Highway bill assumes huge jump in oil prices

Highway bill assumes huge jump in oil prices
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The Senate highway bill unveiled Tuesday assumes that crude oil prices will rise by nearly 90 percent in the next 10 years in order to raise money for infrastructure.

The bill, introduced Tuesday afternoon, proposes selling oil from the federal government’s Strategic Petroleum Reserve. It’s the result of a deal hashed out by Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellThe Hill's Campaign Report: Trump, Biden spar over coronavirus response Senator Tom Coburn's government oversight legacy Schumer praises choice of Defense inspector general to oversee corporate lending fund MORE (R-Ky.) and Sen. Barbara BoxerBarbara Levy BoxerPolls show big bounce to Biden ahead of Super Tuesday Sanders poised for big Super Tuesday Establishment Democrats rallying behind Biden MORE (D-Calif.).

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Lawmakers project that selling 101 million barrels from the 693-million-barrel stockpile would raise $9 billion if the federal government sells the oil between 2018 and 2025. In the bill, the price of crude oil is estimated to average $89.10 per barrel.

But crude oil prices settled at $50.68 at the end of the trading day Tuesday on the New York Mercantile Exchange, far below what would be needed to hit the $9 billion mark.

The Senate’s forecast would have been less of a leap as recently as 2014, when oil traded for more than $100 per barrel for much of the first half of the year.

But a global glut in oil supply, combined with anemic demand, caused oil prices to crash last year, and they have yet to recover.

The oil sales ares one of numerous creative provisions that the bill uses to fund infrastructure without raising the gas tax, which has historically been the main source of funding for federal highway programs.

Other offsets include tweaks to Social Security, payments the Federal Reserve makes to banks and customs fees.

Sens. Lisa MurkowskiLisa Ann MurkowskiGOP senators urge Saudi Arabia to leave OPEC Schumer: Senate should 'explore' remote voting if coronavirus sparks lengthy break Turning the virus into a virtue — for the planet MORE (R-Alaska) and Maria CantwellMaria Elaine CantwellMcConnell sets Friday night deadline for bipartisan deal on stimulus Washington state lawmakers warn health workers running low on protective gear Carper staffer tests positive in Delaware MORE (D-Wash.) said they oppose any sales from the oil stockpile that are not used to pay for energy security or related purposes, a position with which the White House agrees.

The Energy Information Administration (EIA) predicts that prices will rise slowly in the coming years, but not enough to meet the Senate’s needs.

In the EIA’s latest forecast, released in February, it said that oil will average $76.25 in 2018, and rise to $91.13 by 2025.

The Senate failed Tuesday to pass a procedural vote to move forward on consideration of the legislation.