US, WASHINGTON (ORDO NEWS) — The Trump administration plans to lease energy companies oil storage space in the country’s Strategic Oil Reserve after the initiative to buy millions of barrels of emergency supplies was canceled due to lack of funding, according to two sources informed about the situation, Reuters reports.
The new plan could help the United States cope with the growing surplus of raw materials, which could cause commercial storages to be full, sending world oil prices to an even steeper peak amid falling demand due to the coronavirus pandemic.
This plan may be announced as early as Wednesday, sources said.
The plan is a change of course relative to the original scheme, according to which the Department of Energy would buy oil from US producers at the expense of federal funds.
However, Congress did not approve the allocation of funds for the purchase, forcing the agency last week to cancel the proposal.
The revised plan will help traders and other market participants who are trying to cope with the rapid drop in oil prices – they will be able to store raw materials for sale later, after the crisis is over.
The US strategic oil reserve has 77 million barrels of free capacity – a little less than what the country uses in four days. Currently, it contains about 635 million barrels of oil in salt caverns on the coast of Texas and Louisiana.
The Department of Energy has not responded to a request for comment.
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