President Joe Biden’s administration announced last week that it would sell an additional 20 million barrels of oil from the Strategic Petroleum Reserve (SPR) to further lower gasoline prices, which spiked after Russia invaded Ukraine.
This is Biden’s fifth approval of such a deal. The White House maintained that such moves are lowering gas prices while also blaming the still-high costs on “disruptions posed by Russia’s invasion,” according to Fox Business.
Gas prices have decreased dramatically since hitting a national average of over $5 per gallon in June. However, as of Monday, the average was still $4.21, compared to $3.17 one year ago and around $2.39 when the president first took office in January 2021.
The United States has sold 125 million barrels from the SPR and delivered roughly 70 million to buyers, according to Reuters. The SPR releases have provided a “supply lifeline” to oil and refinery businesses as they work to restart oil production following a slowdown at the peak of the COVID-19 outbreak, according to a government official.
The United States will start purchasing back 60 million barrels of crude for the reserve in the fall, according to a statement from the Department of Energy. The agency plans on proposing a law enabling it to establish contracts to buy oil in subsequent years at predetermined fixed rates, helping to replenish the SPR. Inventories of the SPR have fallen to 475.5 million barrels, the lowest level since June 1985.
“What it means in practice is that producers would have more certainty about future demand for their product, and that would encourage investment in production today,” a senior U.S. official said, according to Reuters.