The U.S. Department of Energy announced it purchased six million barrels of crude oil for the Strategic Petroleum Reserve (SPR) to protect the nation's energy security.
The contracts were awarded on Sept. 27 for the monthly delivery of 1.5 million barrels of sour crude, which is the oil that a lot of U.S. refineries process. The deliveries will be made from February 2025 to May 2025 to the Bayou Choctaw site.
The government has purchased more than 56 million barrels for the reserve over recent months. The average purchase price was $76 per barrel, which is $19 lower than the 2022 sales price of $95.
The effort is to replenish the stockpiles after President Joe Biden sold 180 million barrels from the reserve in 2022 to lower gas prices in the wake of the Russian invasion of Ukraine.
"This follows the historic release from the SPR to address the significant global supply disruption caused by Putin's war on Ukraine and help keep the domestic market well supplied, ultimately helping to bring down prices for American consumers and businesses," the department's press release stated.
The replenishment strategy is divided into three parts. The first is to purchase with revenues from emergency sales. The second is to exchange returns, and the third is to secure legislative solutions that will avoid unnecessary sales, Reuters reported.
The U.S. purchased 3.5 million barrels from Exxon Mobil, 2 million from Shell Trading Company and 500,000 from Macquarie Commodities. The department says it awarded the contracts to the most competitive bids, which met its requirements in terms of quality and specifications.
Analysis from the Department of the Treasury indicates that SPR releases in 2022, along with coordinated releases from international partners, reduced gasoline prices by as much as 40 cents per gallon.
According to the DOE, it has already secured the cancellation of the scheduled sale by Congress of 140 million barrels for 2024 to 2027. It also explained the importance of the SPR to the country in its latest statement.
"The SPR continues to be the world's largest supply of emergency crude oil. The federally owned oil stocks are stored in underground salt caverns at four sites in Texas and Louisiana," it stated.
DOE also highlighted how it prioritizes the "operational integrity" of the SPR to ensure that it will continue to meet its purpose of being a "critical energy security asset."
"The SPR has a long history of protecting the economy and American livelihoods in times of emergency oil shortages," said the department.
