The Biden administration said on Friday that it would buy three million barrels of crude oil for the strategic petroleum reserve after selling nearly 200 million barrels of oil over the course of the last year.
The announcement appears to signal an end to the administration’s effort to use sales of oil from the reserve to tamp down oil and gasoline prices that surged after Russia invaded Ukraine in February. It also appears to be an acknowledgment by the administration that oil prices had fallen substantially since this summer when they briefly climbed above $120 a barrel and that sales by the government are no longer needed.
U.S. and global oil prices are trading near their lowest levels of the year with the West Texas Intermediate benchmark selling for around $74.50 a barrel on Friday afternoon. Retail gasoline prices are also lower than they were 12 months earlier with the national average for regular fuel at $3.18 a gallon on Friday, according to AAA.
The reserve was created by Congress in 1975 after the Arab oil embargo as a way to protect the United States from a supply shortage caused by natural disasters, war or other geopolitical problems. The reserve has been used several times, including during the Iraq-Kuwait crisis in 1990-91, Hurricane Katrina in 2005 and the Middle East disruptions of the Arab Spring in 2011.
Three million barrels, which represents roughly 15 percent of daily U.S. demand for oil, is quite small compared with the 180 million barrels the administration has sold from the reserve since the Russian war began. The Energy Department said the “repurchase is an opportunity to secure a good deal.” The administration said in October that it would begin replenishing the reserve at $67 to $72 a barrel.
Administration officials have argued that they wanted to sell high and buy low, a strategy that could now put a floor on falling oil prices, encouraging oil companies to keep production up or even increase it. That, in turn, could prevent another energy price jump next year, a major goal of the Biden team. Republican lawmakers and candidates have criticized Mr. Biden and Democrats for high inflation, especially for essential commodities like gasoline.