The Trump administration is exploring whether it can find money in the U.S. Department of Energy's (DOE) budget to buy oil for the Strategic Petroleum Reserve (SPR) after the funding was not included in the $2 trillion stimulus package the Senate is expected to pass soon, three sources familiar with the matter said.
The administration has told energy interests not to worry, that money will be found in the DOE's budget, one of the sources said, though it was unclear how much money could be appropriated.
The administration prefers that Congress fund the purchase, but that has been slowed down by lawmakers concerned that it would serve as a bailout for the oil industry.
Energy Secretary Dan Brouillette said last week he had asked Congress for $3 billion to buy 77 million barrels of oil for the SPR, held in caverns on the Texas and Louisiana coasts.
He said the DOE would buy an initial 30 million barrels by the end of June as a first step in fulfilling President Donald Trump's directive to fill the emergency stockpile to help domestic crude producers.
U.S. crude oil prices have plummeted to under $24 a barrel as the spread of coronavirus crushed global demand and Saudi Arabia and Russia wage a war over oil market share.
Another source said Brouillette had been trying to get lawmakers to put a measure in legislation that would allow the DOE to find money in the budget.
The DOE did not immediately respond to requests for comment.
The Senate is poised to vote on the unprecedented $2 trillion package on March 25, but it must also be passed by the House and it was uncertain how soon it will be brought to Trump to sign.
As expected, energy measures, including the SPR purchase and incentives for wind and solar power and for cutting emissions from airlines were left out of the bill to move it quickly. Those measures could be added in further stimulus bills in coming weeks.
Analysts at Height Securities LLC said in a note on March 25 they continue to expect the administration will find one way or another to add oil to the SPR "potentially through emergency authority, repurposing unspent funds, and/or another act of Congress." But they said the purchase is under risk "until a clear strategy is enumerated."
Although greenfield projects have been put on hold, short-term economics offer a safety net for the U.S. offshore oil and gas industry.
This week’s meetings are part of an OPEC+ effort to review the impact of a record supply that started May 1 cut and hear from countries yet to deliver their share in full, such as Iraq.
U.S. oil producers sought on Jan. 23 to soothe OPEC's worries about losing market share, telling the group that investors in the U.S. firms wanted a reduction in growth and higher payouts.