• 3 hours Why Alberta Will Win The War Over Trans Mountain
  • 12 hours Trade war with China on hold
  • 7 hours Saudi Arabia Ready to Start Pumping More Oil
  • 1 hour Psychological manipulation of oil prices.
  • 6 hours Venezuela Election Won by Maduro Amid Widespread Disillusionment
  • 14 hours The Gravity Effect on Oil Prices
  • 12 hours Higher Fuel And Staff Costs To Weigh On Ryanair Profits
  • 11 hours Tesla’s $35,000 Model 3 Could Now Cost $78,000
  • 13 hours California to mandate solar on new homes
  • 10 hours How is Pruitt still around?
  • 19 hours Russia/Germany Pipeline Really A Security Threat for US?
  • 12 hours Trump Could 'Punish' Venezuela With Oil Sanctions Immediately After Presidential Vote
  • 23 hours Most Likely Fossil Fuel Future
  • 6 hours Top Google Engineers Say Renewable Energy Simply Won't Work
  • 15 hours $1 for a Journey on the Loop
  • 15 hours Renewable Energy Use In Europe Didn’t Stop Carbon Emissions From Rising
Alt Text

Trump Tears Up The Iran Deal

Oil prices jumped on Tuesday…

Alt Text

These Two Shale Plays Are Making A Comeback

U.S. shale drillers are once…

Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

Trending Discussions

Trump To Sell Half The Strategic Petroleum Reserve

Offshore

In a release of part of the draft budget for fiscal 2018, the Trump administration has proposed halving the strategic petroleum reserve, which will raise some US$500 million during the fiscal year and US$16.6 billion over the next ten years, according to Bloomberg.

Among the other measures aimed at increasing budget revenues from the oil and gas industry is stopping oil royalty payments for the Gulf of Mexico states, opening up the Alaska national Wildlife Refuge for drillers, and selling power transmission lines in the West. As Bloomberg notes, most of these are likely to face opposition in Congress.

The proposed oil sales from the strategic reserve will add to already approved sales of 190 million barrels of crude, to take place between this year and 2025. These sales were passed by the previous presidential administration in 2015 and 2016. The strategic reserve currently holds 687.7 million barrels. According to Bloomberg, halving the reserve will violate the minimum threshold requirement, which is 450 million barrels of oil.

The idea to open up protected lands for oil and gas exploration may at first sound like a boon for the oil industry, but in fact the industry’s reaction to earlier plans by the President to expand Arctic drilling has been less than enthusiastic, due to the high production costs in the Arctic. Environmental opposition is also bound to be a problem, but costs are the bigger one. Shale may be thriving in a price environment of US$50 a barrel, but that won’t be true for Arctic oil.

As for the Gulf Coast plan, President Trump’s idea is not new: President Obama, too, tried to cut the royalties to Gulf Coast states from offshore drillers near their coastline. At the time, state governments put up fierce opposition, and this is likely to repeat now. To date, Gulf Coast states receive 37.5 percent of the royalties GOM drillers pay into the federal budget and use a lot of the money for environmental restoration programs. Yet in the unlikely scenario of the President winning their support for the measure, the additional federal revenue would be to the tune of US$3.56 billion over the next decade.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • Philip Branton on May 23 2017 said:
    Hmm...... Selling the reserves to who? Dubai Ports....? China....? Tillerson Enterprises..? Clinton Global Initiative....? Amazon oil.....? Facebook Petroleum....?

    Strategic....is strategic....
  • Naomi on May 23 2017 said:
    Low energy prices stimulate wealth creation, economic growth, and tax revenue. Adding strategic petroleum reserves to the market is a strategic move to lower oil prices. As well the future of energy is low cost methane hydrates. Petroleum should be sold while the price is high.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News