Oil purchase to fill strategic reserve dropped from stimulus
The administration used low oil prices to justify purchases for the reserve
The Trump administration's plan to top off the Strategic Petroleum Reserve ran into a blockade Wednesday after lawmakers excluded $3 billion in funding for oil purchases from the massive stimulus package before Congress.
Senate Democrats took credit for stripping out that money from the Senate bill, unveiled Wednesday, calling it a “bailout” for the oil industry.
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Along with the rest of the roughly $2 trillion package, the appropriations section will be added as an amendment to an unrelated bill that passed the House last year. The Senate is expected to vote on the legislation Wednesday.
The administration had announced plans to buy 77 million barrels — enough to fill the reserve. The SPR has about 640 million barrels of oil and filling it up would cost about $2.3 billion, at current prices.
The Energy Department solicited offers from small and midsize producers to fill the reserve and cushion the fallout from low oil prices after the global market cratered this month, following decisions from Russia and Saudi Arabia to continue production.
But DOE would need money from Congress to make purchases for the SPR. The department has about $10 million in its SPR fund.
The department on March 10 also announced it would delay a planned sale of oil from the reserve, citing the low prices.
Congress has at least four times since 2015 tapped the reserve to pay for legislation, including the 21st Century Cures Act, the 2017 tax overhaul, the 2015 bipartisan budget agreement and the 2015 highway infrastructure bill.
Some of those sales have already occurred, others are mandated as late as 2027.
DOE sold about 10 million barrels in the fall of 2019, and those deliveries took place in October and November.
While a spokesman for Senate Minority Leader Charles E. Schumer, D-N.Y., pointed to the exclusion of the “$3 billion bailout for big oil,” a summary of the House Democrats’ stimulus focused on legislation to codify the decision to delay sales from the SPR.
“The price of crude oil has fallen to its lowest level in nearly two decades, so selling oil from the SPR now would result in a significant loss of value to the taxpayer,” a summary of the bill said.
Republicans pushed for the $3 billion purchase measure in an effort to shore up domestic oil and gas companies and their workers.
“If you believe in the purpose of the SPR, now is the perfect time to make sure it’s full,” Energy Secretary Dan Brouillette said on March 19 of the low prices. “The purpose of this is to mitigate these types of disruptions,” he said. “We’re expecting that Congress is going to be supportive of this.” The DOE proposal is open to small and midsize U.S. producers with fewer than 5,000 employees.