America's emergency oil stockpiles have plunged to 40-year lows under President Joe Biden as US officials have sought to cushion consumers from high gas prices.
In an interview with CNN, Energy Secretary Jennifer Granholm vowed to completely refill the depleted Strategic Petroleum Reserve, a staggering task given that the rainy-day fund has shrunk by nearly 300 million barrels since Biden took office.
"The bottom line is we are going to replenish," Granholm said on Tuesday.
Granholm said it's "definitely possible" the Energy Department will pick up the pace of purchases for the SPR, but she conceded a complete refill is unlikely anytime soon.
Asked if the goal is to replenish the SPR during Biden's current term, Granholm indicated that would be unlikely.
"The first term's over in a year and a half. So, I'm not sure it'll be fully replenished. But certainly, the plan is this term and the next term to be able to do that," said Granholm, who previously told lawmakers it could take years to refill the SPR.
Refilling the SPR, a series of underground storage tanks located along the US Gulf Coast, is a delicate balance for the Biden administration. Moving too slowly could leave Americans exposed to future gas price shocks in the event of a natural disaster, war or other event that disrupts oil supply. Moving too fast could lift prices by boosting demand.
Biden has aggressively drained the SPR, launching unprecedented emergency sales to combat high inflation and shield Americans from gas price surges after Russia invaded Ukraine.
Analysts say those moves have indeed helped mitigate the impact on consumers. After spiking to a record high of $5.02 a gallon last June, the national average price for regular gasoline is down by $1.48, according to AAA. Fourth of July gas prices took an almost unprecedented plunge on an annual basis.
Beyond the emergency sales, the SPR has been shrunk by Congressionally-mandated sales required as part of previous budget deals.
Still the world's largest emergency stockpile
Bob McNally, who served as an energy adviser to former President George W. Bush, said "draining the SPR was a mistake that will take many years to correct."
A complete refill will require oil prices staying low and Congressional legislation to pay for the purchases, he noted.
"I wouldn't bet the farm on either," added McNally, who is currently president of consulting firm Rapidan Energy Group. "I forecast oil prices headed higher this decade and, if that's right, then SPR refilling will largely stop. It's possible President Biden might even resort to more releases due to political panic about high pump prices."
US officials insist the SPR contains more than enough oil to respond to future shocks.
"We still have the largest strategic petroleum reserve in the world," Granholm said. "We have, by far, enough to be able to deal with any emergencies over the next couple of years."
A drop in the bucket
The Biden administration has already begun what will be a years-long process of replenishing the reserve.
So far, the Energy Department has purchased 6.3 million barrels of oil for the SPR. Officials have also announced plans to acquire another six million by August.
Although important symbolically, those 12.3 million barrels represents just a drop in the bucket. The reserve held 346.8 million barrels of oil as of the week ending July 7 according to federal data. That's the smallest amount since August 1983 and down by 291.3 million since Biden took office in January 2021.
There are also logistical and economic constraints holding back replenishment efforts.
Granholm noted that parts of the SPR are undergoing maintenance. At the same time, officials have said they will only look to purchase oil when prices are at or below about $67 to $72 a barrel.
"We're going to go as responsibly as possible and making sure we get a good value for taxpayers," Granholm said.
According to the Energy Department, the administration paid an average of $72.67 a barrel for the 6.3 million barrels purchased so far. That's well below the average of about $95 per barrel that the oil was sold for last year.
Beyond the efforts to buy oil, the Energy Department won approval from lawmakers to cancel Congressionally-mandated sales of 140 million barrels of oil through fiscal 2027.
Granholm 'concerned' by Saudi and Russian moves
Meanwhile, two of the world's leading oil producers — Saudi Arabia and Russia — are working hard to boost prices. Both nations have announced new steps to restrain supply.
Asked if she is worried by the moves from the two nations, Granholm said, "Yes, we are concerned any time there is a significant diminishment in supply because that of course has an impact for consumers at the pump."
"We don't want people paying higher gas prices because other nations have decided to cut back on what is a commodity that is traded globally," Granholm added. "We want everybody to have access to the energy that they need. And it is concerning when nations cut back."
Granholm declined to say whether she expressed these concerns to officials in Saudi Arabia and Russia.
