President Joe Biden on Wednesday will announce the sale of an additional 15 million barrels from the Strategic Petroleum Reserve in December, a senior administration official said, as his administration seeks to counter market pressure created by OPEC+’s decision to extend oil production targets to just three weeks to cut back from the midterm elections.
The announcement of the sale is the latest step in the White House’s unprecedented plan to balance global markets and curb soaring gas prices. It marks an extension of the six-month program meant to provide a bridge for domestic producers to ramp up their own production as the global market convulsed after Russia’s invasion of Ukraine, though the release from earmarked casks stands in its March announcement .
This promotion, introduced to regular sales in recent months, along with global economic concerns, helped push gas prices down for nearly three straight months.
“The price of gas is still too high and we need to keep working to bring it down,” Biden said at an event in Los Angeles last week, adding he plans to announce more measures in the coming days.
The proposed measure would come in line with the government’s March announcement that it would release a historic 180 million barrels from the SPR over a period of six months to counter rising energy prices sparked by Russia’s invasion of Ukraine. The promotion, which rolled out to regular sales in recent months, along with global economic concerns, helped push gas prices lower for nearly three straight months.
Biden has also made it clear to his advisors that he is willing to approve future releases if conditions warrant in order to balance the market. The president, the official said, has directed his energy and economics teams to be prepared to approve “significant additional sales in the coming months” if global market conditions warrant.
The president will also on Wednesday outline the government’s plan to replenish the emergency reserve fund, which is now at its lowest level in nearly 40 years, sending an important signal to market participants given the scale of federal action over the past six months.
Biden will announce that the government intends to buy back crude for emergency reserve if prices are at or below $67-$72 a barrel.
“We believe this is an important signal to producers that the SPR will help moderate and stabilize price movements – not only when prices rise, but also when prices fall,” the official said.
As part of this, the government will also finalize a rule that will allow the US government to enter into fixed-price contracts with suppliers through a competitive bidding process, which will facilitate future crude oil buybacks.
The plan also serves to counter any criticism of the unprecedented scale of Biden’s reserve releases, which officials say underscore the administration’s intention to top up when market conditions make it most beneficial.
“This government is very committed – and we will reiterate that commitment – to replenishing the SPR,” the official said. “We consider the SPR to be an incredibly important national security asset and want to ensure it continues to serve its purpose well into the future.”
The official noted that the reserve is still the largest in the world at around 400 million barrels and that the US remains capable of dealing with any crisis or challenge that would require its deployment.
“It’s important to understand and emphasize that 400 million barrels is a lot of barrels,” the official said.
US officials strategically slowed the volume of sales as the six-month program neared its deadline to ease market transition pending the OPEC+ decision, prompting furious opposition from US officials and an intense effort within the government to create options counteract any resulting increase in gas prices.
That included additional releases from the reserve, and officials have been closely monitoring Biden’s ability to trigger new releases under the original program as Election Day approaches.
This headline and story were updated Tuesday with additional developments.