White House announces the US Strategic Petroleum Reserve will now be made available
On Tuesday, the White House and Department of Energy announced that the US Strategic Petroleum Reserve would be made available.
President Joe Biden authorized the release of 32 million barrels of crude. They will come from four separate Strategic Petroleum Reserves (SPR). It will be delivered between December 2021 and April 2022. On December 17, 18 million more barrels of crude will be released.
Interested parties will have to participate in an auction to qualify to receive the crude. The program is set up so that buyers will have to return it in the next few years- between 2022 and 2024. The deadline for companies to submit bids is December 6 and contracts will be awarded by December 14.
However, the petroleum that is being released is sour crude, which is not favored among refiners. Sour crudes have a higher percentage of sulfur content, which means that they must be refined further. This process requires natural gas, which costs twice as much as it did earlier in the year. The downside is that if unused, it will be stored or exported, which renders the president’s goal of reducing gas prices ineffective.
The US cannot restrict the crude from being exported. “The SPR does not have authority or control over exports of crude oil exchanged or sold from the SPR. There are no restrictions on the export of U.S. crude oil,” read an email from the DOE. With the exception of countries not allowed to trade with the US, foreign countries may participate in both offers.