The United States on Thursday said nine companies will buy 20 million barrels of oil in the latest sale from the Strategic Petroleum Reserve as part of the Biden administration’s plan to ease petroleum prices elevated by Russia’s invasion of Ukraine and economies recovering from the COVID-19 pandemic.
The administration said in March it would release a record 1 million barrels of crude per day from May to October, or about 180 million barrels, from the SPR, which holds oil in caverns on the coasts of Louisiana and Texas.
The companies buying oil included Valero Energy Corp, with 4.9 million barrels, Motiva Enterprises LLC, with 2.1 million barrels, Phillips 66 with 950,000 barrels and Chevron Corp with 350,000 barrels. Deliveries will take place between September 16 and October 21.
Earlier this month Reuters calculated that since May, SPR releases have averaged 880,000 bpd, not meeting the 1 million bpd plan. A DOE spokesperson said at the time that occurred because the July 4 holiday and use of an additive to cool crude for transportation had slowed some deliveries.
U.S. gasoline prices have fallen from more than $5 a gallon earlier this summer to under $4 a gallon Thursday. Deputy U.S. Energy Secretary David Turk said that oil and gasoline prices have dropped in part due to the SPR sale and coordinated withdrawals from other countries’ oil reserves.
The administration has described the SPR sale as a bridge to get supply and demand in balance as domestic producers boost output. “We want to make sure that bridge is as long as it can be and as flexible as it can be so that we can deal with further challenges as we have them,” such as hurricanes, Turk said in a interview with Resources for Future.
The withdrawals have pushed SPR’s supply down to 464.6 million barrels, the lowest level since 1985. Turk said the department will use money from current sales to buy oil back at lower prices.