The US Department of Energy has issued oil purchase bids to refill strategic black gold reserves that US President Joe Biden’s administration has used extensively for more than a year with the aim of lowering gasoline prices.
The government called on the companies to sell the oil to the state “at less than $96 a barrel, the average price” at which it bought it, which was “a good deal for the taxpayer”.
The buy-back process includes, in the first stage, three million barrels of oil, according to a statement by the Ministry of Energy on Friday.
With the general rise in prices following the Covid pandemic receded and the war broke out in Ukraine, the price of a barrel increased, reaching a maximum of $120.
Therefore, the Biden administration decided to resort exceptionally to the country’s strategic reserves in order to put pressure on prices.
Since the beginning of September 2021, the government has withdrawn regarding 216 million barrels from reserves, which have fallen by more than a third to reach their lowest level since January 1984 at 382 million barrels.
And President Joe Biden announced in October that the government would begin buying back oil to replenish reserves.
“This first step in the refill strategy … comes following the historic withdrawal of these reserves to deal with the major disruption to global supplies due to Russian President Vladimir Putin’s war on Ukraine,” the Energy Ministry statement added.
He added that reliance on reserves “has helped lower gasoline prices,” which are now “at their lowest levels since September 2021.”
A barrel of US West Texas Intermediate oil is currently trading below the $80 threshold.
The price is slightly above the threshold set by Joe Biden in mid-October (between $67 and $72) to begin replenishing strategic reserves.
As for the price of gasoline at gas stations, which reached a record high in June of more than $5 a gallon, it has fallen to an average of $3.1, according to the American Automobile Association.
