The US Department of Energy is strapped for cash to replenish the SPR at low prices

The price of US WTI crude oil has finally remained in the low $70s per barrel for a sustained period of time, allowing the Biden administration to step up the filling of the Strategic Petroleum Reserve (SPR), which it has said it will do at prices of $79 per barrel or less.

WTI Crude is now at $70 a barrel as of Tuesday morning, after spending days below that mark.

But the Energy Department only has $841 million left to buy crude oil for the SPR, Bloomberg reported Tuesday, citing an estimate by ClearView Energy Partners, a consulting firm. That money would be enough to buy only about 12 million barrels of crude at today’s prices, according to Bloomberg calculations.

That would be a drop in the ocean, given that the SPR is only a little over half full of its 700 million barrel capacity.

DOE’s Office of Petroleum Reserves recently announced a solicitation to supply up to 1.5 million barrels of oil to the Bayou Choctaw site in January 2025. An additional solicitation will follow on August 12, 2024, for an additional 2 million barrels destined for Bryan. Site Mound, also for delivery in January 2025.

The replenishment strategy follows the SPR’s critical role in stabilizing the market during global supply disruptions, notably the release of more than 180 million barrels of oil from the SPR starting in 2021 as gasoline prices remained high. The Treasury Department says these waivers, along with coordinated international efforts, helped reduce gasoline prices by up to 40 cents per gallon in 2022.

The SPR currently hosts 375 million barrels of crude oil — a figure that is 263 million barrels less than the oil in the SPR at the start of President Joe Biden’s term. The SPR, capable of storing up to 714 million barrels of crude oil, is stored in underground salt caverns at four locations in Texas and Louisiana and was designed to protect the American economy and livelihoods during oil shortages.

By Charles Kennedy for Oilprice.com

More top reads from Oilprice.com