The Biden administration has spoken with energy companies as it considers a plan to use the Strategic Petroleum Reserve to both push down oil prices for consumers and support longer-term demand for producers, two sources familiar with the matter said.
The discussions, which involve combining new releases from the stockpile and setting the schedule for buying the oil back, reflect the White House’s desire to combat rising pump prices without hurting domestic drillers or refiners.
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 the costs this week. David Turk, his deputy energy secretary, also said last week the administration can tap the 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 reserve, known as the SPR, the sources said, after Biden in March announced the biggest sale ever, 180 million barrels, from May to October.
To stabilize oil prices, which rose before falling last week and steadying on Monday, it is also preparing to sell about an additional 40 million barrels of SPR oil, which could be announced soon, said a third source.
The Energy Department still has about 14 million barrels of SPR oil left to sell from the 180 million barrel release, which was slowed in July by holidays and hot weather. In addition, the administration is mandated by a law Congress passed years ago to sell another 26 million barrels of SPR oil in fiscal year 2023, which started Oct. 1.
“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 White House and the DOE did not immediately respond to requests for comment about the talks with energy companies.
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.