March 25, 2020 / 8:25 PM / 4 days ago

UPDATE 1-Trump admin looks to buy oil for reserve out of Energy Dept budget -sources

(Adds analyst comment)

By Timothy Gardner

WASHINGTON, March 25 (Reuters) - The Trump administration is exploring whether it can find money in the U.S. Department of Energy’s budget to buy oil for the nation’s emergency crude reserve after funding was not included in the $2 trillion stimulus bill the Senate is expected to pass soon, three sources familiar with the matter said.

The administration has told energy interests not to worry, that money will be found in the DOE’s budget, one of the sources said, though it was unclear how much money could be arranged that way.

The administration prefers that Congress fund the purchase, but that route has been slowed down by lawmakers concerned that it would serve as a bailout for the oil industry.

Energy Secretary Dan Brouillette said last week he had asked Congress for $3 billion to buy 77 million barrels of oil for the SPR, held in caverns on the Texas and Louisiana coasts.

He said the DOE would buy an initial 30 million barrels by the end of June as a first step in fulfilling President Donald Trump’s directive to fill the emergency stockpile to help domestic crude producers.

U.S. crude oil prices have plummeted as the spread of coronavirus crushed global demand and Saudi Arabia and Russia wage a war over oil market share. They rose slightly on Wednesday to nearly $25 a barrel on hopes for the Senate stimulus package.

The DOE did not immediately respond to requests for comment.

The Senate is poised to vote on the unprecedented $2 trillion package on Wednesday, but it must also be passed by the House and it was uncertain how soon it will be brought to Trump to sign.

As expected, energy measures, including the SPR purchase and incentives for wind and solar power and for cutting emissions from airlines were left out of the bill to move it quickly. Those measures could be added in further stimulus bills in coming weeks.

Kevin Book, an analyst at ClearView Energy Partners, said the Department of Energy has raised about $850 million in its SPR modernization fund through a series of oil sales from the SPR. That is more than enough money for the initial 30 million barrel purchase. Additionally, the Trump administration could “stitch together a tapestry of funding sources and authorities” including the 1950 Defense Production Act to raise money, Book said. (Reporting by Timothy Gardner; additional reporting by Valerie Volcovici Editing by Marguerita Choy and Diane Craft)

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