Biden administration seeks energy sector in search of fuel balance

The Biden administration has spoken with energy companies as it considers a plan to use the Strategic Oil Reserve to lower oil prices for consumers and support long-term demand for producers, two sources familiar with the matter said.

The discussions, which involve combining new releases from the inventory and setting the timetable for the oil repurchase, reflect the White House’s desire to combat rising prices at pumps without hurting domestic drillers or refiners.

Rising retail gasoline prices have helped push inflation to the highest level in decades, posing a risk to Biden and his fellow Democrats ahead of the Nov. 8 elections, in which they seek to retain control of Congress.

Biden said last week that gas prices are too high and he would have more to say about lowering costs this week. David Turk, his deputy energy secretary, also said last week that the government may use the SPR in the coming weeks and months as needed to stabilize oil.

The government has talked to energy companies about repurchasing oil through 2025 to replenish the reserve, known as the SPR, the sources said, after Biden in March announced the biggest sale of all time, 180 million barrels, from May to October. .

To stabilize oil prices, which rose before falling last week and leveled off on Monday, it is also preparing to sell an additional 40 million barrels of SPR crude, which could be announced soon, a third said. source.

The Energy Department still has about 14 million barrels of SPR oil to sell from the release of 180 million barrels, which was slowed in July by holidays and hot weather. In addition, the government is required by a law passed by Congress years ago to sell another 26 million barrels of SPR oil in fiscal 2023, which began Oct. 1.

“The administration has a small window before the midterm elections to try to lower fuel prices, or at least demonstrate that it is trying,” said a source familiar with the White House deliberations. “The White House did not like $4 a gallon of gasoline and has signaled that it will take steps to avoid it again.”

Average U.S. gasoline prices hit about $3.89 a gallon on Monday, about 20 cents more than a month ago and 56 cents more than last year at this time, from according to the AAA engine group. Gasoline prices hit a record average above $5.00 in June.

The White House and DOE did not immediately respond to requests for comment on the talks with the energy companies. In May, the DOE said it would launch offers later this year for a buyback of about a third of the sale of 180 million barrels.

He then suggested the deliveries would be linked to lower oil prices and lower demand, likely after fiscal 2023, which ends on September 30 next year.

Two sources said the buybacks could continue through 2025. Biden officials in recent months have also urged oil refiners including Exxon Mobil (XOM.N), Chevron (CVX.N) and Valero (VLO.N) not to increase fuel exports and warned them they could take action if mills didn’t build up inventories.

The government has not removed a possible ban on gasoline and diesel exports from the table, although opponents of such a measure say it could exacerbate Europe’s energy crisis and raise fuel prices at home.