Trump budget would cut oil stockpile, open Arctic refuge to drilling

WASHINGTON: US President Donald Trump’s White House would sell half of the nation’s emergency oil stockpile and open the Alaska National Wildlife Refuge to drilling as part of a plan to balance the budget over the next 10 years, documents released by the administration on Monday showed.

The White House budget, which will be delivered to Congress on Tuesday, is meant as a proposal and may not take effect in its current form. But it reveals the administration’s policy hopes, which include ram ping up American energy output.

The US Strategic Petroleum Reserve, the world’s largest, holds about 688 million barrels of crude oil in heavily guarded underground caverns in Louisiana and Texas.

Congress created it in 1975 after the Arab oil embargo caused fears of long-term motor fuel price spikes that would harm the US economy.

The Trump budget proposes to start selling SPR oil in fiscal year 2018, which begins on Oct 1, with sales that would generate US$500 million, according to the documents.

The sales from the reserve would gradually rise over the following years, peaking at nearly US$3.9 billion in 2027, and totaling nearly US$16.6 billion from 2018 to 2027.

Past SPR sales have sometimes caused crude oil futures prices to drop by adding to available supply.

In this case, that would work against Trump’s efforts to revive the downtrodden oil and gas drilling industries.

US crude oil prices on Monday settled at US$50.73 a barrel, a relatively low level that has limited energy company profits.

The Trump budget would also seek to raise US$1.8 billion over the coming decade by leasing oil in the Arctic National Wildlife Reserve, the largest protected wilderness in the United States, believed to hold rich reserves of crude.

US politicians have been debating whether to open the reserve in northeastern Alaska to drilling since the 1970s, with opponents citing the risk of spills and the contribution to global climate change.

Trump has already moved to expand US offshore drilling, including in parts of the Arctic, as part of his broader effort to support the oil and gas industries. He has also moved to trim the US Environmental Protection Agency, including by proposing a more than 30 per cent cut to its funding.

Mick Mulvaney, the director of the Office of Management and Budget, told reporters on Monday that the overall budget proposal was part of an effort to help the US economy grow at a rate of 3 per cent a year.

“It drives our tax reform policy, our regulatory policy, trade, energy ... everything is keyed toward getting us back to 3 per cent,” he said.

The White House did not immediately respond to questions about the energy-related budget proposals.

Trump’s budget would also restart a nuclear waste fund that would bring in more than US$3 billion by 2027.

The Obama administration stopped charging nuclear energy utilities the fee in 2014 after it stopped the licensing process for Nevada’s Yucca Mountain - a waste dump that cost the government billions of dollars but never opened.

The Trump administration proposed reviving Yucca in details of the budget released in March.