The Biden administration released 180 million barrels of oil from America’s emergency stockpile ahead of the 2022 midterm elections, appearing to try to tackle the skyrocketing price of gas at the pump causing the reserve to plummet to its lowest levels since 1983.
The administration has announced plans to start refilling the heavily drawn-down US Strategic Petroleum Reserve with a purchase of 3 million barrels of crude oil in February.
The Department of Energy (DOE) announced in a document inviting US energy companies to tender for the sale.
But, even though tasked with the purchase of sour crude oil for the Strategic Petroleum Reserve, Biden’s US Department of Energy has reportedly rejected multiple offers from producers.
Informed sources told US business media that the offers the DoE has received so far have been turned down due to prices being deemed too high, and for failing to meet other requirements, which were not outlined in any detail.
The failure to get a deal means the purchase will be put off until an unspecified later date, the Energy Department has confirmed in a statement.
“DoE only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers. Following a review of the initial submission, DoE will not be making any award selections for the February delivery window,” the department said Friday.
The DoE has not offered information on which producers submitted bids, nor the possible reasons, besides cost, that they were turned down.
Washington’s strategy of holding off on the purchase of crude oil to fill up its depleted is reportedly a prudent, thought-out strategy to save the US save tens of millions of dollars.
However, if the administration is wrong by delaying the filling of the reserves as soon as possible, the US could end up in a similar disastrous position European countries collectively found themselves in the spring and summer of 2021.
They gambled with their energy security by holding off on refilling their underground natural gas storage reserves, hoping for a drop in prices at a later date.
The problem they ran into was price drop never came, and the surge in orders caused by pent-up demand caused a major supply crunch in the fall and winter of 2021, which was exacerbated through 2022 by shocks caused by the crisis in Ukraine, and Brussels’ rejection of Russian energy.
Only time will tell how the US Energy Department’s game of chicken will play out in the long run.
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