Biden Announces Sale of Strategic Petroleum Reserve Oil
It should be no surprise to anyone at this point that gas and diesel prices are at historic highs, due in part to the Ukraine-Russian conflict and the resulting oil embargo. With people across the country struggling to pay the new prices, the Biden Administration has announced that it will be adding its own supply of oil to the market, by tapping into and selling part of its Strategic Petroleum Reserve.
The Strategic Petroleum Reserve (SPR) is exactly what its name would imply: the United States federal government has its own massive facility, around where Louisiana meets Texas, where it stores oil to use at its discretion. It has a current maximum capacity of 714 million barrels.
Biden announced on March 31st that the United States would be emptying its facility by 1 million barrels per day for the next six months, emptying 180 million barrels into the economy. It will be the largest release from the SPR since its inception in 1977, a record that was previously held in November 2021 when Biden released 50 million barrels. With the average daily consumption in the United States totaling around 20 million per day, this release should help cover 5% of daily demand, or at least 9 full days worth.
Buy Low, Sell High
The decision also has a secondary effect for the United States government. With the sell-off of oil, the Department of Energy plans to use the money obtained to buy oil in the future at a lower price, when all of these high oil prices are behind us. By doing this, the federal government will most likely be able to turn a profit.
It is hard to say how much this oil injection into the market will impact oil prices, and how much impact that will in turn have on gasoline and diesel. Whatever the case, it is currently unknown how much oil the United States has left to sell, as the SPR webpage from the Department of Energy has not been updated since the end of January.
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