The Biden administration plans to sell oil from the Strategic Petroleum Reserve in a bid to dampen fuel prices before next month’s congressional elections, three sources familiar with the matter said on Monday.
President Joe Biden’s announcement is expected this week as part of the response to Russia’s war on Ukraine, one of the sources said.
The sale would market the remaining 14 million barrels from Biden’s previously announced, and largest ever, release from the reserve of 180 million barrels that started in May.
The administration has also spoken with oil companies about selling an additional 26 million barrels from a congressionally mandated sale in fiscal year 2023, which began Oct. 1, a fourth source said.
The Department of Energy will also release further details on eventually buying the oil back, reflecting the White House’s desire to combat rising pump prices while supporting domestic drillers.
Rising retail gasoline prices have helped boost inflation to the highest in decades, posing a risk to Biden and his fellow Democrats ahead of the Nov. 8 midterm elections, in which they are seeking to keep control of Congress.
Biden said last week gasoline prices are too high and that he would have more to say about lowering costs this week. David Turk, his deputy energy secretary, also said last week the administration can tap the Strategic Petroleum Reserve, or SPR, in coming weeks and months as necessary to stabilize oil.
The administration has spoken with energy companies about buying back oil through 2025 to replenish the SPR, the sources said, after Biden in March announced the biggest sale ever, 180 million barrels, from May to October.
The Energy Department still has about 14 million barrels of SPR oil left to sell from the historic release, because selling was slowed in July and August by holidays and hot weather.
Additionally, the administration is mandated by a law Congress years ago to sell another 26 million barrels of SPR oil in fiscal year 2023, which started Oct. 1, a sale likely to come soon, one of the sources said.
“The administration has a small window ahead of midterms to try to lower fuel prices, or at least demonstrate that they are trying,” said a source familiar with the White House deliberations. “The White House did not like $4 a gallon gas and it has signaled that it will take action to prevent that again.”
Average U.S. gasoline prices hit about $3.89 a gallon on Monday, up about 20 cents from a month ago and 56 cents higher than last year at this time, according to the AAA motor group. Gasoline prices hit a record average above $5.00 in June.
The DOE and the White House did not immediately respond to requests for comment about the sales.
In May, the DOE said it would launch bids late this year for a buy-back of about one third of the 180 million barrel sale. It suggested then that deliveries would be linked to lower oil prices and lower demand, likely after fiscal year 2023, which ends Sept. 30 next year. Two sources said the buy-backs could continue through 2025.
Biden officials in recent months also urged oil refiners including Exxon Mobil, Chevron and Valero to not increase exports of fuel and warned them it could take action if plants do not build inventories.
The administration has not taken a potential ban of gasoline and diesel exports off the table although opponents of such a move say it could exacerbate Europe’s energy crisis and raise fuel prices at home.