–Oil-Producing States Cooperating To Influence Oil Price A ‘Murky Area’
WASHINGTON (MaceNews) – U.S. Energy Secretary Dan Brouillette Tuesday said the Trump administration is unlikely to unveil brand-new measures to support the country’s battered oil and gas sector, and will instead leverage existing credit programs funded by emergency legislation.
In an interview on CNBC, Brouillette also cautioned against how much oil-dominant states like North Dakota, Oklahoma and Texas can cooperate to impact oil prices due to anti-trust laws.
The restrictions imposed to contain the coronavirus pandemic and the collapse of oil prices last month has put enormous pressure on U.S. energy producers.
“We will never let the great U.S. Oil & Gas Industry down. 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!” President Donald Trump tweeted Tuesday morning.
Brouillette confirmed he will be meeting later today with National Economic Director Larry Kudlow and Treasury Secretary Steven Mnuchin at the White House “to begin formalizing some of the thoughts we have about what we might do to make sure that this important industry makes it all the way through the pandemic.”
“We will be looking at some of the lending authorities and facilities that have already been created” to ensure energy companies can participate in those programs, he said.
Particular focus will be on potential discrimination by banks in their lending decisions, Brouillette added, citing reports that some financial institutions have rejected loan applications by fossil fuel companies.
Guaranteeing access to the emergency funds already provided by Congress “is the most logical step forward,” he said, supplemented by actions in concert with the Department of the Interior – such as expanding storage options to alleviate the immediate pain in the oil markets.
“I’ll be working closely with Congress to see if we might be able to expand the infrastructure of our Strategic Reserve” from the current 1 billion barrels limitation, Brouillette said.
To address the oil storage crunch that has contributed to the collapse in oil prices, the Energy Department last week announced negotiations with nine U.S. companies to temporarily store their crude oil in the Nation’s Strategic Petroleum Reserve.
In addition to mitigating the immediate pain from the oversupply challenges, it will also benefit the nation to fill up the SPR at a time when it makes economic sense, Brouillette argued during the interview.
Earlier Tuesday, OPEC reported several member nations, as well as non-OPEC producing countries, held an informal teleconference “to discuss the current dramatic oil market situation,” during which they reiterated their commitment to the April 12 agreement – when participants agreed to cut oil production collectively by 9.7 million barrels per day.
“We are going to continue to work with them [OPEC],” Brouillette said, and “we are going to continue those types of conversations.”
Brouillette said his agency is also working with the International Energy Agency to identify countries that have spare storage capacity and encourage them to make it available.
The Texas Railroad Commission Tuesday postponed its vote on limiting oil production in the nation’s largest oil-producing state, voicing their desire to recruit other oil-producing states to limit output as well.
While there are laws that allow state regulators to take individual action on production limits, “whether they can do it in conjunction with other states remains a bit of a murky area,” Brouillette warned.
“Collusive activity with the intent of affecting the price of a product is clearly illegal,” he said.