(Bloomberg) -- The Biden administration may not be able to take full advantage of the recent drop in oil prices as it seeks to refill its depleted crude oil reserve, the Energy Department’s No. 2 official said Monday.
The US Strategic Petroleum Reserve stands at its lowest level since the 1980s, but physical constraints and maintenance at the network of underground caverns along the US Gulf Coast have been limiting the amount the Energy Department can purchase to about 3 million barrels a month, Deputy Energy Secretary David Turk said.
“That is the physical limit of how much we can buy back,” Turk said in a Bloomberg TV interview on the sidelines of the COP28 climate conference. “We hope we can bring more capacity on line at these price levels to buy as much as we can to refill. We will buy back as much as we possibly can, but there are some physical constraints.”
Oil prices have posted back-to-back monthly declines as supplies from non-OPEC countries ballooned, while the outlook for demand growth has softened. West Texas Intermediate fell 0.8% Monday to $73.45 a barrel, the lowest since Nov. 16.
Read More: Massive US Oil Caverns Sit Empty and Will Take Years to Refill
The more than 700-million-barrel oil reserve, constructed in the aftermath of the 1970s Arab oil embargo, currently stands at about 350 million barrels, following the Biden administration’s historic 180 million barrel withdrawal to tame gasoline prices in the wake of Russia’s invasion of Ukraine as well as sales mandated by Congress.
So far efforts to refill it have been at a trickle, with two of the reserve’s sites in Texas and Louisiana offline for maintenance and a $1.4 billion modernization program, funded through oil sales, behind schedule and over budget.
The Energy Department, which solicited a request for 3 million more barrels for the reserve Friday, said it since January it has “secured” 12 million barrels for the reserve, including the direct purchase of 9 million barrels and the return of 4 million barrels from oil companies.
(Adds current capacity of reserve in ninth paragraph.)
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