Energy Department

U.S. to sell additional 20 million barrels of oil from strategic reserve

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An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

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WASHINGTON, July 26 (Reuters) – The Biden administration on Tuesday said it will sell an additional 20 million barrels of oil from the Strategic Petroleum Reserve as part of a previous plan to tap the facility to calm oil prices boosted by Russia’s invasion of Ukraine and as demand recovers from the pandemic.

The administration said in late March it would release a record 1 million barrels of per day of oil for six months from the SPR, held in hollowed-out salt caverns on the coasts of Louisiana and Texas.

The United States has already sold 125 million barrels from the reserve with nearly 70 million barrels already delivered to purchasers, a senior administration official told reporters.

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The SPR releases have been a “supply lifeline” to oil and refining companies as the industry continues to get oil production back online after declines during the peak of the COVID-19 pandemic, the official said.

The U.S. Energy Information Administration, the statistics arm of the Energy Department, said this month that U.S. oil output will rise to more than 11.9 million barrels per day (bpd) in 2022 and to nearly 12.8 million bpd in 2023, from about 11.2 million bpd in 2021. That compares with a record near 12.3 million bpd in 2019.

The United States will take bids in autumn to begin the process of buying back 60 million barrels of crude for reserve, a first step in replenishing the stockpile after the 180 million barrel release, the Department of Energy said in May. read more

The department will soon propose a rule to help put oil back into the SPR, where levels have sunk to 475.5 million barrels, the lowest since June 1985, by allowing it to enter forward contracts to purchase oil in future years at fixed, preset prices.

“What it means in practice is that producers would have more certainty about future demand for their product, and that would encourage investment in production today,” a senior U.S. official told reporters.

Oil purchases to replenish the SPR will not be competing with demand for oil in the near term as they will likely take place after fiscal year 2023, an official told reporters.

A U.S. Treasury Department analysis showed that the SPR releases, along with coordinated releases from international partners, have reduced gasoline prices at the pump by as much as 40 cents per gallon, compared to what they otherwise would have been.

International oil prices fell on Tuesday on the SPR sale and on consumer concerns about inflation and interest rates. Brent crude futures settled at $104.40 a barrel, down 75 cents.

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Reporting by Timothy Gardner, Doina Chiacu and Jeff Mason; Editing by Paul Simao, Andrea Ricci and Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

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Nuclear Power Gets New Push in U.S., Winning Converts

Ms. Capito has argued that coal-fired power plants, which have been closing as the nation moves away from fossil fuel sources, could become sites for nuclear reactors. That would provide benefits for places like her home state, which has produced coal and relied on it as fuel for power generators.

“Ultimately, you get to a point where you need something that’s not weather dependent, something like nuclear to make the grid reliable,” said John Kotek, who ran the Office of Nuclear Energy during the Obama administration and is now vice president for policy at the Nuclear Energy Institute, a trade association. “There are other technologies that are candidates to play that role, but if you look at what is available today across the widest scale, that’s nuclear energy.”

The rising costs of other sources of power have made nuclear energy more competitive around the world, including in the United States, which has the largest fleet of nuclear plants of any country. They produce about 20 percent of the nation’s electricity and 50 percent of the clean energy.

The United States maintains 92 reactors, though a dozen have closed over the last decade — including, a month ago, the Palisades Nuclear Generating Station in Michigan, about 55 miles southwest of Grand Rapids.

The owner, Entergy, decided to shut the plant after a power-purchase agreement with a utility expired. Entergy said it could not find buyers for the plant, and decommissioning has gone too far to bring it back online, even with the money from the federal government.

Diablo Canyon is next on the decommissioning list, but Gov. Gavin Newsom has proposed extending its life. The plant, on California’s central coast, supplies almost 10 percent of the state’s electricity. Pacific Gas & Electric, which owns the plant, announced in 2016 that it planned to close it when its licenses expired, saying it would focus more on solar and wind power as renewable energy sources.

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