The expectations of the US oil industry to support shale oil went by the board. The U.S. Department of Energy removed the $ 3 billion fund requested for the project from the $ 2 trillion incentive package Wednesday.
The $ 2 trillion plan, approved to support the US economy, does not include financing to purchase about 77 million barrels of crude oil. Given the current uncertainty about Congress Allowances for crude oil purchases related to the March 19, 2020 request, the Ministry withdrew the request.
The Trump administration had requested $ 3 billion to purchase oil for the Strategic Oil Reserve (SPR). This amount would buy 77 million barrels enough to carry the SPR to its capacity. This $ 3 billion support requested for SPR purchases has not been shelved forever. The requested $ 3 billion can be added to future coronavirus incentive legislation.
The SPR was created as a lifeline in the event of serious supply outages during Ford management. Nevertheless, there has been a real sale of oil from SPR in recent years.
However, the idea behind the sales was that with the disappearance of the US oil dependency and becoming a net oil exporter, it was no longer necessary to retain such crude oil. Crude oil held in SPR reached 726 million barrels in 2011. SPR currently consists 635 million barrels of oil stored in multiple locations.
In fact, the modeling behind SPR purchasing is to support the shale, that is produced rather costly, and 77 million barrels of new demand can help to support the industry.
Whether this would have any effect was a matter of debate. The world consumed about 100 million b / w before the recent collapse of demand. The first oil group tender was announced last week, and the SPR wanted to purchase 30 million barrels to be delivered between May 1 and June 30. This will be about 490,000 b / d. If this refers to a restructured demand such as 88 million b / d, this means that the demand will increase by 0.05 to 0.05. Compared to total U.S. oil demand, it is probably 18 million b / d, or 2.7%.
As a result, this debate ended with the inability to convert the SPR purchase into the final law adopted by Congress and White House negotiators.