Donald Trump has told his energy and economic officials to craft a plan to help energy companies that have been hit by the collapse in oil prices, in a move that is expected to face resistance from Democrats in Congress.
“We will never let the great US oil & gas industry down,” Mr Trump tweeted on Tuesday morning. “I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!”
The White House is struggling to respond to the fall in prices, which has continued despite a recent deal between Saudi Arabia and Russia to cut supply by almost 10m barrels a day, that Mr Trump helped broker.
The US president was originally concerned that falling prices would hurt shale producers — which are important in swing states such as Pennsylvania — but the further plunge has sparked broader concern about the entire US energy industry.
Lockdowns and travel bans implemented by authorities to prevent the spread of the coronavirus has seen global demand for crude plummet by as much as a third this month from pre-crisis levels.
The Trump administration hammered out a deal with Congress earlier this month to pass a $2.2tn stimulus package and has just reached an agreement with lawmakers to provide more help for small businesses.
But there is no consensus on Capitol Hill about helping energy companies, which have long been vilified by environmental groups that are aligned more closely with Democrats as environmentally unfriendly “Big Oil”.
“If Trump asks for an oil bailout, remind him of the favours he’s already done for them, including his ongoing effort to undo the safeguards put in place after the Deepwater Horizon disaster,” said Chris Van Hollen, a Democratic senator from Maryland, referring to the explosion of a BP oil drilling rig in the Gulf of Mexico in 2010.
The Treasury did not comment on the president’s tweet. Oil and gas companies are already potentially eligible for federal aid under a section of the $2.2tn stimulus package that directs $500bn in aid to distressed parts of the economy. The bulk of the money is reserved for a series of programmes run by the Federal Reserve which would have the US central bank extend loans to troubled companies and buy their debt under certain conditions.
Bharat Ramamurti, a former aide to Democratic senator Elizabeth Warren and member of the congressional oversight panel for the $500bn fund, warned that any help for the energy sector would be closely watched.
“If this plan ends up using some of the $500bn Congress allocated to the Treasury Department in the Care Act, the Congressional Oversight Commission . . . should scrutinise the plan very carefully,” he tweeted.
Some Republicans have urged Mr Trump to pressure Riyadh to further cut supply. Kevin Cramer, a North Dakota senator, has suggested that the administration block Saudi tankers from bringing oil to the US.
The American Exploration & Production Council, which represents 26 of the largest independent oil and natural gas companies, urged the administration to put pressure on China to buy more US energy in line with the trade agreement that the US and China concluded earlier this year.
“China has only purchased a de minimis amount of US crude in the first months of 2020, while it has increased purchases of crude oil from Saudi Arabia and Russia,” said Anne Bradbury, the head of the trade group, which represents companies such as Chesapeake Energy and Devon Energy. “Rather than increasing imports from countries like Russia and Saudi Arabia, the Chinese government must take the necessary steps to remain in good standing with the US as a trusted trading partner.”
Democrats have already warned that the stimulus money should not be used for the oil sector. Two dozen Democrats last week signed a letter to the administration led by Ed Markey, a Massachusetts senator, and Nanette Diaz Barragán, a California lawmaker, which criticised energy companies for “taking every opportunity to push for a bailout that avoids responsibility for record levels of debt and financial turmoil that are of their own making”.
Alexandria Ocasio-Cortez, a progressive New York lawmaker, on Monday said the fall in oil prices signalled it was time to implement the “Green New Deal”. In a tweet about negative oil prices, that was later deleted, she said: “You absolutely love to see it.”
She added: “This along with record-low interest rates means it’s the right time for a worker-led, mass investment in green infrastructure to save our planet.”
Republicans attacked her for not caring about millions of people potentially losing their jobs. Steve Scalise, the House Republican whip, said Ms Ocasio-Cortez had deleted the tweet because Democrats were “willing to sacrifice people’s jobs and livelihoods for their radical socialist agenda”.
Kelly Armstrong, a GOP lawmaker from North Dakota, which relies heavily on energy companies, said people’s jobs were “evaporating”.
“Lives are being ruined in real time. North Dakota companies that have taken decades to build have been destroyed in hours. Any public official that loves to see this does not deserve to hold office,” Ms Armstrong said.
Oil lobbyists have been pushing for their sector not to be excluded from accessing liquidity through the federal legislation. The American Petroleum Institute, which represents big US oil companies, said “access to liquidity from lenders is vitally important to all industries impacted by this crisis”.