The future of the Trump administration plan to purchase millions of barrels of oil is in doubt after the Senate declined to provide funding for the purchase in its latest coronavirus stimulus package.
The Energy Department withdrew its solicitation to buy oil for storage in the Strategic Petroleum Reserve (SPR) on Wednesday.
“Given the current uncertainty related to adequate Congressional Appropriations for crude oil purchases associated with the March 19, 2020 solicitation, the Department is withdrawing the solicitation,” the department said in withdrawal document.
“Should funding become secure for the planned purchases, the Department will reissue the solicitation,” it continued.
The department has said that it would initially purchase 30 million barrels of oil after President Trump
Donald John TrumpNorth Korea asking for aid, while denying any coronavirus cases: report Iranian official maintains Tehran has ‘no knowledge’ of American hostage’s whereabouts Unemployment claims surge to 3.2 million as coronavirus devastates economy MORE said that he wanted to purchase crude for the SPR, giving a boost to the oil industry.
As of Thursday morning, oil was selling for nearly $24 per barrel, meaning to purchase 30 million barrels would cost more than $700 million.
Senate Minority Leader Charles Schumer (D-N.Y.) said in a letter to colleagues after the stimulus deal was struck that it did not include what he described as a “bailout for big oil.”
Energy Secretary Dan Brouillette is calling on Congress to provide funding as soon as possible, according to department spokeswoman Shaylyn Hynes.
“President Trump’s directive to buy oil at a competitive price for the SPR is a common sense move benefiting taxpayers and supporting our nation’s economic and national security interest,” Hynes said in a statement.
“Small to medium size American energy companies and their employees should be provided the same relief being provided to other parts of our economy,” she added.
Oil prices have plunged because of decreased demand linked to the coronavirus and international disputes involving Russia and Saudi Arabia.
The oil industry appeared to have mixed sentiments on whether the SPR purchase funds should have been included in the stimulus package, which passed the Senate unanimously late Wednesday.
When Trump announced that he wanted to buy the oil, Anne Bradbury, the CEO of the American Exploration and Production Council, said in a statement that the move could “help alleviate the oversupply disruptions in the marketplace.”
However, asked about the decision to not include the funding, the American Petroleum Institute’s senior vice president of policy, economics and regulatory affairs, Frank Macchiarola, noted in a statement that his group “did not advocate for these purchases.”
Environmentalists were pleased that the money for oil purchases wasn’t in the stimulus package, although some expressed disappointment in other provisions such as a $500 billion corporate liquidity fund.
“In the midst of a horrifying global health crisis that’s already claimed the lives of thousands of people, it’s unconscionable that the Senate is prioritizing giving even a single cent to some of the richest corporations in the world when working people are struggling,” said a statement from Varshini Prakash, the executive director of the progressive Sunrise Movement.
“It’s good that we forced Senators to cut some of the worst corporate giveaways, including all handouts to fossil fuel companies, but we need our allies in the House to hold the line and push for more,” Prakash added.
— This report was updated at 12:35 p.m.
