The United States could begin purchasing U.S. produced crude oil for the Strategic Petroleum Reserve as soon as two weeks from now, and fill it in several months, an Energy Department source said on Monday.
President Donald Trump said late on Friday that he has ordered the Energy Department to fill the reserve “to the top.” The move was aimed at helping domestic energy producers suffering from the plunge in oil prices brought about by the spread of coronavirus and a price war between Saudi Arabia and Russia.
The Energy Department has said the reserve, which has a capacity of 713 million barrels, can take an additional 77 million barrels of crude.
It was unclear how the government would finance such a purchase will be funded by the government. The cost of 77 million barrels at Monday’s prices for WTI oil of less than $30 a barrel would be nearly $2.3 billion.
Congress would likely have to pass a bill containing funding but it was uncertain how much money could be arranged through legislation. Some lawmakers in the House of Representatives, which is controlled by Democrats, could seek measures to promote green energy as a compromise.
Still, the source was confident that things would move quickly. “Based on discussions with industry we are confident that this can be filled within several months,” said the DOE source who spoke on condition of anonymity.
Trump, who is running for reelection in November, has been divided on the impact of low oil prices. Last week he said in a tweet: “Good for the consumer, gasoline prices coming down!”
But the oil price drop could also push many domestic crude producers into bankruptcy.