February 8, 2018
WASHINGTON (Reuters) – The U.S. budget deal reached by Congress on Wednesday includes the sale of 100 million barrels of crude oil from the country’s emergency petroleum stash starting in 2022, or about 15 percent of the reserve, according to the text of the agreement.
Under the agreement, expected to be voted on later on Thursday, the Energy Department would sell 30 million barrels from 2022 to 2025, 35 million barrels in 2026 and 35 million barrels in 2027 to help fund the government. The Strategic Petroleum Reserve, or SPR, currently holds 665.1 million barrels of crude in series of underground caverns on the Texas and Louisiana coasts.
In today’s prices the oil is worth more than $6.1 billion dollars.
As U.S. oil production hits 10.25 million barrels per day, beating a record set in 1970, pressure has grown to sell oil from the reserve, even though the country still imports crude.
In his budget proposal last year, President Donald Trump had called for selling off half of the SPR as part a broader plan to raise billions of dollars to balance the budget. The proposal never became law in part because of opposition from many of Trump’s fellow Republicans in Congress. Republican Senators Lisa Murkowski and John Hoeven opposed that plan, saying it would have hurt U.S. drillers by knocking down prices and that the reserve is needed for emergencies, such as major storms and outages in oil producing countries.
Opponents also say that some of the oil the SPR holds was bought at higher price levels than today’s prices, so sales should not occur until oil rises.
Last September, in the wake of Hurricane Harvey that inundated refineries in Texas, the Energy Department sold 5.3 million barrels of oil from the SPR to four refiners.
Also that month, six refiners bought 14 million barrels of oil from the reserve to help fund the government and medical research, as mandated in a previous law.
This week’s budget deal also would direct the sale of $350 million worth of crude, or about 5.7 million barrels, this year. The proceeds of that sale will go to modernize the reserve which is need of repairs as storage units and pumps are constantly exposed to wet, salty air. The SPR modernization plan also calls for work on terminals to take oil by ship.
Reporting by Timothy Gardner; Editing by Marguerita Choy