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The Biden Administration has announced that it is releasing the next Notice of Sale for crude oil from the nation’s Strategic Petroleum Reserve (SPR) for 20 million barrels.
As part of the Tuesday announcement, the White House cited a “new analysis” from the Department of Treasure that estimates that the previous SPR releases that the White House pegs at 125 million barrels—along with the releases of crude oil from foreign partners as well—has reduced gasoline prices by “up to about 40 cents per gallon”. Not compared to what they were, but “compared to what they would have been absent these drawdowns.”
The Biden Administration also announced steps to repurchase oil for the SPR “in future years, likely after FY2023” to help encourage more nearterm supply.
The 125 million barrels that the White House cited in the press release includes 70 million barrels that have made their way to buyers already. The rest are “planned to be delivered to customers in the weeks and months to come.”
The press release stressed the impact the SPR releases have had so far, in response “to the energy market disruptions posed by Russia’s invasion,” referring to the “Putin price hike.”
Today’s announcement is for the fifth sale that President Biden has authorized from the SPR. The announcement included a proposal for fixed-price forward purchases of crude to replenish the SPR “and encourage short-term production.” These fixed price contracts, according to Tuesday’s statement, will afford producers the assurance to make investments, “knowing that the price they receive when they sell to the SPR will be locked in place”, and protecting them from price erosion.
The proposal for the fixed price has yet to be finalized, but the Department of Energy is proposing rulemaking this week to allow for these purchases.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.