The Biden Administration has successfully executed a forward contract acquisition for the Strategic Petroleum Reserve. We’re extremely pleased to see the Department of Energy (DOE) successfully utilize its new authority, and even more excited that it simultaneously announced another forward contract acquisition for September delivery. These repurchases leverage the new regulatory authority to engage in fixed price contracts, and is a positive step to carry out the President’s energy policies to stabilize the energy price and investment outlook.


At the end of last year, DOE announced a pilot acquisition that failed to acquire any barrels because of too few bidders and too high prices for the bids. As we previously wrote, the acquisition revealed flaws in the design of the process, leaving industry participants vulnerable to several costs and one-sided optionality for the Federal government. A failure to execute a novel authority can easily result in stasis or abandonment of the strategy, but as we noted, the exposed flaws were readily surmountable. We are pleased to see the DOE learn, adapt, and improve upon its processes.

DOE and the Biden Administration writ-large deserve credit for successfully using a novel new authority to acquire petroleum at a significant return for the taxpayer. With the average sale price at $95 dollars, and a purchase price that apparently averages $73, the taxpayer return for the acquisition is approximately $66 million.


As President Roosevelt once said of the New Deal era, “the country demands bold, persistent experimentation.” The Biden Administration is attempting to radically alter the economic and energy landscape. The passage of the IIJA, IRA, and CHIPS are the first steps, but true success will require nimble management and market-shaping authorities to stabilize the investment outlook. We will have more to say in the coming days and weeks about how this success can translate to a more transformative and permanent paradigm shift for US energy policy, but the DOE’s success paves a clear path to future successes.