‘TRUMP TO TAP OIL RE­SERVES TO TRIM DEBT’

Move ex­pected to raise US$16.6b in sales over next decade if passed

New Straits Times - - World - WASH­ING­TON

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

BLOOMBERG PIC

The United States’s Strate­gic Petroleum Re­serve now holds 687.7 mil­lion bar­rels of oil in salt cav­erns and tanks at des­ig­nated lo­ca­tions in Texas and Louisiana.

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