Jan. 2 (Bloomberg) -- The U.S. Energy Department plans to add 12 million barrels of oil to the nation’s Strategic Petroleum Reserve, the first increase since prices surged to a record in July.

A ban on oil purchases for the reserve ended Dec. 31. Oil futures in New York tumbled to as low as $32.40 a barrel last month from July’s all-time high above $147. Futures settled at $46.34 per barrel today. The department last put oil in the reserve in July, when it added 1.3 million barrels.

“Thank God they’re doing it at reasonable prices,” said Peter Beutel, president of Cameron Hanover, an energy consulting company based in New Canaan, Connecticut. “But 12 million barrels is a drop in the bucket. It’s not going to have a big impact on prices.”

Today’s addition is part of 25 million barrels of oil the department plans to put into the reserve by the end of this year, according to a statement today. It comes weeks before the Bush administration is set to leave office, leaving implementation to President Barack Obama’s administration.

“DOE plans to take advantage of the recent sharp decline in crude oil prices to enter the market,” the statement said. “The approximately $600 million received from DOE in 2005 from the emergency sale of crude oil following hurricanes Katrina and Rita will be used for the purchase.”

The department is seeking the oil for deliveries in February, March and April. In addition, from January through May, the Department will get 5.5 million barrels that were loaned to U.S. refiners after interruptions caused by hurricanes Gustav and Ike last fall.

Royalty Payments

The Energy Department plans to add another 2.2 million barrels in January in lieu of royalty payments to pay for Gulf of Mexico production. The department also will seek contracts to exchange 25,000 barrels per day, or an estimated 6.1 million barrels of oil, instead of royalty oil from May through December.

If all the oil announced today is acquired, it would fill the reserve to its 727 million barrel capacity, up from a current 702 million barrels.

With Dan Lonkevich in New York. --Editor: Robin Saponar, Jon Bixby.

To contact the reporter on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net.

Last Updated: January 2, 2009 15:50 EST