The budget bill passed by the U.S. Senate on Tuesday slashes the amount of money available to replenish the Strategic Petroleum Reserve even though President Donald Trump vowed on his first day in his second term to fill it “right to the top”.
Former President Joe Biden conducted several sales from the SPR including 180 million barrels, the most ever, after Russia invaded Ukraine. The sales left the SPR at its lowest level in 40 years, when the U.S. was far more dependent on oil imports.
The budget bill slashed the amount of money for crude oil purchases to replenish the SPR to $171 million from $1.3 billion. That’s only enough to buy about 3 million barrels instead of 20 million barrels at today’s prices.
Rapidan Energy, a consultancy group, told clients in a note that the funding was hit by the Senate’s struggle to find budget cuts elsewhere as it softened some of the cuts to green energy in a version of the House bill.
The bill now heads to the U.S. House, but it was unclear when lawmakers there would vote.
Trump said on Tuesday that he plans to fill up the SPR when the market conditions are right, but it was unclear when or how. Even deliveries of oil to the SPR that were scheduled after Biden bought back some crude last year are as much as seven months delayed. Biden scheduled 15.8 million barrels of deliveries to the SPR from January through May. So far, only 8.8 million of that has been delivered to the reserve, a situation the Trump administration blamed on maintenance.
The Senate bill kept a measure to cancel 7 million barrels in congressionally-mandated sales. Lawmakers could cancel further mandated sales in legislation later in the year. The SPR has nearly 403 million barrels, far less than the 727 million barrels it held in 2009, the most ever. It is still the world’s largest emergency reserve of oil. The U.S. hit record oil output under Biden, production Trump is looking to expand.
(Reporting by Timothy Gardner, Editing by Franklin Paul)