WASHINGTON, D.C. — Today, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 3.2 million barrels of U.S. produced crude oil for the Strategic Petroleum Reserve (SPR). These contracts to deliver crude oil in September follow the Request for Proposal (RFP) that was announced on June 9, 2023. The 3.2 million barrels are being purchased for an average price of about $71.98 per barrel, lower than the average of about $95 per barrel that SPR crude was sold for in 2022, securing a good deal for taxpayers. On July 7, DOE plans to announce another RFP for the purchase of crude oil for delivery in October and November.
Today’s announcement advances the President’s replenishment strategy following his historic release from the SPR to address the significant global supply disruption caused by Putin’s war on Ukraine. Analysis from the Department of the Treasury indicates that SPR releases last year, along with coordinated releases from international partners, reduced gasoline prices by up to roughly 40 cents per gallon compared to what they would have been absent these drawdowns.
A total of 9 companies responded to the Request for Proposal submitting 28 proposals. This purchase has been fully subscribed, and the contracts were awarded to 4 companies. The crude oil will be delivered to the Big Hill SPR storage site from September 1, 2023, to September 30, 2023. This follows the repurchase of 3 million barrels for delivery in August 2023 that was announced earlier this month and were purchased for an average price of about $73 per barrel, lower than the average of about $95 per barrel that SPR crude was sold for in 2022.
The Administration’s three-part replenishment strategy includes: (1) Direct purchases with revenues from emergency sales; (2) Exchange returns that include a premium to volume delivered; and (3) Securing legislative solutions that avoid unnecessary sales unrelated to supply disruptions. DOE has already secured cancellation of 140 million barrels in congressionally mandated sales scheduled for Fiscal Years 2024 through 2027. This cancellation has led to significant progress toward replenishment.
The SPR continues to be the world’s largest supply of emergency crude oil, and the federally owned oil stocks are stored in underground salt caverns at four sites in Texas and Louisiana. Through scheduled maintenance periods and the Life Extension 2 program, DOE continues to prioritize the operational integrity of the SPR to ensure that the SPR can continue to meet its mission as a critical energy security asset. The SPR has a long history of protecting the economy and American livelihoods in times of emergency oil shortages.