Purchase of 2.7 Million Barrels Advancing Efforts to Replenish Reserve at a Good Deal for American Taxpayers as DOE Maintains the SPR’s Operational Readiness and Protects the Nation’s Energy Security
WASHINGTON, D.C. — Today, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 2.7 million barrels of U.S.-produced crude oil for the Strategic Petroleum Reserve (SPR). These contracts to deliver crude oil in January follow the Request for Proposal (RFP) that was announced on November 6, 2023. The 2.7 million barrels are being purchased for an average price of $79 per barrel, well below the average of about $95 per barrel that SPR crude was sold for in 2022, securing a good deal for taxpayers.
Today’s announcement advances the President’s commitment to safeguard and replenish this critical energy security asset. This follows President Biden’s 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. Analysis from the Department of the Treasury indicates that SPR releases last year, along with coordinated releases from international partners, reduced gasoline prices by as much as 40 cents per gallon.
A total of 9 companies responded to the RFP, submitting 23 proposals, and the contracts were awarded to 4 companies. The crude oil will be delivered to the Big Hill SPR storage site from January 1, 2024, to January 31, 2024.
The Administration’s ongoing three-part replenishment strategy to get the best deal for taxpayers while increasing SPR stocks includes: (1) Direct purchases with revenues from emergency sales; (2) Exchange returns that include a premium of additional oil on top of volume delivered; and (3) Securing legislative solutions that avoid unnecessary sales unrelated to supply disruptions. DOE has already secured cancellation of 140 million barrels of congressionally mandated sales scheduled for Fiscal Years 2024 through 2027. These cancellations have resulted in significant progress toward replenishment.
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. Through scheduled maintenance periods and the Life Extension 2 program, DOE continues to prioritize the operational integrity of the SPR to ensure that it can continue to meet its mission as a critical energy security asset. The SPR has a long history of protecting the economy and American livelihoods in times of emergency oil shortages.