Biden buys 3 million barrels of oil to stock up the emergency Strategic Petroleum Reserve

The Department of Energy (DOE) announced Friday it will purchase 3 million barrels of oil to replenish the supply it depleted from the Strategic Petroleum Reserve in a bid to lower gas prices. 

The department said it will purchase the oil for less than the $96 per barrel it sold its supply for. Three million barrels, only 15 percent of daily U.S. demand, is a drop in the bucket of the 180 million DOE has depleted the reserve of since March. 

The deal is part of a fixed-price plan that allows refiners to sell oil to the SPR at a stable rate and avoid selling at the volatile oil market's rate on any given day. 

At the same time the department will tap 1.8 million barrels from the reserve in an emergency exchange after a shutdown of the Keystone pipeline due to leaks last week. Part of the pipeline remains shuttered with no set timeline for reopening.

Emergency exchanges allow oil refineries to borrow oil from the reserve for a short period due to supply disruptions from weather events or pipeline outages. The 1.8 barrels in the emergency exchange must be replenished, unlike the 180 million barrels that have been released to tamp down prices since March. 

It will likely take months or years to fill the SPR back to its pre-Russian invasion levels - its supply is now at its lowest in 38 years. 

The DOE announced Friday it will purchase 3 million barrels of oil to replenish the supply it depleted from the Strategic Petroleum Reserve in a bid to lower gas prices

Three million barrels, only 15 percent of daily U.S. demand, is a drop in the bucket of the 180 million DOE has depleted the reserve of since March

As of this month the reserve contains 387 million barrels of oil, but is designed to hold up to 714 million barrels.  

The Biden administration announced in May a plan to accept bids to buy back about one-third of the depleted supply. In October DOE said it planned to purchase the oil for between $67 and $72 per barrel. 

Oil prices on Friday were running at $73 per barrel, after record highs of $120 per barrel in June. Retail gas was at $3.18 per barrel, but DOE's purchase could bottom out falling prices, encouraging oil companies to keep production up or increase it. 

The SPR is the world's largest supply of emergency oil, stored in salt caverns in Texas and Louisiana. Created by Congress in 1975 after the Arab oil embargo, it has been used during several emergencies over the years, including the Iraq-Kuwait crisis in 1990-91, Hurricane Katrina in 2005 and Middle East uprisings during the Arab Spring in 2011.