White House Quietly Changed the Price It’s Willing To Pay for Oil Reserves

White House Quietly Changed the Price It's Willing To Pay for Oil Reserves

(RightWing.org) – During the early days of the Biden administration, the president announced he was initiating new energy policies to combat global climate change. In January 2021, President Joe Biden introduced an oil and gas leasing moratorium on federal lands and waters. According to the Centers for Strategic and International Studies (CSIS), 25% of the nation’s supplies come from federal lands. It said drilling cutbacks could significantly impact investment and production going forward.

Through 2021, gas prices rose significantly, contributing partially to runaway inflation. In June 2022, the national average rose over $5 for the first time in US history. Instead of turning to US energy producers to increase oil and gas supplies, Biden tried unsuccessfully to get Saudi Arabia to increase production. In March, he announced an unprecedented tap of the Strategic Petroleum Reserve (SPR).

The Department of Energy (DOE) announced it would repurchase the oil at a discounted price, but now it has changed the repurchase price to a higher number.

DOE Goes Back on Biden’s Word

Over the last two years, the administration allocated the fewest acres of oil and gas leases on federal lands since the 1940s. On October 18, the White House stated it would begin purchasing oil to re-supply the SPR when oil hit between $67 and $74 per barrel. On Friday, December 16, the DOE reneged. Now, the government says it will begin repurchasing oil when average market prices are lower than $96 per barrel.

The DOE said it would start to stop receiving bids for oil contracts to re-supply the SPR on December 28. Also, the administration said the tap of the SPR would incentivize producers to increase domestic production and deliver less expensive energy costs to consumers.

Is America Getting a Return on the President’s Investment?

On April 3, energy analyst Kevin Book spoke with NPR about the administration’s controversial decision to release a record 180 million barrels from the strategic oil reserves over six months. Biden acknowledged the reason for the tap of the SPR was to reduce the price at the pump for consumers. Book noted that no president had ever announced tapping the oil reserve to lower costs, or at least they didn’t say it out loud.

Book said the SPR is an emergency tool in the event of a severe energy interruption or the anticipation there could be one. The energy expert noted the release wouldn’t significantly impact consumer gas prices as the supply it injected into the oil and gas markets wasn’t enough to offset the lack of it without increasing production.

Book noted how the SPR is an insurance policy for the economy. He stated that, by law, when the government sells oil, it has to use the money acquired from the sales to repurchase it within a year. It could be at a lower price to benefit taxpayers or a higher one.

So, do you think America is getting a good return on the investment?

You decide.

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