US President Donald Trump’s proposal to sell nearly half of the U.S. emergency oil stockpile has sparked an intense debate about whether the Strategic Petroleum Reserve is still required.
The federal government has stashed away nearly 700 million barrels of oil to shield Americans from a shock that would send gasoline prices spiking.
U.S. shale oil boom has dramatically altered the global energy landscape by drastically reducing U.S. imports in the past decade.
The exact timing of the move is still unknown but Trump’s fiscal 2018 budget estimated $16.6 billion to be raised after selling an additional 270million barrels of oil over the next decade.
Strategic Petroleum Reserve was created in the wake of the 1970s Arab oil embargo, which today is the largest stockpile of government -owned emergency oil on the planet.
Some analysts warn that selling half of Strategic Petroleum Reserve could backfire, especially in today’s uncertain world.
“It’s a bit concerning. You’re reducing the government’s budget deficit, but you’re putting more risk onto the consumer. That’s who is going to pay for it,” CNN quoted Carl Evans, senior crude oil analyst at Genscape of an energy market research firm as saying.
Evans pointed to the risk posed by the political strife in Venezuela and Nigeria that has caused production to tumble in those OPEC nations.
If Trump wants to sell 50% of the strategic reserve from current levels or on top of the reductions Congress recently agreed to. Those cuts would already wipe out more than 150 million barrels from the SPR, according to S&P Global Platts.