The White House has proposed to dispose of half of the strategic petroleum reserves in the United States as a budget-balancing measure in the course of the next decade. The budget proposal by the Trump administration also seeks to allow drilling in Alaska’s National Wildlife Refuge. While the budget proposal might be ignored by Congress, it reveals the policy hopes of the Trump administration and this includes increasingly the energy output of the United States.
Currently, the strategic oil reserves of the United States which are the largest in the world boast of crude oil barrels that amount to approximately 688 million. These reserves are held in underground caverns that are heavily guarded in the states of Texas and Louisiana. The reserves were created by Congress in 1975 following an Arab oil embargo which raised fears that long-term spikes in motor fuel prices would cause harm to the economy of the United States.
Next fiscal year
Under the newly released Trump budget proposal, selling of the oil from the strategic petroleum reserves would begin in next fiscal year which starts on October 1. At first the revenue generated from the initial sales would amount to $500 million. But with time the sales would gradually increase to reach a high of $3.9 billion in a decade. The combined proceeds from the sales would be $16.6 billion.
Coming at a time when OPEC is leading efforts aimed at tightening oil supplies, the Trump administration’s budget proposal to sell half of the U.S. strategic oil reserves undermines those plans.
Drilling in Alaska
The budget proposal is also seeking to generate approximately $1.8 billion in the next ten years by leasing oil contained in Alaska’s National Wildlife Reserve. The reserve, which is America’s biggest protected wilderness, is thought to hold enormous crude reserves. Allowing drilling in Alaska would lead to an increase in the amount of oil produced in the United States. Since mid-last year oil production in the United States has increased by more than 10% to stand at 9.3 million barrels a day.
Politicians in the United States have been engaged in debates since the 1970s on whether to allow oil drilling in the northeastern parts of Alaska. Opponents of drilling have cited the risks associated with spills and the harm it would do to the environment. Offshore drilling in the United States has, however, been expanded since Trump took over power all in efforts to support the gas and oil industries.