The Washington PostDemocracy Dies in Darkness

The Energy 202: Struggling U.S. oil companies hope for more economic help in next coronavirus stimulus package

with Paulina Firozi


The struggling U.S. oil industry got no special bailout in the huge coronavirus stimulus package signed by President Trump on Friday. But the political fight over money to help the oil sector is far from over. 

Lawmakers decided to kick the can down the road on a fraught political battle over refilling an emergency oil reserve in the effort to pass a much-needed stimulus package designed to send $2 trillion into the pocketbooks of people and businesses.

But the push to buy oil to replenish the nation’s Strategic Petroleum Reserve could come up again as Congress is expected to take up another stimulus package next month in response to the deadly pandemic.

“That’s when you can slow down the legislative process and not throw together a trillion-dollar bill in a week,” said Liam Donovan, an energy lobbyist at the Washington-based firm Bracewell.

The Trump administration, for its part, still appears eager to purchase oil and help prop up independent domestic oil producers hurt most by the plummet in crude prices since the novel coronavirus started to spread around the world.

“Small to medium size American energy companies and their employees should be provided the same relief being provided to other parts of our economy, and the Secretary calls on Congress to work with the Administration to fund the President’s request as soon as possible,” Energy Department spokeswoman Shaylyn Hynes said in a statement.

An early draft of the stimulus package from Senate Republicans included $3 billion for buying oil for the reserve. But Democrats balked at offering aid for the oil sector, which they see as responsible for another crisis — that of rising global temperatures. 

This means oil companies will have to stand in line with the rest of corporate America to access hundreds of billions of dollars in emergency federal aid earmarked for distressed companies across the U.S. economy.

If the issue of oil for the Strategic Petroleum Reserve reemerges, Democrats may again push for a suite of clean-energy subsidies for companies to erect wind turbines or install solar panels or for regular Americans buy electric vehicles or make their homes more energy-efficient. The Trump White House succeeded in striking down similar provision from being included in a must-pass spending bill last December.

After the bill became law without the oil money, the Energy Department scrapped plans to buy 77 million barrels to reload the emergency oil stockpile — a move the Trump administration had said was prudent since the price of West Texas Intermediate has dropped by 65 percent since the start of the year.

Though that amount of oil is small for a nation that consumes about 20 million barrels of petroleum per day, the federal government’s purchase would have been a “signal to the industry” that more help was on the way, Donovan said. It could have also been a way for the federal government to make money, by buying oil while prices are low and selling it when they are high again.

The federally owned reserve, held underground in Louisiana and Texas and authorized to store 713.5 million barrels of oil, is meant insulate the country from disruptions in the supply of petroleum, such as the 1970s oil shocks. But in 2015, Congress directed the government start selling off from the reserve as the United States became a major oil and gas producer. 

Small to midsize U.S. oil producers have been especially eager to get relief from the federal government as Saudi Arabia and Russia engage in an oil price war triggered by the pandemic. Oklahoma oil billionaire Harold Hamm, a Trump ally and donor who founded one of those companies, Continental Resources, has said he wants the federal government to impose tariffs on the Saudis for flooding the market with oil.

Kevin Book, head of research at ClearView Energy, said the Energy Department could potentially secure funding for refilling the reserve by invoking the Defense Production Act — though he added “it would be something of an untested proposition.”

Trump dusted off the 1950 law to order General Motors to manufacture ventilators for hospitals expected to be overwhelmed soon by coronavirus patients. The White House declined to comment on whether it would use the Cold War-era powers for this purpose. 


— This Texas shale town was already reeling from a collapsing oil market. Then came coronavirus. The last several weeks have tested Midland, Tex., and the town’s mayor, Patrick Payton. The energy industry in the Permian Basin has started shuttering. “In a region where nearly every aspect of industry is touched in some way by the energy sector, fear quickly spread among those here who remember all too well the oil bust of the 1980s,” Holly Bailey writes. “…More people will get sick, but what worries Payton and other local officials across the region is what happens next. The energy industry was already cratering before the coronavirus, and the pandemic is almost certain to make things worse.”

— Several FEMA staffers have been infected: At least seven employees at the federal agency tasked with leading the federal coronavirus response have tested positive for the coronavirus. There are also four cases pending. 

  • The FEMA workers’ union wants more info: Union leaders had requested more information about the location of the infected workers so others could get tested, but the agency rejected the request, saying those who need to have been informed, the New York Times reports.
  • The breadth of FEMA’s work: “As of Saturday, FEMA was responding to 54 major disasters around the country, according to agency documents,” per the report. “Thirteen states and territories have requested disaster assistance from FEMA for the coronavirus since Monday alone.”

— These states look to block fossil fuel protests amid pandemic: Kentucky, South Dakota and West Virginia have passed laws to penalize protests against fossil fuel infrastructure in recent weeks, HuffPost reports.

  • Kentucky: Gov. Andy Beshear (D) signed legislation that "designated ‘natural gas or petroleum pipelines’ as ‘key infrastructure assets’ and made ‘tampering with, impeding, or inhibiting operations of a key infrastructure asset’ a ‘criminal mischief in the first degree.’ ”
  • South Dakota: Similarly, Gov. Kristi Noem (R) “signed a bill that expanded the definition of ‘critical infrastructure’ to include virtually any oil, gas or utility equipment, and raised the charges for causing ‘substantial interruption or impairment’ of such facilities to felonies. Five days later, on March 23, the governor approved a second measure defining a felony ‘riot’ as ‘intentional use of force or violence by three or more persons’ that causes ‘any damage to property.’ ”
  • West Virginia: And Gov. Jim Justice (R) “greenlighted legislation assigning the same critical infrastructure status to a wide range of oil, gas and pipeline facilities, slapping fines as high as $20,000 on anyone found guilty of causing ‘damage, destruction, vandalization, defacing or tampering’ that totals $2,500 or more.”

— In non-coronavirus news: Scientists and lawyers inside the Trump administration are pushing back on the administration’s efforts to undo environmental regulations by embedding data into rulemaking documents that leave them at risk for legal challenges, the New York Times reports.

  • Federal employees say it’s part of their duty: “You work hard on stuff that is good for the world, for a long time, for years, and then it’s trashed, and you’re told you have to participate in trashing it,” Kathy Kaufman, a clean-air policy expert who retired in 2017 after nearly three decades at the EPA. “You’re in a difficult position, and you know you have to figure out what to do.”
  • For example… “The current rules, written during the Obama administration, are now up for review, and Trump administration appointees do not want to further tighten controls on the industrial pollutant, which contributes to lung disease. But in a draft analysis of the soot regulations, scientists included data showing that by tightening the existing standard by 25 percent, as many as 12,150 lives could be saved a year. That data may be a powerful weapon for promised legal challenges to the stay-the-course soot rule.”
  • The response from the administration: “Trump administration loyalists see in the scientists’ efforts evidence that a cabal of bureaucrats and holdovers from previous administrations is intentionally undermining the president and his policies,” per the report.


— Need a few ideas to keep entertained? How about weather-themed movies, or cloud watching, or others from this list from our colleague Matthew Cappucci.