President Trump is trying to find a way around reluctant lawmakers.
Last year, Energy Secretary Chris Wright complained that the GOP-led Congress wouldn’t give the Trump administration the billions of dollars needed to fill up the U.S.’s oil reserves.
The federal oil stocks are in dire need of new supplies.
The Trump administration has repeatedly blamed former President Joe Biden for draining the reserves, but it has depleted the stocks further despite Trump’s pledge that he would replenish them “right to the top.”
The Energy Department in the past has used proceeds from crude sales to acquire new barrels, but before Trump’s re-election, that account was essentially depleted, analysts at energy analysis firm Rapidan Energy Group noted at the time. The administration could swap that heavy oil for light or medium crude from the U.S., which it would then pump into the national stockpile. “Think of it like trading in an older car and putting its value toward a new vehicle purchase. But they noted that it would have the added benefit of letting American oil producers participate in the plan, which could help address their concerns about U.S.-sponsored competition from Venezuela. The government has reserved recent solicitations for crude to recharge the strategic stocks to domestic producers.
Congress last year appropriated a paltry $171 million to begin refilling the stockpile, compared with the $20 billion that Wright said at the time was needed. Because the salt caverns are set up to contain mostly light to medium types of crude, analysts said the trade would likely be necessary.
In January, a few days after the Trump administration seized Venezuelan strongman Nicolás Maduro, Wright said he was looking at “creative ways in which we do deals with private businesses that we can generate oil without any government cash and put it in the Reserve. He said on CNBC that American refineries are set up to transform heavy Venezuelan crude into fuel and would benefit from an influx of new barrels. “Our refineries could buy Venezuelan oil and then offer the U.S. government higher-quality oil,” said Clayton Seigle, a managing director at advisory firm Beacon Global Strategies.
Wright offered more details on Wednesday about the unorthodox deal.
The Trump administration said the deal “secures our energy dominance for the next century—all at zero cost to the United States. It said it would ensure a stable supply of low-cost oil that can facilitate refilling the federal stockpile.
