(CNN) — President Joe Biden on Wednesday will announce the sale of an additional 15 million barrels from the Strategic Petroleum Reserve in December, a senior administration official said, as his administration seeks to counter market pressures created by the OPEC+ decision to cut oil production targets just three weeks from the midterm elections.
The announcement of the sale is the latest step in the White House’s unprecedented plan to balance global markets and dampen soaring gas prices. It marks an extension of the six-month program that was designed to provide a bridge for domestic producers to ramp up their own production as the global market faced spasms in the wake of Russia’s invasion of Ukraine, even as the release is composed of barrels earmarked in his March announcement.
That action, which has rolled out in regular sales over the last several months, combined with global economic concerns to help drive gas prices down for nearly three months straight.
“The price of gas is still too high, and we need to keep working to bring it down,” Biden said at an event in Los Angeles last week, adding that he planned to announce additional actions in the coming days.
The planned action would fulfill the administration’s announcement in March to release a historic 180 million barrels from the SPR over a six-month period to counter soaring energy prices triggered by Russia’s invasion of Ukraine. The action, which has rolled out in regular sales over the last several months, combined with global economic concerns to help drive gas prices down for nearly three months straight.
Biden has also made clear to his advisers that if the conditions merit, he is prepared to authorize future releases to balance the market. The President, the official said, directed his energy and economic teams to be prepared to authorize “significant additional sales in coming months” if the global market conditions require it.
The President on Wednesday will also detail the administration’s plan to refill the emergency reserve, which is now at its lowest level in nearly 40 years, laying out an important marker for market participants, given the scale of the federal action over the course of the last six months.
Biden will announce that the administration intends to repurchase crude oil for the emergency reserve when prices are at or below between $67 and $72 per barrel.
“We think that’s an important signal for producers that the SPR will be part of helping to helping to moderate and stabilize price flows — not only when prices are going high but when prices are going low,” the official said.
As part of this, the administration will also be finalizing a rule to permit the US government to enter into fixed price contracts with suppliers through a competitive bid process, which will facilitate the future repurchasing of crude.
The plan also serves the purpose of countering any criticism about the unprecedented scale of Biden’s reserve releases, one that officials said underscores the administration’s intent to refill when market conditions make it most advantageous.
“This administration is very committed — and we’re going to reiterate this commitment — to replenishing the SPR,” the official said. “We view the SPR is an incredibly important national security asset and we want to make sure that it serves its purpose well into the future.”
The official noted that the reserve, which has roughly 400 million barrels, is still the largest in the world and that the US remains positioned to deal with any crisis or challenges that would require its use.
“It’s important to understand and underscore, 400 million barrels is a lot of barrels,” the official said.
US officials strategically slowed the size of sales as the six-month program neared its deadline in an effort to ease the market transition until the decision by OPEC+, which set off furious pushback from US officials and an intensive effort inside the administration to produce options to counter any resulting increase in gas prices.
That included additional releases from the reserve, and officials have closely eyed Biden’s ability to trigger new releases within the bounds of the initial program as Election Day looms.
(Copyright (c) 2024 CNN. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)