‘TRUMP TO TAP OIL RESERVES TO TRIM DEBT’
Move expected to raise US$16.6b in sales over next decade if passed
THE White House plan to trim the national debt includes selling off half of the nation’s emergency oil stockpile, part of a broad series of changes proposed by President Donald Trump to the federal government’s role in energy markets.
Trump’s first complete budget proposal, released in part on Monday, would raise US$500 million (RM2.15 billion) in fiscal year 2018 by draining the Strategic Petroleum Reserve, and as much US$16.6 billion in oil sales over the next decade.
The proposal also seeks to boost government revenues by allowing oil drilling in the Alaska National Wildlife Refuge, ending the practice of sharing oil royalties with states along the Gulf of Mexico and selling off electricity transmission lines in the West. Like much of the budget, those moves are likely to face opposition in Congress.
Presidential budget proposals typically undergo significant changes in Congress, but provide insight into White House priorities.
The Strategic Petroleum Reserve currently holds 687.7 million barrels of oil in salt caverns and tanks at designated locations in Texas and Louisiana.
That allows for quick distribution when natural disasters or unplanned accidents occur, according to the Energy Department website.
Measures passed in 2015 and last year call for the sale of nearly 190 million barrels of oil from the reserve between next year and 2025 to raise money for unrelated government programmes.
Those sales would cut the reserve by about 27 per cent. Slashing the stockpile by half would require further sales, and would risk breaching the legally required inventory threshold. The reserve must contain a minimum of 450 million barrels.
The budget summary document doesn’t indicate the scope or timing of potential oil reserve sales, or whether a US$2 billion programme to modernise the stockpile’s infrastructure would be affected.
Trump is also seeking to raise money with two other proposed changes — one that would be cheered by the oil industry and another that would draw its ire.
For instance, he projects raising US$1.8 billion over the next decade by opening up the 7.69hectare Arctic National Wildlife Refuge (ANWR) to oil and gas development. The idea of allowing drilling in the refuge for its estimated 12 billion barrels of crude has long been championed by Alaska Republicans.
Trump’s budget request suggests ANWR leasing could begin to pay off in fiscal 2022, with US$100 billion in projected revenue that year.
Trump’s budget request also revives an Obama-era proposal to cut the payments Gulf Coast states collect from offshore drilling near their coastlines, a change that would translate to an extra US$3.56 billion in federal revenue over the next decade. Bloomberg