Biden revives bid to refill US oil reserve with 6M-barrel purchase

Investing.com - President Joe Biden has revived his bid to refill the heavily-drawn US oil reserve, with the Department of Energy announcing two separate offers of crude purchases on Thursday totaling 6 million barrels, to be delivered between December this year and January 2024.

The last time the Biden administration announced purchase intentions for the Strategic Petroleum Reserve, or SPR, was in July. 

“The Department of Energy, Strategic Petroleum Reserve Project Management Office has a requirement to conduct a purchase of approximately three (3) million barrels of United States produced sour crude oil for December 2023 delivery,” said of the two offer documents circulated on Thursday. The other document  was identically worded, except for the delivery period, which was stated as January 2024.

According to the documents, those responding to its purchase offer for December must submit their responses by October 24. For the January purchase, responses must be received by November 1.

“The Government contemplates (the) award of a firm-fixed-priced contract resulting from this,” the documents said. “The Government intends to evaluate proposals without discussions with Offerors (except clarifications). Therefore, the Offeror’s initial proposal should contain its best terms from a price and technical standpoint.”

The Biden administration leaned heavily on the SPR between late 2021 and early this year to offset tight crude supplies that had raised fuel costs for Americans. 

The SPR's crude balance has fallen to around 40-year lows after the release of some 200 million barrels by the administration.

Biden’s use of the SPR has been a highly-charged matter for oil bulls as well as his political opponents. Both accuse the president of indiscriminately releasing hundreds of millions of barrels from the stockpile to subdue crude prices and shore up his political standing with American voters — when the reserve is meant for emergency use, in times of critically short oil supply. 

Last year’s releases came ahead of the midterm election where Democrats aligned with the president regained control of the Senate while conceding the House, or Congress. Both Biden and the Democrats are up for reelection in November 2024.

Biden, in his defense, had said he was only acting to reduce record high pump prices of gasoline, which stood at above $5 per gallon last June and hovering since at around $3.50. The administration had also blamed last year’s high crude oil prices for US inflation getting to four-decade highs of above 9% in June 2020.