Biden Releases 50M Barrels of Oil from Strategic Reserve Without Simultaneous Mea Culpa
Announcement is in parallel with other major energy consuming nations, including China, India, Japan, Republic of Korea, and the United Kingdom
Washington DC November 23, 202!; Over the last 18 months, the COVID-19 pandemic forced an unprecedented global economic shutdown. As the world is re-opening from a near economic standstill, countries across the globe are grappling with the challenges that arise as consumer demand for goods outpaces supply. But here in the United States, the economic recovery is stronger and faster than anywhere else in the world – according to the Organization for Economic Co-operation and Development, the US is the only one of the major economies to have returned to pre-pandemic gross domestic product levels – in large part due to President Biden’s American Rescue Plan, which funded and facilitated a nationwide vaccination program, provided resources to schools and small businesses to keep them open in the face of COVID waves and put money in the pockets of those hit hardest by the pandemic. As a result of the strong recovery in the United States, Americans have nearly $100 more per month in disposable income in their pockets this year, even as COVID has continued to complicate the economic recovery around the world.
Even so, American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills, and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic. That’s why President Biden is using every tool available to him to work to lower prices and address the lack of supply.
Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.
The President has been working with countries across the world to address the lack of supply as the world exits the pandemic. And, as a result of President Biden’s leadership and our diplomatic efforts, this release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent.
The U.S. Department of Energy will make available releases of 50 million barrels from the Strategic Petroleum Reserve in two ways:
- 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the Strategic Petroleum Reserve in the years ahead. The exchange is a tool matched to today’s specific economic environment, where markets expect future oil prices to be lower than they are today, and helps provide relief to Americans immediately and bridge to that period of expected lower oil prices. The exchange also automatically provides for re-stocking of the Strategic Petroleum Reserve over time to meet future needs.
- 18 million barrels will be an acceleration into the next several months of a sale of oil that Congress had previously authorized.
The President stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic.
Even as the President is helping to lead the world in addressing oil supply imbalances, he is also focused on how consolidation in the oil and gas sector may be resulting in anti-competitive practices that keep American consumers from benefitting when oil prices fall. There is mounting evidence that declines in oil prices are not translating into lower prices at the pump. Last week, the President asked the Federal Trade Commission to examine what is going on in oil and gas markets and to consider “whether illegal conduct is costing families at the pump.”
Today’s announcement reflects the President’s commitment to do everything in his power to bring down costs for the American people and continue our strong economic recovery. At the same time, the Administration remains committed to the President’s ambitious clean energy goals, as reflected in the historic Bipartisan Infrastructure Law signed last week and the House-passed Build Back Better Act that together represent the largest investment in combatting climate change in American history and is a critical step towards reaching a net-zero emissions economy by 2050 and reducing our dependence on foreign fossil fuels.
WASHINGTON, D.C.: At the direction of President Biden, U.S. Secretary of Energy Jennifer M. Granholm authorized that 50 million barrels of crude oil from the U.S. Department of Energy’s (DOE) Strategic Petroleum Reserve (SPR) be made available. As the global economy recovers from the pandemic, oil supply has failed to increase at a pace necessary to meet demand. Today’s decision is in response to the highest oil prices experienced in seven years and aims to ensure adequate supply as we exit the pandemic. For the first time, as the result of the President’s leadership, today’s announcement is in parallel with other major energy consuming nations including China, India, Japan, South Korea, and the United Kingdom.
“As we come out of an unprecedented global economic shutdown, oil supply has not kept up with demand, forcing working families and businesses to pay the price,” said Secretary Granholm. “This action underscores the President’s commitment to using the tools available to bring down costs for working families and to continue our economic recovery.”
The exchange will be conducted with crude oil from all four SPR storage sites (maximum amount from each site listed):
- Approximately 10 million barrels from Big Hill, TX
- Approximately 10 million barrels from Bryan Mound, TX
- Approximately 7 million barrels from West Hackberry, LA
- Approximately 5 million barrels from Bayou Choctaw, LA
Companies interested in receiving crude oil through the exchange must submit bids no later than 10:00 a.m. Central Time, December 6, 2021, and contracts will be awarded to successful offerors no later than December 14, 2021. Deliveries will take place January through April 2022, with early deliveries accepted in late December.
Exchange crude oil will be returned to the SPR in calendar years 2022, 2023, and 2024. A Notice of Sale for up to 18 million barrels of SPR crude oil will be announced no sooner than December 17, 2021.
The SPR is the world's largest supply of emergency crude oil, and the federally owned oil stocks are stored in underground salt caverns at four storage sites in Texas and Louisiana. It is a critical tool that has a long history of protecting the economy and American livelihoods in times of economic challenge.
In response to today’s announcement, the DOE will make available up to 32 million barrels of SPR crude oil available through an exchange and accelerate the timeline for a sale of an additional 18 million barrels mandated by Congress in Section 30204 of the Bipartisan Budget Act of 2018 (Public Law 115-123).
An exchange is a mechanism specifically suited to the current economic environment, where markets expect future oil prices to be lower than they are today. The exchange creates a bridge from today’s high price environment to a period of lower prices, and automatically provides for restocking the SPR over time. Companies that receive SPR crude oil through the exchange agree to return the amount of crude oil received, as well as an additional amount that depends on how long they hold the oil.
Any company registered in the SPR’s Crude Oil Sales Offer Program is eligible to participate in the exchange and/or the upcoming Congressionally mandated sale. Other interested companies may register through the SPR website’s