediately begin making deals with oil companies to buy barrels at fixed prices but hold off on the purchases until after the next fiscal year, or Sept. 30, 2023.
Entering price agreements at a time when oil remains relatively high — around $100 per barrel — could mean taxpayers end up spending more than they otherwise would have if prices continue to drop.
Senior administration officials argued that this approach would “encourage greater near-term investment in supply but will not raise demand for barrels now or in the near future.”
Current regulations allow the administration to enter into contracts for future delivery but require that the price reflect market prices when the oil is delivered.
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The senior administration officials, who spoke with reporters but required anonymity, said a price fix would provide assurances to producers that a drop in future oil prices would not impact what the government pays. The more-than-a-year delay, they said, would avoid taking oil away from the market at a time when supply is limited.
The plan, which the Energy Department intends to officially propose later this week for a public comment period, is likely to frustrate critics who have accused the president of playing politics with the stockpile.
Republican lawmakers plan investigations into President Biden’s energy policies — including his handling of the SPR — if the party retakes control of either chamber after the midterm elections.
In March, Mr. Biden announced a record release of 1 million barrels of oil per day for six months from the SPR, or 180 million barrels total. It came in response to Russia’s war against Ukraine, which further exacerbated skyrocketing gasoline prices.
Paired with prior releases, the administration will have released 260 million barrels from the SPR into the market by the November elections. The SPR is anticipated to reach its lowest level since March 1984, prompting national security concerns from Republicans.
The Department of Energy previously announced that it would begin to repurchase the first 60 million barrels through a buyback bidding process by the end of October.
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Mr. Biden is also seeking credit for blunting high prices at the pump with the SPR releases. In a yet-to-be-released analysis, the Treasury Department has estimated that the price of gasoline would be 20 to 40 cents per gallon higher absent the releases.
While the national average for a gallon of regular gas has continued to drop for more than a month, the price remains historically high. The average Tuesday was $4.33 per gallon for regular gasoline, down 69 cents from its high of $5.02 last month but still $1.17 more than one year ago, according to AAA.
The senior administration officials said more details about the methodology of the analysis would come in the near future.