(Investing) – WASHINGTON -A U.S. House committee released a budget proposal that includes more than $1.5 billion to replenish and maintain the Strategic Petroleum Reserve, and cancels a congressionally mandated sale, following huge sales from the facility in 2022.
The proposal from the House Energy and Commerce Committee released late on Sunday contains $1.32 billion to purchase oil to help replenish the SPR, the world’s largest emergency stockpile of crude, and $218 million for maintenance of the facility.
U.S. Energy Secretary Chris Wright had estimated in March that it would take $20 billion and years to accomplish U.S. President Donald Trump’s goal of filling the SPR, a move that would help domestic energy producers amid relatively low oil prices. The facility has the capacity to store about 727 million barrels and currently holds about 399 million barrels.
The House committee is controlled by Trump’s fellow Republicans and this move is part of a wider proposal to cut grants and loan financing in former President Joe Biden’s landmark climate law, the Inflation Reduction Act.
Biden, a Democrat, sold a record 180 million barrels from the SPR in 2022 after Russia, a leading oil producer, invaded Ukraine, bringing the reserve down to its lowest level in 40 years.
The House measure, which faces a committee vote on Tuesday, also repeals a congressionally mandated sale of 7 million barrels from the SPR through fiscal year 2027. The Biden administration had worked with Congress to cancel congressionally mandated sales to help keep levels in the SPR from falling.
The Department of Energy also issued a proposal in the Federal Register on Monday that would allow the government to buy oil for the SPR at an indexed price, instead of a fixed price – meaning the actual price of the oil could move higher or lower with the market.
The Biden administration had adopted a fixed-price rule, arguing that it helped in arranging quick purchases for the reserve.
The DOE said in the new proposed rule that fixed-price contracts have “only served to unnecessarily create confusion in the industry.”
The new rule will go into effect in 60 days unless the proposal receives “significant adverse comments.”
