The Biden administration plans to buy 2.7 million barrels of oil to help replenish the nation's much-depleted emergency stockpile.
The planned purchase for the oil is at an average price of $79 per barrel, the Department of Energy said in a statement on Friday.
Biden sold off more than 40% of the Strategic Petroleum Reserve last year to help lower gas prices following the Russian invasion of Ukraine. In total, the White House tapped the reserve four times last year, including when Biden ordered a record-setting 180 million barrels of oil released from the reserve.
The repeated withdrawals left the stockpile at the lowest level since the 1980s, prompting accusations from Republicans that Biden had left the U.S. vulnerable to potential energy threats.
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The reserve had 351 million barrels in the week ended November 24, still near the lowest level since 1984, according to the latest Department of Energy data. That is down from about 630 million barrels at the beginning of 2020.
Established after a 1973-74 oil embargo by Arab members of OPEC, the reserve has been used in several emergencies, including in 2005 after Hurricane Katrina made landfall and destroyed swaths of the Gulf of Mexico oil infrastructure. At the time, the Bush administration authorized the release of 20.8 million barrels of crude oil to U.S. producers.
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Proponents of releasing barrels from the emergency stockpile say that doing so increases oil supplies and reduces prices at the pump, while also generating billions in revenue for the federal government. But critics say that releasing emergency supplies is a short-term fix and does not increase the country's oil production capabilities.
The White House announced plans earlier this year to replenish the oil reserve with a call for bids to repurchase 60 million barrels of oil – roughly one-third of the emergency supply released by the president in 2022.
West Texas Intermediate, the U.S. benchmark, was hovering around $75.90 per barrel on Friday, despite a fresh round of OPEC+ production cuts. That marks a major drop from May 2022, when prices hit a high of $120 per barrel.
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However, it is a notable increase from early 2020, when prices were under $20 per barrel. At the time, former President Donald Trump tried to add 77 million barrels of oil to the emergency oil cache, but he was blocked by congressional Democrats.
Brent crude, meanwhile, was trading around $80 per barrel.
