The Biden administration announced plans Thursday to refill the Strategic Petroleum Reserve (SPR) two years after Democrats blocked the Trump administration’s similar, but cheaper proposal.
The Department of Energy (DOE) said it would initiate a long-term SPR replenishment plan involving a purchase of 60 million barrels of oil that would likely occur in 2023, according to the announcement. President Joe Biden has ordered a 50-million-barrel SPR release in November, a 30-million-barrel release on March 1 and a 180-million-barrel release on March 31 to combat rising gasoline prices.
The price of crude oil touched its highest level in nearly 11 years on Wednesday amid the ongoing Ukraine crisis which has roiled energy markets.
The WTI index, the U.S. benchmark index, surged to $112.09 per barrel, its highest level since May 2011, early Wednesday before receding near $108 per barrel, marketplace data showed. The global Brent crude benchmark approached $114 per barrel then dropped below $111 a barrel.
President Joe Biden will join other Western nations in releasing a total of 60 million barrels of crude oil amid the Ukraine crisis, the coalition announced Tuesday.
Overall, 31 member nations of the International Energy Agency (IEA), including the U.S., agreed to coordinate the release, according to the Paris-based group. The decision was made in light of Russia’s invasion of Ukraine and its subsequent effects on global energy security.
The prices of energy, crude and gasoline all increased in 2021 from 2020, the U.S. Energy Information Agency reports. Prices increased because of higher demand and a range of other factors.
By the end of 2021, commodities on the energy index traded 59% higher than they did on the first trading day last year on the S&P Goldman Sachs Commodity Index (GSCI), the EIA reports.
GSCI is a commodity index that tracks the performance of global commodities markets. It’s a weighted average that’s updated every year. In 2021, the energy index comprised 54% of the GSCI, with the two crude oil benchmarks, the West Texas Intermediate (WTI) and Brent, accounting for approximately 70% of the energy index. WTI crude oil accounts for the largest share of the overall GSCI of more than 21%.
U.S. crude oil production fell by 8% in 2020, the largest annual decrease on record, the U.S. Energy Information Agency reports.
This plunge occurred one year after the U.S. reached a record annual average high of 12.2 million barrels a day in production in 2019.
A large group of House Republicans penned a letter to top Biden administration officials Friday, urging them not to ban U.S. crude oil exports.
The GOP lawmakers, led by Texas Reps. Roger Williams and August Pfluger, said the move would be a “catastrophic mistake” and further exacerbate high energy prices in the letter addressed to Energy Secretary Jennifer Granholm and Commerce Secretary Gina Raimondo. The congressmen noted that a previous crude oil export ban had been opposed by Democrats and Republicans alike.
“President Biden’s war on American energy continues with his Administration’s latest discussions to reinstate the export ban on crude oil, which was repealed in 2015 on a bipartisan vote,” Williams said in a statement.