The U.S. Department of Energy has initiated bids to purchase oil in order to refill the strategic reserves of black gold that the administration of President Joe Biden has heavily relied on for over a year to lower gasoline prices. The government has called on companies to sell oil to the state "at a price lower than $96 per barrel, which is the average price" it was purchased at, representing "a good deal for taxpayers." The initial phase of the repurchase process includes three million barrels of oil, according to a statement from the Department of Energy.
With the overall increase in prices following the easing of the COVID pandemic and the outbreak of the war in Ukraine, the price per barrel peaked at $120. Consequently, the Biden administration decided to exceptionally tap into the country's strategic reserves to exert pressure on prices. Since the beginning of September 2021, the government has withdrawn about 216 million barrels from the reserves, which have decreased by more than a third to their lowest level since January 1984 at 382 million barrels. President Joe Biden announced in October that the government would begin repurchasing oil to replenish the reserves.
The Department of Energy's statement added, "This first step in the refilling strategy comes after the historic withdrawal from these reserves to address the significant disruption in global supply due to Russian President Vladimir Putin's war on Ukraine." It continued that relying on the reserves "helped lower gasoline prices," which are now "at their lowest levels since September 2021." West Texas Intermediate crude oil is currently trading below $80 per barrel, just above the threshold set by the U.S. president in mid-October (between $67 and $72) to begin replenishing the strategic reserves.
