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 McConnellOvernight Defense: House passes T spending package with defense funds | Senate set to vote on blocking Saudi arms sales | UN nominee defends climate change record Overnight Defense: House passes T spending package with defense funds | Senate set to vote on blocking Saudi arms sales | UN nominee defends climate change record Senate to vote Thursday to block Trump's Saudi arms deal MORE (R-Ky.) and Sen. Barbara BoxerBarbara Levy BoxerOnly four Dem senators have endorsed 2020 candidates Only four Dem senators have endorsed 2020 candidates Hispanic civil rights icon endorses Harris for president 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 MurkowskiInterior spending bill holds Trump administration accountable for 2017 promises Hillicon Valley: Hacker group targeted electric grid | House Democrats press CBP over facial recognition program | Senators offer bill to protect health data | Groups file FCC complaint over carriers' use of location data Hillicon Valley: Hacker group targeted electric grid | House Democrats press CBP over facial recognition program | Senators offer bill to protect health data | Groups file FCC complaint over carriers' use of location data MORE (R-Alaska) and Maria CantwellMaria Elaine CantwellHillicon Valley: Democratic state AGs sue to block T-Mobile-Sprint merger | House kicks off tech antitrust probe | Maine law shakes up privacy debate | Senators ask McConnell to bring net neutrality to a vote Hillicon Valley: Democratic state AGs sue to block T-Mobile-Sprint merger | House kicks off tech antitrust probe | Maine law shakes up privacy debate | Senators ask McConnell to bring net neutrality to a vote Senators call on McConnell to bring net neutrality rules to a vote 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.