The US Government is proposing to sell off half of the 687.7 million barrels in the Strategic Petroleum Reserve as part of a broad package of changes to reform the energy market and raise revenue.
The Strategic Petroleum Reserve is a government facility comprising four sites on the Gulf of Mexico. Oil is stored in deep underground chambers within salt domes under the surface, ready for distribution should a national emergency arise.
If approved by congress, the plan could raise $500m in the next fiscal year and possibly up to $16.6bn over the coming decade, depending on oil prices. A potential obstacle, however, may be the legally required minimum inventory of 450 million barrels. Cutting the current reserves in half would take it substantially below this.
The proposed budget also looks to open up the Arctic National Wildlife Refuge for oil and gas development. Environmentalists have so far blocked any drilling on the 19-million-acre reserve, citing the potential impact on the local wildlife.
While the budget suggests that opening this area could start generating $100bn in revenue in the 2022 fiscal year, oil companies may not be so enthusiastic. Northern Alaska is a relatively expensive place to operate in, and combined with currently modest prices, oil producers may prefer to explore other avenues and avoid the inevitable backlash from environmentalists. For example, ExxonMobil, which makes lubricants like Mobil Unirex N3, is set to benefit from quick returns from shale fields at current market conditions.