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Investing.com – Rising oil prices above US targets appear to have prompted the Biden administration to delay replenishing the country’s emergency oil reserves after deciding the offers it received were too expensive or underwhelming.
The Energy Department rejected several offers for a potential purchase in February, according to US reports.
Earlier, the US Department of Energy indicated in December its intention to start replenishing strategic oil reserves, starting with the purchase of 3 million barrels next month, i.e. January 2023.
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Historical release
The plan follows the historic release of 180 million barrels of oil from reserves ordered by President Joe Biden as he seeks to tame high gasoline prices in the wake of Russia’s invasion of Ukraine.
The buying program, which used a new approach that accepts fixed-price offers, is expected to continue in the coming period, according to US reports.
And the Biden administration planned to start buying crude when it dropped about $70 a barrel, as oil fell during the fourth quarter and record U.S. prices fell near those levels last month.
Long term plan
DOE has developed a long-term plan to transition from issuance to renewal and has said it is committed to doing so in a way that provides an equitable deal.
The Energy Department said it will select only bids that meet the required raw specifications and at a price that is a bargain for the taxpayer.
After reviewing the initial submission, the Energy Administration will not make any selections for bids submitted for delivery in February, according to a statement from the U.S. Department of Energy.
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strategic reserve
And US President Joe Biden, more than any of his predecessors, has relied heavily on oil stockpiles from emergency reserves to bring down the high prices that voters hate.
The SPR is a series of underground storages that hold large amounts of resources that could be used during war, hurricanes, or other times of trouble.
The amount of oil in the Strategic Petroleum Reserve has decreased by almost a third – 36% to be exact – since Biden took office in January 2021.
Thus, the emergency oil stock is at its lowest level since June 1984, a time when both the US economy and energy demand were much lower than they are today.
The Strategic Petroleum Reserve – the world’s largest emergency supply – was created in 1975 in the wake of the Arab oil embargo.
