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Oil plunge sparks calls for Congress to act
As the price of oil plunges to its lowest point in 12 years - and threatens to drag the broader U.S. economy down with it - lawmakers say Congress should consider helping teetering energy companies with policy fixes beyond the decision to lift the oil-export ban.
Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski (R-Alaska) and House Energy and Commerce Chairman Fred Upton (R-Mich.) will meet next week to discuss an energy package expected to move in both chambers later this year.
Among the proposals under discussion: Expediting the process for exporting liquefied natural gas, and upgrading infrastructure to move energy to market more quickly and cheaply.
Another top priority for the two Republicans is loosening environmental and other regulations. But moves in that direction are highly unlikely while a Democrat remains in the White House.
With oil currently below $33 a barrel, some on Capitol Hill are calling for quick action.
Some lawmakers are floating the possibility of taking retaliatory trade measures against Saudi Arabia, which has flooded the market with cheap oil in what some analysts see as a bid to drive America's growing shale oil industry out of business.
The stock market slumped again on Friday, capping off the worst year-opening week in the history of the Dow Industrial Average and the S&P 500. Analysts blamed tumbling oil prices, after the stock market in China stabilized overnight.
"We're trying to help the industry and we know that exports will help whether it's crude oil or LNG," Upton said, referring to liquefied natural gas. "I'm intending to sit down with Lisa next week.
"The two of us have worked together already and I remain confident that if she can get a bill out of the Senate...that we can a get a bill that is in fact bipartisan that the president can sign," he added.
Upton said the House version of the energy legislation includes language to expedite natural gas exports.
Sen. John Hoeven (R-N.D.) claimed the Obama administration has proposed nearly 100 regulations for the oil and gas industry, ranging from restrictions on methane and carbon dioxide to limits on operating on federal land.
"We really are right now locked in a global battle between OPEC and Russia, countries like Venezuela - we're really battling out to see who's going to provide oil and gas," he said. "That's why it's so important that government create an environment where we can compete."
Legislation passed last month to lift the four-decade ban on oil exports is expected to boost exports by 500,000 barrels a day but so far it has had little impact on prices.
An energy package is one of the few major pieces of legislation expected to pass the Senate this year after Majority Leader Mitch McConnell (R-Ky.) did his best to clear the decks before the election year.
A wave of bankruptcies in the energy sector have spread alarm on Capitol Hill and Wall Street, where plunging oil prices, along with China's fluctuating currency, set off a round of stampede selling this week.
Goldman Sachs has warned that oil may sink as low as $20 a barrel, which would shake financial markets by sinking energy stocks, driving companies into bankruptcies and setting off a round of junk-bond defaults.
Third Avenue Investment, a New York-based fund, last month blocked clients from pulling their money, prompting a sell-off of high-yield bonds and evoking memories of the 2008 meltdown.
Growing tensions between Saudi Arabia and Iran over the execution of a Shiite cleric might have been thought to have boosted prices by raising the specter of regional conflict. But that had little effect on oil prices this past week.
Bankruptcies among oil and gas companies have hit the highest quarterly level since the midst of the 2008 financial crisis, Bloomberg Business reported last month.
Oil and gas companies have laid off more than 250,000 workers and that number could swell in the months ahead.
North Dakota Rep. Kevin Cramer (R) said lawmakers could begin to mull retaliatory tariffs against Saudi Arabia in the future but emphasized he is not advocating for that yet.
"I'm very hesitant to go down that path at this time but clearly that would be a possible option should the Saudis not play fair. Because as much as I advocate for free and open markets, I also advocate for fair markets," he said.
Saudi Arabia, taking advantage of its low extraction costs, has refused to curb oil production in a bid to expand market share and undercut competitors. This has raised the prospect of the U.S. government taking action to level the playing field for domestic companies.
"I'm not prone to a lot of government intervention in terms of propping industry up, per se. What would be the most helpful is to roll back regulations that get in the way of further development and profitability," said Cramer, who cited the Endangered Species Act as one burdensome regulation.
"Obviously they have access to our market and I suppose to some degree there is a role that can be played there. I'm not at the point where I'm ready to advocate tariffs or restricting their access necessarily," he added.
If the energy industry continues to sink, other proposals will pop up in the energy negotiations due to kick off next week.
Hoeven said he wants to help the energy industry by pushing legislation to allow companies to gather natural gas from oil wells on federal land.
"The other thing of course is infrastructure. We also have to help our industry compete by having infrastructure. That means the right mix of pipelines, transmission lines, rail, roads," he said.
He has introducted the North American Energy Infrastructure Act to expedite the construction of pipelines.