Trump administration to buy 1 million barrels of oil for national stockpile

The Department of Energy (DOE) is planning to buy 1 million barrels of oil from U.S. companies after funding to make a larger purchase failed to pass Congress.

A notice posted by the agency Wednesday calls the purchase “a test” for the Strategic Petroleum Reserve, a national stockpile President Trump in mid-March said he would fill “right up to the top.”

The 1 million barrel purchase would be a far cry from the 77 million barrels of space within the reserve. Doing so would have required $3 billion in funds, which Congress did not appropriate as part of the CARES Act stimulus package.

The effort comes as oil prices have fallen to historic lows due to a lack of demand and a lack of storage space for an oversupply of oil.

Democrats have repeatedly spoken out against any effort to assist the oil and gas industry during the coronavirus pandemic.

“Using federal assistance — including low-interest loans, royalty relief, tax breaks, or strategic petroleum reserve purchases — in order to prop up oil companies would be a wasteful misuse of government resources that would exacerbate the climate crisis,” Sens. Bernie Sanders (I-Vt.), Ed Markey (D-Mass.) and Jeff Merkley (D-Ore.) wrote in a letter to the president when the idea was first floated.

In April, DOE announced it would instead rent 23 million barrels of storage space in the reserve, allowing companies to pay for the space in oil. 

The 1 million barrel purchase would be open to small and mid-sized oil and gas companies. The Federal Reserve Board also tweaked its Main Street Lending Program to be accessible to the same size oil companies.

Energy Secretary Dan Brouillette told Bloomberg TV on Wednesday that he and Treasury Secretary Steven Mnuchin were asked by President Trump “to evaluate the programs that were passed by the Congress and ensure that there is access for these energy industries to those programs.”