In its recent 2018 budget, the Trump Administration included a huge energy announcement.

While it went mostly under the radar, the budget included a proposal to sell half of the U.S. Strategic Petroleum Reserve (SPR) for some extra revenue.

Now, the SPR was originally established by Congress in 1975 after the 1973-74 Arab Oil Embargo wreaked havoc on America’s fuel supply.

It was designed to hold up to 729 million barrels of crude oil, and as of mid-May the SPR’s underground locations in Texas and Louisiana held about 688 million barrels.

Selling 350 million or so of those barrels, as proposed, would save some $16.6 billion…

But there’s a downside to it, too.

A few years ago, I was called on to make an external value assessment of the storage volume contained in the SPR.

In that report, I identified another crucial advantage to the SPR system.

An advantage that the proposed sell-off is putting at risk…

And that the U.S. oil industry – long supporters of the Trump Administration – is now clamoring to keep.

Here’s what you need to know…

Another Oil Embargo Won’t Happen

My report on the SPR from a few years ago also led to a specific recommendation on how to use it – let me come back to that in a bit.

But first, let’s talk about the original, more “strategic” considerations regarding the SPR – and what Congress had in mind when it created the SPR back in 1975.

Back then, it was regarded only as a protection from future embargos by global producers. But if that’s still the case, it has outlived its purpose.

Nobody these days will refuse to sell crude to the U.S., even if serious political differences emerge.

Venezuela under the late Hugo Chavez is a good case in point. Despite holding America responsible for everything wrong with both the western hemisphere and the world, Venezuelan state oil company PDVSA remained adamant about protecting its access to the U.S. market.