On The Hill

 

Oil prices plunged this week due to the fall-out between Saudi Arabia, Russia, and OPEC. The lack of an agreement plus the shock of the coronavirus epidemic has squeezed the oil industry, who currently have fewer tools to help recover than they have had in the past.

 

The U.S. Energy Information Administration reported oil will experience its first year-on-year decline in production since 2016. Lower prices will reduce drilling activity, and EIA said in its monthly outlook U.S. oil production will average 13 million barrels per day this year, and will fall to 12.7 million barrels per day in 2021.^[1]

 

The Trump administration said consumers will benefit from lower gas prices, but many unknowns remain on a prolonged slump or recession.^[2] Small and medium sized companies will likely be the first to be impacted due to higher costs and reliance on debt to continue drilling activities. The push for federal action is being led by independent producers and the White House is considering support for U.S. Shale producers and the energy sector.

 

Offering aid to the industry is a difficult sell, as production was at record levels last year and has benefited from deregulation under the current administration. Senator John Cornyn (R-TX) said on Wednesday he does not think the oil industry “needs any bailouts,” and Sen. Joe Manchin (D-WV) said, “The oil industry has a better chance of surviving a downturn than the average person out there trying to survive.”^[3]

 

But some Republican Senators have expressed interest in energy aid in response to the market fallout. Two ideas are currently being floated: refilling the Strategic Petroleum Reserve with private-sector oil, along with royalty relief and low-interest loans for oil and gas producers. Senator Lisa Murkowski (R-AK) cautioned the talks remain in an early discussion phase.^[4]

 

 

 

The bipartisan energy package S. 2657 stalled out this week after a fight over an amendment to phase out hydrofluorocarbons. “Maybe it’s not coming back at all because right now I don’t know who I’m gonna work with,” Murkowski said. “I don’t know how long it’s stalled out. I have no idea. But I can tell you I’m not in the mood to be helping anybody else on legislation that they think is a priority.” ^[5]

 

On Monday (Mar. 9), the bill failed to pass a cloture vote that would have advanced the bill.

 

Murkowski also said, “That committee (EPW) could do its job. They could hold a hearing on that that might help,” Murkowski said. “As the chairman of the Energy Committee, I can’t fix EPW’s problems and so when they visit that problem on our bill what happens is all the work that all these people did is stalled out.”

 

Manchin said, “Since they’ve been thwarted within their own committee, they took whatever option they had,” and “this was the only option they had and I respect that. It just threw a crink in everything we’ve worked so hard for.”

 

The fight over HFCs could muddy the waters over other legislation the Senate takes up in the coming weeks. 

 

 

 

Global markets plunged as the World Health Organization (WHO) has ruled the coronavirus a pandemic. Financial markets suffered their worst day on Thursday (Mar. 12) since the Black Monday stock market crash of 1987. This week, lawmakers largely scrambled to put together a package in response to the coronavirus. House Democrats led by Speaker Nancy Pelosi (D-CA) met with Treasury Secretary Steve Mnuchin to resolve differences on a package, which the House will take up Friday (Mar. 13). The Senate has called off recess and is expected to take up the package next week. The legislation, according to a Dear Colleague from Pelosi, will include enhanced unemployment benefits, free virus testing, aid for food assistance programs like SNAP, 14 days of paid sick leave, and tax credits for small/medium-sized businesses.

 

Additionally, the Federal Reserve announced it would inject $1.5 trillion in loans into the banking system and broaden its Treasury securities. In an address from the Oval Office on Wednesday (Mar. 11) night, President Trump announced sweeping travel restrictions on non-American citizens from nearly all of continental Europe. 

 

Republicans and Democrats said Friday (Mar. 13) that an emergency coronavirus package is on track to be passed by the House. Lingering issues remain on how much, and for how long, employees would be eligible to receive paid leave. Additionally, whether President Trump, who has been calling for Congress to include a payroll tax cut, will support the package remains uncertain.

 

“The negotiations are going very well. This has been a bipartisan effort,” Mnuchin said Friday morning. “I think we’re very close to getting this done.” ^[1]

 

 

 

^[1] Anchondo, Carlos. “The oil crash and climate: What to know.” Energywire, 12 Mar. 2020. https://www.eenews.net/energywire/stories/1062580833

 

^[2] E&E News staff, “EVs, shale and Trump: 5 takeaways from the oil crash.” Energywire, 10 Mar. 2020. https://www.eenews.net/energywire/stories/1062563473

 

^[3] Adragna, Anthony; Colman, Zack; and Lefebvre, Ben. “Oil industry push for Trump bailout draws political headwinds.” Politico Pro, 11 Mar. 2020. https://subscriber.politicopro.com/article/2020/03/oil-industry-push-for-trump-bailout-draws-political-headwinds-1890767

 

^[4] Koss, Geof; Cahlink, George; and Sobczk, Nick. “Senate GOP eyes energy aid in response to market fallout.” E&E Daily, 12 Mar. 2020. https://www.eenews.net/eedaily/stories/1062581971/search?keyword=senate

 

^[5] Adragna, Anthony. “I don’t know who I’m gonna work with’: HFC push imperils energy bill.” Politico Pro, 10 Mar. 2020. https://subscriber.politicopro.com/article/2020/03/i-dont-know-who-im-gonna-work-with-hfc-push-imperils-energy-bill-1890098