The Trump administration is planning to sell half of America’s strategic oil reserve.
The US created the strategic oil reserve in 1975 after suffering through an oil embargo imposed by the Arab OPEC nations.
Located in protected underground centres in Texas and Louisiana, the strategic oil reserve holds about 688 million barrels of crude oil.
Under the proposal, the United States would empty half the reserve over the next decade, which would be expected to raise about $500 million in the first year, and increase somewhat in subsequent years.
It is believed the total profit from the sell-off would be $16.6 billion (USD).
Growing American oil production
Because of increased domestic production, the US is now far less reliant on OPEC oil. While the strategic oil reserve would cover the United States for 145 days in the event of a full import blockade, the United States has already reduced their oil imports by about 3 million barrels per day.
The Trump administration is also proposing opening up more of Alaska to oil exploration, which could further reduce American demand for oil imports.
Questions for Canada
Considering the importance of the US market for Canadian oil, increased American production and a more desperate OPEC puts more pressure on Canada. Our current government has pushed policies that are hurting the energy industry, and will reduce our ability to compete against ruthless economic adversaries.
Unless we reduce regulations and taxes soon, Canada will fall further and further behind in the race for dominance of the oil market.