The U.S. Department of Energy’s (DOE) Office of Petroleum Reserves today announced that it will start repurchasing crude oil for the Strategic Petroleum Reserve (SPR). This repurchase is an opportunity to secure a good deal for American taxpayers by repurchasing oil at a lower price than the $96 per barrel average price it was sold for, as well as to strengthen energy security.
In October, the President announced a plan to replenish the SPR using updated authorities that allow for fixed-price purchases of crude oil. Relative to conventional purchase contracts that expose producers to volatile crude prices, this new approach, when used at scale, can give producers the assurance to make investments today, knowing that the price they receive when they sell to the SPR will be locked in place. Today’s notice will pilot this new approach by starting with a purchase of up to 3 million barrels of crude oil.
This initial step to fulfilling the President’s replenishment strategy follows his historic release from the SPR to address the significant global supply disruption caused by Putin’s war on Ukraine and provide a wartime bridge for domestic production to increase. The releases have helped lower gas prices for American families. National retail gas prices are now the cheapest since September 2021 and are down by over $1.80 per gallon since their peak in June 2022. DOE must receive bids for this notice no later than 10:00 a.m. Central Time on Wednesday, December 28, 2022.
Contracts will be awarded to successful offerors no later than Friday, January 13, 2023, with deliveries to the Big Hill SPR site in Beaumont, Texas to occur in February 2023. The solicitation is posted to FedConnect, Sam.gov, and SPR websites.
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. The SPR has a long history of protecting the economy and American livelihoods in times of emergency oil shortages.
