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Oil and gas

Will Trump’s oil flow from U.S. reserves or the arctic?

John Kemp  Senior Market Analyst, Commodities and Energy, Reuters News

John Kemp  Senior Market Analyst, Commodities and Energy, Reuters News

President Donald Trump has pledged to sell half of United States emergency crude oil reserves and open the Arctic National Wildlife Refuge (ANWR) to drilling as part of a plan to balance the budget over the next 10 years, according to documents released by the administration.

Although the White House budget is meant as a proposal and may not take effect in its current form; it does outline several of the administration’s policy hopes, which include ramping up American energy output.

U.S. oil reserves sales

The U.S. Strategic Petroleum Reserve (SPR), created by Congress in 1975 following the Arab oil embargo, holds about 688 million barrels of crude oil in large underground caverns based in Louisiana and Texas, designed to counter the fear of long-term motor fuel price spikes that could eventually harm the U.S. economy.

Infographic explains the U.S. Strategic Oil Reserve, including storage sites, how the oil is stored, oil reserve inventory, and other emergency oil stocks around the world.
Copyright Reuters 2011. All rights reserved. Learn more about Reuters News Graphics.


The proposed budget aims to begin selling SPR oil in 2018, potentially generating sales of $500 million and gradually raising over the years to peak at an estimated $3.9 billion in 2027. Assuming the estimates hold true, that could total nearly $16.6 billion between 2018 and 2027. However historical data cautions the accuracy of these estimates, as past SPR sales have shown the opposite is true, in that sometimes crude oil futures prices drop due to the increased supply, effectively working against President Trump’s efforts to revive the oil and gas drilling industries.

Arctic National Wildlife Refuge oil drilling

Additional efforts to ramp up the American energy output outlined in the current administration’s proposed budget is to begin leasing oil from Alaska’s ANWR. The largest U.S. protected wilderness area is believed to house vast amounts of crude. With a potential $1.8 billion on the line over the next decade, it is worth a debate.

Oil spill in Alaska is seen with oil seeping from underground in water in a hole dug on a beach on Eleanor Island May 5, 2010.
Oil is shown seeping from underground in water in a hole dug on a beach on Eleanor Island, Alaska May 5, 2010.

Many U.S. politicians have been debating whether to open the reserve in northeastern Alaska to drilling since the 1970s, citing the risk of spills and global climate change contributions as grave concerns for reservations.

Although as President Trump has already moved to expand U.S. offshore drilling and trim the Environmental Protection Agency’s (EPA) funding by more than 30%, it is clear his desire to grow the economy takes precedent.

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