The Biden administration said Friday it would buy three million barrels of crude for the Strategic Reserve after selling nearly 200 million barrels of oil over the past year.
The announcement appears to signal an end to the government’s efforts to use the sale of oil from the reserve to depress oil and gasoline prices, which have skyrocketed following Russia’s invasion of Ukraine in February. It also appears to be an acknowledgment by the government that oil prices have fallen significantly since this summer, when they briefly rose above $120 a barrel, and that government sales are no longer needed.
Oil prices in the US and around the world are trading near their lowest levels for the year, with the West Texas Intermediate benchmark set at $74.29 a barrel on Friday afternoon. Retail gasoline prices are also lower than 12 months ago, according to the AAA, with the national average for regular fuel standing at $3.18 a gallon on Friday.
The reserve was created by Congress in 1975 after the Arab oil embargo to protect the United States from supply shortages caused by natural disasters, war, or other geopolitical problems. The reserve has seen multiple uses, including during the 1990-91 Iraq-Kuwait crisis, 2005 Hurricane Katrina, and the 2011 Arab Spring crisis in the Middle East.
Three million barrels, about 15 percent of daily US oil demand, is quite small compared to the 180 million barrels the government has sold from reserve since the Russian war began. The Department of Energy said the buyback is an opportunity to strike a good deal. The government said in October it would start replenishing reserves at between $67 and $72 a barrel.
Government officials have argued they wanted to sell high and buy low, a strategy that could put an end to falling oil prices and encourage oil companies to maintain or even increase production. That, in turn, could prevent another jump in energy prices next year, a big goal for the Biden team. Republican lawmakers and candidates have Mr. Biden and the Democrats for high inflation, especially for essential commodities like gasoline.