The two-year budget deal reached by congressional leaders would set up the biggest sale in history from the nation’s emergency oil stockpile.
In an effort to partially pay for new spending, the budget agreement would sell 100 million barrels of the Strategic Petroleum Reserve (SPR) in the next decade.
Taken with sales Congress authorized last year to pay for other spending, the deal would leave the Department of Energy-managed reserve with just over 300 million barrels, or about half its previous size.
The deal takes a big chip out of a landmark safety net established in the 1970s to guard the United States from the effects of international turmoil or other big supply disruptions.
“It’s the biggest non-emergency sale proposed in history,” Kevin Book, managing director of ClearView Energy Partners, said of the 100 million-barrel sale.
“The age of energy scarcity, the entire structure — regulatory and otherwise — that was built to address concerns about ‘not enough,’ has apparently ended.”
Oil is currently going for around $60 a barrel, which would net the United States $6 billion if sold today. Prices are likely to increase over the next decade, when the sales would happen, but it’s difficult to predict by how much.
Until recently, Congress had strong bipartisan agreement to avoid using the SPR as a piggy bank. But with little other sources of income and perennial opposition to tax increases, it has increasingly been used as such, for costs like infrastructure and a medical research bill.
The Trump administration proposed last year to cut the SPR’s size in half, which Congress is now on track to do. The deal still needs to be approved by both the House and Senate.
The stockpile is kept in a series of leased tanks and other facilities along the Gulf Coast. It has a total capacity of around 700 million barrels, making it the largest petroleum reserve in the world.
The International Energy Agency requires its 29 member countries to keep oil reserves based on their net import volumes, which are at a historic low in the United States thanks to a recent boom in domestic production.