DOE releases 50 million barrels of crude oil from U.S. reserves

Under President Biden’s leadership, US Secretary of Energy Jennifer M. Granholm has authorized the release of 50 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) of the US Department of Energy (DOE).

As the global economy recovers from the pandemic, the supply of oil has not increased at the pace needed to meet demand. This decision follows the highest oil prices recorded in 7 years and aims to ensure an adequate supply at the end of the pandemic. For the first time, thanks to the president’s leadership, this announcement comes in parallel with other major energy consuming countries, including China, India, Japan, South Korea and the United Kingdom.

“As we emerge from an unprecedented global economic crisis, the supply of oil has not kept up with demand, forcing working families and businesses to pay the price,” Secretary Granholm said. “This action underscores the president’s commitment to use the tools available to reduce costs for working families and continue our economic recovery.”

The exchange will be carried out with crude oil from the four SPR storage sites (maximum quantity from each site listed):

  • About 10 million barrels from Big Hill, Texas.
  • About 10 million barrels from Bryan Mound, Texas.
  • About 7 million barrels from West Hackberry, Louisiana.
  • About 5 million barrels from Bayou Choctaw, Louisiana.

Deliveries will take place from January to April 2022, with early deliveries being accepted at the end of December 2021.

Exchange crude oil will be returned to SPR during calendar years 2022, 2023 and 2024. A notice of sale for up to 18 million barrels of SPR crude oil will be announced no earlier than December 17, 2021.

The SPR is one of the world’s largest reserves of emergency crude oil, and federally owned oil stocks are stored in underground salt caves at four storage sites in Texas and Louisiana. It is an essential tool with a long history of protecting America’s economy and livelihoods in times of economic challenge.

In response to this announcement, the DOE will make available up to 32 million barrels of SPR crude oil through an exchange and accelerate the 18 million barrels additional sale schedule mandated by Congress in Section 30204 of the bipartite budget law of 2018 (public law 115-123).

A stock exchange is a mechanism specifically adapted to the current economic environment, where markets expect future oil prices to be lower than they are now. The trade creates a bridge between the current high price environment and a period of lower price and automatically predicts the replenishment of the SPR over time. Companies that receive SPR crude oil through the exchange agree to return the amount of crude oil received, as well as an additional amount that depends on how long they hold the oil.

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