The Biden administration had no problems aggressively draining the SPR by 1mmb/d at market prices in the immediate aftermath of the Ukraine war, in hopes of lowering the price of gasoline ahead of November’s elections and avoiding an inflationary midterm rout. However, when it comes to refilling the SPR, now that US emergency inventories are down to the lowest level since November 1983 and not too far from an all time low which threatens the structural integrity of the salt caverns the oil is deposited in…
… the White House has “unexpectedly” gotten cold feet.
One month after the White House said it will start refilling the Strategic Petroleum Reserve, and made an initial order of 3mm barrels of sour crude (a tiny fraction of the 200 million released in 2022), in what it said was a clear message to oil companies that they can freely invest capital in boosting output cause, well, Biden’s got their backs, overnight we learned that there was a rather sizable caveat in the White House’s brilliant plan.
According to Bloomberg, the Biden administration has delayed the replenishment of the nation’s emergency oil reserve after deciding the offers it received were either too expensive or didn’t meet the required specifications. Citing “people familiar” the report adds that “the Department of Energy rejected the several offers it got for a potential purchase in February.” In other words, absent a brutal US or global recession which drags oil far lower – courtesy of the Fed which is doing Biden’s bidding of containing inflation by crushing the US economy with the highest interest rates in a generation – the SPR won’t get any more oil.- READ MORE