But in a tactic typical for a president who likes to be perceived as unpredictable, Trump is zigzagging wildly — from toying with imposing tariffs on crude oil from Saudi Arabia and elsewhere to publicly backing down from introducing any new border taxes. It's a an erratic strategy to address an oil-price crisis that has brought the price of crude to a nearly two-decade low and threatens to bankrupt dozens of U.S. companies.
"The energy industry definitely needs the help right now," said Dan Eberhart, a Republican donor and chief executive of the drilling services company Canary, who opposes tariffs. “Everyone is super eager to help, but doesn't know what to do.”
The American oil industry has been hit by a one-two punch: The outbreak of the novel coronavirus has led to a dramatic drop in oil demand, all while Saudi Arabia and Russia have inundated the world with oil in a fierce production war that U.S. firms fear will ultimately leave them with a smaller share of the global oil market. Now, with low oil prices weighing them down, American firms are considering cuts in capital spending and production in order to stay afloat.
Trump has been playing a cat-and-mouse game with Saudi Arabia and Russia, alternatively threatening tariffs on imports and saying they should lower production on their own. Domestically, oil companies and their allies disagree on whether to implement tariffs on imports as they lobby the White House for help.
Several small to midsized firms that extract oil from shale reserves through “fracking,” as well as lawmakers like Sen. Kevin Cramer (R-N.D.), want import tariffs to protect their business, as fracking is more expensive than other traditional forms of oil production. At the same time, major multinationals that operate Gulf of Mexico refineries built for processing foreign crude don’t want to lose access to their raw fuel.
During a White House meeting Friday with oil executives,Trump brought up the idea of hitting the Saudis and other foreign competitors with tariffs while top executives from ExxonMobil, Phillips 66 and Chevron pushed back against any new border taxes. Harold Hamm, the outspoken founder of shale producer Continental Resources who was also at the meeting, has been calling for penalizing what he sees as the illegal dumping of oil by foreign competitors.
Trump ended the meeting by leaving the option of issuing tariffs on the table, according to Cramer and American Petroleum Institute President Mike Sommers, both of whom attended the meeting.
“The president made the case that he would like that arrow in his quiver,” Sommers said, adding that Trump “had a better understanding” of the API’s opposition to tariffs by the end of the meeting.
Sommers added that “from our perspective, it was a good meeting” and that he appreciates the pressure the president is applying to Saudi Arabia and Russia. “It was a good tone to set,” he said.
The next day, during a news conference, Trump inched closer to the idea of imposing tariffs. “We’re going to take care of our energy business,” he said Saturday, “and if I have to do tariffs on oil coming from outside, or if I have to do something to protect thousands and tens of thousands of energy workers and our great companies that produce all these jobs, I’ll do whatever I have to do. Okay?”
But on Sunday, Trump backtracked a bit. After repeating that refrain (“I would do tariffs, very substantial tariffs”), he said he doesn’t think he is “going to have to” issue any tariffs after all.
And by Monday, Trump was warming up to yet another idea: cutting U.S. oil production in tandem with the Organization of the Petroleum Exporting Countries. “Maybe we will, maybe we won’t,” Trump said. “But we’ll have to make that decision.”
While Trump weighs his options, the energy ministers from Russia, Saudi Arabia and other OPEC nations sit down — virtually, via video conference — on Thursday to discuss production cuts to lift the price of oil from $32 a barrel, where it closed Tuesday. Trump is under pressure from those counterparts to agree to cut production in the United States.
Yet unlike Russia or Saudi Arabia, the U.S. president has little power to stop American firms from producing oil if they want to. Trump appeared to acknowledge as much Monday, noting that “the cuts are automatic” as U.S. firms respond to lower prices.
Indeed, the Energy Information Administration said Tuesday it is predicting an average 11.76 million barrels a day of production through the end of 2020, which is a drop from a previous 12.99-million-barrel forecast. For the 2021 forecast, the nonpartisan agency said it is predicting 11 million daily barrels, a drop of 1.6 million from previous predictions.
Continental Resources, for one, said it will cut production by about 30 percent for April and May. Its founder, Hamm, is still been on a media tear for tariffs, granting interviews to the the Washington Examiner and Financial Times following the White House meeting.
“What we suggested to the president is to shut down dumping," Hamm told the Examiner. "That's not bailing anybody out. That is stopping something illegal or unfair."
It was always unlikely Trump would make a decision before the OPEC meeting, since whatever decision that comes it will inform what Trump does next. “I don’t think anyone knows until the weekend,” said Stephen Brown, an energy consultant and former oil refining lobbyist.
“If they are his only option, it is politically advantageous to impose in a number of key states on a temporary basis,” Brown added of tariffs. “That said, it is a terrible idea from a policy perspective.”
Paulina Firozi contributed to this report.
— How air pollution is upping the risk of coronavirus-related deaths: An analysis of 3,080 U.S. counties found coronavirus patients in areas with higher levels of dangerous air particles are more likely to die of the illness, the New York Times reports.
- The details: The report from researchers at the Harvard University T.H. Chan School of Public Health is the “first nationwide study to show a statistical link, revealing a ‘large overlap’ between Covid-19 deaths and other diseases associated with long-term exposure to fine particulate matter.”
- By the numbers: Someone who has lived for decades in a county with high pollution is 15 percent more likely to die of the infection than someone with a unit less of fine particulate pollution. “The paper found that if Manhattan had lowered its average particulate matter level by just a single unit, or one microgram per cubic meter, over the past 20 years, the borough would most likely have seen 248 fewer Covid-19 deaths by this point in the outbreak,” per the report.
— Federal officials seek spare supplies from federal agencies: Numerous federal offices have discovered stashes of critical medical supplies, and now the Trump administration is looking to redistribute these supplies to hospitals and health-care workers in desperate need.
- Who has these supplies and why? The Environmental Protection Agency said this week it found 225,000 pieces of medical supplies to share, and the Energy and Agriculture departments have also discovered some supplies, Todd C. Frankel and Lisa Rein report. “The critical gear had been purchased by the U.S. government for its routine work of investigating chemical spills, inspecting power plants, conducting wellness exams or working in hazardous environments — any of the regular jobs performed by federal employees, at least until the novel coronavirus pandemic hit,” they write.
- There are some obstacles: “Some federal agencies have struggled to donate items they’ve located, stymied by red tape and an apparent lack of adequate coordination within the government’s emergency response, according to interviews with agency officials and documents reviewed by The Post.”
— More workforce changes for auto companies: Honda and Nissan announced they will furlough thousands of workers in the United States as car manufacturers continue to see a drop in U.S. sales. Honda told Reuters the company would guarantee salaries through Sunday and will lose plants in Alabama, Indiana and Ohio through May 1. Those plants employ about 18,400 people. Nissan said it would lay off about 10,000 workers as of Monday.
— More calls for park and memorial closures: Eleanor Holmes Norton (D), the D.C. delegate to the U.S. House, sent a letter to the acting head of the National Park Service calling for the Jefferson and Lincoln Memorials in the District to be closed, citing weekend crowds. She called for a response within five days.
- To quote: “I have received reports that the chambers have been crowded, particularly on weekends, making social distancing difficult if not impossible,” Norton wrote. “Closure would protect the public and NPS employees, including U.S. Park Police officers. Federal agencies need to lead by example and do everything possible to flatten the curve.”
Another impact of plummeting oil demand: Exxon Mobil said it would slash its capital spending for the year by 30 percent, and the “largest portion of the $10 billion in cuts will be in the Permian Basin, the largest U.S. oil field in Texas and New Mexico. Exxon said it would evaluate how the cuts would affect production,” the Wall Street Journal reports. The company’s chief executive also said there would be a greater impact on the company’s oil production next year.
— As oil demand craters, wind and solar use is up: Renewable energy sources are expected to make up nearly 21 percent of U.S. electricity use this year, the New York Times reports. That’s an increase from 18 percent last year and 10 percent a decade ago.
- The details: “In many parts of the world, including California and Texas, wind turbines and solar panels now produce electricity more cheaply than natural gas and coal,” per the report. “That has made them attractive to electric utilities and investors alike. It also helps that while oil prices have been more than halved since the pandemic forced most state governments to order people to stay home, natural gas and coal prices have not dropped nearly as much.”
- Dips in power plant, vehicle use also mean lower emissions: Greenhouse gas emissions are set to decline by 7.5 percent in 2020, Bloomberg News reports. The carbon dioxide emissions drop is a result of decreased used of power plants and transportation fuel as people stay home.
In other news:
- The U.S. Court of Appeals for the District of Columbia Circuit ruled 2 to 1 to strike down the Trump administration’s move to scrap Obama-era rules to limit the use of hydrofluorocarbons, a potent greenhouse gas. The court said the EPA “overstepped in 2018 when it completely set aside a 2015 rule blocking the use of hydrofluorocarbons (HFCs) as replacements for ozone-depleting substances,” E&E News reports.
— The biggest and brightest moon of the year: “Buds are bursting and magnificent pink flowers are blooming all around as spring takes hold in the Northern Hemisphere,” Jason Samenow writes. “And we have a full moon to honor the moment, aptly called the pink moon.”