U.S. to sell additional 20 million barrels of oil from strategic reserve
Christian Fernsby ▼ | July 27, 2022
The Biden Administration announced that it is releasing the next Notice of Sale to supply additional barrels of crude oil from the Strategic Petroleum Reserve (SPR) onto the global market, building on the more than 125 million barrels of oil that have already been sold.Article continues below
A new analysis from the Department of the Treasury estimates that these releases, along with coordinated releases from international partners, have reduced gasoline prices by up to about 40 cents per gallon compared to what they would have been absent these drawdowns.
With these releases, the President has executed a drawdown of unprecedented size and scope to respond to the energy market disruptions posed by Russia’s invasion, and his actions are having an impact. It is, as one leading analyst noted at the time of announcement, “hard to overstate the scale of this intervention.†And the Department of Energy is delivering.
There is no precedent for this level of drawdown, and one major bank estimated in March that the maximum drawdown capacity of the SPR was only 500,000 barrels per day. Nonetheless, the SPR is executing at a speed that is about twice that level.
And those actions are helping mitigate the Putin price hike. In fact, the Department of the Treasury estimates that as a result of these drawdowns both domestically and internationally, the price at the pump for Americans is up to about 40 cents per gallon lower than it otherwise would have been.
The Department of Energy is issuing a notice to sell 20 million barrels from the Reserve. This is the fifth sale that the President has authorized to shore up crude oil supplies in response to Putin’s war in Ukraine by releasing one million barrels per day into the market. The Administration expects to continue to deliver barrels for several more months. ■ What to read next
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