Energy Secretary Dan Brouillette said Thursday that he will ask Congress for $3 billion to fulfill President Trump’s order to buy low-priced oil to restock the nation’s emergency Strategic Petroleum Reserve.
That funding would be sufficient to buy 77 million barrels, the full amount of open capacity in the SPR. It contradicts a statement from Treasury Secretary Steven Mnuchin, who earlier Thursday told Fox Business that the U.S. government should “go out and buy $10 billion or $20 billion” of oil to fill up the reserve.
However, the Energy Department would need nowhere near that amount, so it’s unclear how Mnuchin generated that higher number.
Brouillette told reporters on a press call that he had not seen Mnuchin’s comment and said he intends to call the treasury secretary to ask what he meant.
The Energy Department has begun the process of fulfilling Trump’s order to fill the SPR to take advantage of low crude prices. The agency announced Thursday a solicitation for purchase of an initial 30 million barrels with the intent to eventually buy 77 million barrels.
Brouillette said the agency will focus on buying sweet and sour crude from small to midsize U.S. oil producers that are “facing potentially catastrophic losses” from the coronavirus and “the intentional disruption to world oil markets by foreign actors.” Sellers must be U.S.-based and employ fewer than 5,000 people.
But Brouillette acknowledged DOE will need funding from Congress to fulfill Trump’s order, which he hopes lawmakers provide in the third batch of a stimulus package being introduced to respond to the coronavirus pandemic. Congress could also reprogram existing funding from other accounts.
“We are expecting Congress to be supportive of this,” Brouillette said. “This industry is of key importance to our national economy, and that is broadly recognized across the capitol.”
Brouillette also acknowledged Trump’s move to buy low-priced oil to restock the SPR won’t halt the price crash rocking the shale industry, and he said that wasn’t the main rationale for doing it.
“I don’t anticipate this will drive oil prices up,” he said.
He said Trump’s decision makes good sense on energy security grounds while benefiting taxpayers.
“Anyone who does personal investing knows you try to do best to buy low and sell high,” Brouillette said.
Congress created the SPR in response to the Arab oil embargo in the 1970s as a way to mitigate supply disruptions. The SPR currently holds just shy of 635 million barrels of oil, according to Energy Information Administration data.
