What will oil prices be when the U.S. government begins selling tens of millions of barrels of oil from its Strategic Petroleum Reserve (SPR) in 2018?
The House passed a federal budget on Wednesday – which is reportedly on its way to likely Senate passage and Presidential signature – calling for the government to sell at least 58 million barrels of oil from the SPR over an 8-year period beginning in 2018. The SPR currently holds about 695 million barrels in 4 sites along the Gulf of Mexico coast. Per the budget bill, the U.S. may sell up to an additional $2 billion dollars’ worth of oil from the reserve to build new pipelines and otherwise modernize infrastructure. That program would represent an incremental 43.5 million barrels based on today’s prices, bringing the total number of barrels to be sold up to a possible 101.5 million. At today’s rates, that could add about $4.7 billion into the US Treasury.