The U.S. government announced Monday that it plans to sell 58 million barrels of crude oil from emergency reserves starting in fiscal 2018 until 2025 to help pay for spending increases included in a newly agreed upon budget deal that ends mandatory spending cuts, reported Reuters.
The proposed sale would involve tapping into the Strategic Petroleum Reserve in Texas and Louisiana, which holds more than 695 million barrels of crude oil, and extracting more than 8 percent of the reserves. Oil sales would start in 2018 at a rate of 5 million barrels per year and rise to 10 million per year by 2023, according to Bloomberg.
The White House and GOP congressional leaders included the proposed oil sale in a tentative breakthrough budget deal that would set government funding levels for the next two years and raise the country's debt limit through 2017. The text of the deal was posted online late Monday and the House is expected to vote on it as early as Wednesday.
Money earned from oil sales would help offset an $80 billion increase in domestic and defense spending over the next two years, just under a 1 percent growth, and would be "deposited into the general fund of the Treasury," according to The Hill.
The U.S. has raised cash from the reserve once before in an effort to counter the power of Arab producers after the 1973-74 oil crisis.
The White House on Tuesday urged lawmakers to support the budget proposal, calling it "a responsible agreement that is paid for in a balanced way."
Critics, including former U.S. energy officials and oil analysts, say that using the reserves to offset spending costs goes against their intended purpose: serving as an emergency backup energy source in case of "severe energy disruption," according to Bloomberg.
Proposals were previously floated to use the oil reserve to pay for a highway bill and new health care research.
Sen. Lisa Murkowski, R-Alaska, chairwoman of the Senate Energy and Natural Resources Committee, led an effort this summer to protect the stockpile, calling any sales not related to energy security irresponsible.
"Selling off millions of barrels of America's strategic oil reserve at a time when spare capacity is low and the global threat environment is heightened would be an error of historic proportions," she said over the summer in response to the highway bill.
"Such a sale would be the largest in the SPR's history - greater than all previous emergency drawdowns combined - and would undermine our nation's energy security for a temporary gain. It would be like cashing in our home insurance policy to pay for repaving the driveway."
Energy Secretary Ernest Moniz agreed, telling senators earlier this month that the reserve is too important and should not be sold off.
"Today's low oil prices, increased domestic oil production and reduced U.S. oil import dependency have led some to conclude that selling large volumes of oil from the SPR for purposes not related to energy security will have no impact on its energy security benefits," Moniz said during testimony to the Senate Committee on Energy and Natural Resources. "This view fails to recognize that the SPR remains an extremely powerful and valuable energy security tool."
Following the announcement of the deal, oil futures had already dropped on Tuesday to a two-month low, according to Market Watch. Natural gas futures also dropped 10 percent to their lowest levels in three years.
