Posted on 01/07/2023 3:42:45 PM PST by SeekAndFind
The Biden administration had no problems aggressively draining the SPR by 1mmb/d at market prices in the immediate aftermath of the Ukraine war, in hopes of lowering the price of gasoline ahead of November's elections and avoiding an inflationary midterm rout. However, when it comes to refilling the SPR, now that US emergency inventories are down to the lowest level since November 1983 and not too far from an all time low which threatens the structural integrity of the salt caverns the oil is deposited in...
... the White House has "unexpectedly" gotten cold feet.
One month after the White House said it will start refilling the Strategic Petroleum Reserve, and made an initial order of 3mm barrels of sour crude (a tiny fraction of the 200 million released in 2022), in what it said was a clear message to oil companies that they can freely invest capital in boosting output cause, well, Biden's got their backs, overnight we learned that there was a rather sizable caveat in the White House's brilliant plan.
According to Bloomberg, the Biden administration has delayed the replenishment of the nation’s emergency oil reserve after deciding the offers it received were either too expensive or didn’t meet the required specifications. Citing "people familiar" the report adds that "the Department of Energy rejected the several offers it got for a potential purchase in February." In other words, absent a brutal US or global recession which drags oil far lower - courtesy of the Fed which is doing Biden's bidding of containing inflation by crushing the US economy with the highest interest rates in a generation - the SPR won't get any more oil.
While the DOE will put off the purchase it had originally planned for next month, the proposed program, which used a new approach that accepts fixed-price offers, will continue, one of the people said. Of course, it will "continue" only as long as oil is below a certain White House mandated threshold, anything above that - as we now can see - means no refills. As a reminder, last year there were reports that the Biden administration had planned to start buying crude when it dropped around $70 a barrel; and while oil fell during the fourth quarter and US benchmark prices fell close to those levels last month, they have since rebounded, with the SPR refill price serving as a market support level.
“DOE has put forth a long term plan to transition from release to replenishment, and we’re committed to doing so in a manner that provides a fair deal for taxpayers,” the department said in a statement Friday.
“DOE will only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers,” it said. "Following review of the initial submission, DOE will not be making any award selections for the February delivery window."
What this means is that, as we noted yesterday, either the White House - in all its infinite wisdom - will start having to chase the price of oil even higher in hopes of catching up to the offer now that it has set a firm floor for oil prices thereby shooting itself in the foot...
The Department of Energy rejected the several offers it got for a potential SPR purchase in February: BBG
Well it will just have to raise its bid then — zerohedge (@zerohedge) January 7, 2023
... or the SPR will not see even one more drop of new oil, and the 372 million barrels currently there, just under 20 days of dometic consumption, will be the total SPR inventory at the time when China inevitably invades Taiwan - a far bigger emergency than a democrat loss in the elections. At that point only that legendary energy guru, Hunter Biden, who was paid so handsomely for his energy insight by Ukraine's energy giant Burisma...
... will be able to save the US.
Just write a check, Joe, you dimwit. Works for everything else.
Watch...Instead...the money will go to Ukraine...
We’re so screwed.
Actually, we’re BEYOND screwed. We’re pregnant by Smarmy Uncle Brandon and we’re in our last trimester!
*SHUDDER*
I remember when domest oil hit $0/bbl back in the Trump administration and he wanted to use the opportunity to fill up reserves and the Dems wouldn’t let him
Destroy America.
The goal was always to destroy the reserve. To leave us weak in a crisis. Refilling it would defeat their purpose.
No money. The dimbulbcrats need those trillions for the Ukraine, illegal immigrant housing/medicine/education, and most important of all, getting all those voting machines rigged each year.
Recall that Trump wanted to add more to the strategic reserve when crude was briefly less than $30.00 a barrel. But Schmuckie blocked it in the Senate.
Those Dims are such good businessmen and money managers and planners.
This is just funny! I don’t care who you are, you have to laugh. Have they not noticed the price of crude oil or the price of gasoline? It’s come down a bit but still high and we are talking about a government contract. Anyone who contracts to fill the reserves is going to pad the price a bit from the beginning. We are talking “futures” prices being added in to the equation. The consensus is that prices will be going up, not down, so that has to be taken into consideration.
LOL! And they complained when Trump wanted to fill the reserves when prices of oil was at historical lows. That’s the oil that sold to China while prices here was escalating. What to do, what to do?! We pay of course, we have no choice.
This is what you get when you make hires and appointments in your administration based on skin color or gender. Incompetence and ignorance rules the day!
Putin will end up selling us the oil that we use to refill the SPR.
Sell low, buy high.
Sell low, buy high.
**********
Lol
Many people are good this. They buy on the “noise.”
Never buy on the noise.(See cryptomania for the latest reference)
Price for a gallon of regular here in metro Birmingham area just went up from $2.89 to $3.09 this week.
-PJ
I hear Russian oil is capped at only $60 per barrel!
Let’s go Brandon!
Isn’t that extra special?
Trump worked for free . . . for US !
And about to deliver Beelzebub.
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