The Department of Energy is buying 3 million barrels of oil to replenish the U.S. Strategic Petroleum Reserve and lower gas prices.
Key Details
- The Biden administration deployed the U.S. Strategic Petroleum Reserve earlier this year to stop skyrocketing gas prices, and now this purchase aims to replenish it.
- The 3-million barrel purchase will allow the U.S. to buy the oil at a fixed price repurchasing it for less than the average of $96 it sold for, says the Department of Energy.
- Purchasing the oil to replenish the reserve will lower oil and gas prices in the U.S.
- The 3 million barrels represent 15% of the average number consumed per day in 2021, which was 19.89 million.
Why it’s news
When Russia invaded Ukraine, it sent gas and oil prices higher—forcing many Americans to dig deeper to afford gas for their cars and other vehicles.
To lower the costs, the Biden administration began using fuel from the U.S. Strategic Petroleum Reserve, the country’s emergency oil stockpile. Biden withdrew 180 million barrels starting in March, taking the reserve to its lowest level since the 1980s.
The administration has announced it is buying 3 million barrels of oil to replenish the reserve. The timing of this is good, considering the price for a barrel of oil is significantly lower than the $96 it originally sold for.
“As we are thoughtful and methodical in the decision to draw down from our emergency reserve, we must be similarly strategic in replenishing the supply so that it stands ready to deliver on its mission to provide relief when needed most,” says Secretary of Energy Jennifer Granholm.
Gas prices have begun lowering, and many expect prices to continue dropping as the reserve continues to be replenished.