Mar 11, 2020 - Energy & Environment

White House weighs shale aid options as oil prices collapse

An oil rig drilling into the Bakken shale formation in North Dakota. Photo: Andrew Burton/Getty Images

The White House is weighing options to provide financial assistance to U.S. oil producers getting hammered by the price collapse, but the picture is murky right now.

Why it matters: It's a sign of the rapidly worsening conditions for the sector and the Trump administration's scramble to respond to the effects of the coronavirus and falling prices.

Driving the news: The internal discussions were first reported by the Washington Post, and subsequently confirmed by Axios.

  • I've also learned that independent oil-and-gas producers via the American Exploration and Production Council (AXPC) has been in touch with the White House on the topic.

Where it stands: There's a bunch of ideas flying around. The WashPost reported that low-interest federal loans were the most likely option for the potential aid.

  • Bloomberg reports that some industry lobbyists are pitching the idea of the government buying up some oil to put into the Strategic Petroleum Reserve.
  • That would "enable the government to take at least 78 million barrels off the world market and provide a modest bump in prices," per Bloomberg.
  • The same story also says that administration is considering a separate idea of lowering royalties on oil and natural gas produced on federal lands.

The intrigue: The Washington Examiner reports that there's some pushback from conservatives to the idea of financial aid for producers.

  • Their piece has comments from officials with the Heritage Foundation and the Institute for Energy Research.

What they're saying: AXPC CEO Anne Bradbury said in a statement Tuesday that the group wants "a solution that ensures American companies can continue to invest in and produce low-cost, reliable energy."

  • "We believe in the free market system and will advocate for policies that support a level playing field to address geopolitical manipulation of the market," she said.

Go deeper

Trump tiptoes toward oil engagement

Illustration: Eniola Odetunde/Axios

The potential for new U.S. responses to the oil price collapse has seemingly grown — enough to send prices back upward, even though it's all inchoate and fluid right now.

Driving the news: President Trump says he's eyeing some kind of intervention in the oil price war between Russia and Saudi Arabia, telling reporters yesterday that he would get involved "at the appropriate time."

OPEC-Russia oil price war escalates as Saudi Aramco announces supply increase

Data: Money.net; Chart: Andrew Witherspoon/Axios

The new oil price war escalated Tuesday as Saudi state oil giant Aramco announced, per reports in Reuters and elsewhere, that it plans to supply the market with 12.3 million barrels per day starting next month.

Why it matters: The increase underscores how the lunge for market share with the collapse of the OPEC+ agreement is going to create financial pain and problems for producers and governments worldwide.

Trump to buy oil for nation’s strategic reserves

President Trump. Photo: The Washington Post / Contributor

President Trump will direct the Energy Department to buy oil for the nation’s strategic stockpile to boost prices and help the oil industry reeling after the market’s historic collapse this week.

The big picture: America’s Strategic Petroleum Reserve was created in the 1970s to ensure the U.S. has oil in case of an emergency. Today, Trump is buying oil for the reserve because of an emergency.