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Oil giants meet at White House amid talk of buying strategic reserves

Oil giants meet at White House amid talk of buying strategic reserves
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Oil giants gathered at the White House Friday, meeting with President TrumpDonald John TrumpMinnesota certifies Biden victory Trump tells allies he plans to pardon Michael Flynn: report Republican John James concedes in Michigan Senate race MORE in the hopes of securing aid as crude prices have plummeted amid the coronavirus outbreak and a price war between Russia and Saudi Arabia.

Oil prices have skydived under the twin threats, dropping to prices in the mid-20s for a barrel of oil, down from more than $50 a barrel in February.

As stresses on the industry magnify, there have been growing calls from Republicans to assist oil producers.

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“We’ll get our energy back,” Trump said at the meeting. “I’m with you 1,000 percent. It’s a great business, it’s a very vital business and honestly, you’ve been very fair. You’ve kept energy prices reasonable for a long period of time.”

The meeting appeared to renew administration efforts to fill the nation’s oil reserves after the initial $3 billion request was left out of the coronavirus package.

“At these prices you’d think we’d want to fill up every cavity,” Trump told the lawmakers and oil executives present at the meeting, a reference to the 77 million gallons of space in the nation’s Strategic Petroleum Reserve.

Among those in attendance at the meeting were representatives from Exxon, Phillips 66, Chevron, and oil tycoon Harold Hamm as well as Energy Transfer Partners, the company behind the Dakota Access Pipeline.

The meeting marks a shift for the oil industry, with the American Petroleum Institute previously stressing that it would not seek direct assistance.

But the administration has continued to float other forms of assistance, with Trump announcing Thursday his hopes that Saudi Arabia and Russia may begin to scale back their production, a move that could dent the oversupply of oil on the market as the pandemic leads to dwindling demand.

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Meanwhile the Department of Energy has looked for other ways to fill the petroleum reserve, offering to rent space to oil producers that are running out of storage space for their goods — a service the government would be paid for in oil. 

Energy Secretary Dan Brouillette said Friday they would buy oil through an “alternative financing mechanism” but provided no additional details.

Lawmakers at the meeting echoed interest in filling the petroleum reserve, with Sen. Ted CruzRafael (Ted) Edward CruzOcasio-Cortez, Cruz trade jabs over COVID-19 relief: People 'going hungry as you tweet from' vacation McSally, staff asked to break up maskless photo op inside Capitol Capitol's COVID-19 spike could be bad Thanksgiving preview MORE (R-Texas) calling it “inexcusable” that Democrats opposed the measure's inclusion in the coronavirus stimulus package.

“Now I think Congress needs to go back and address it,” he said.

Trump likewise encouraged new legislation on the effort, saying, “I don’t think anyone can reject it.” 

Democrats have consistently resisted efforts to boost the oil industry, including through oil purchases. 

“Using federal assistance — including low-interest loans, royalty relief, tax breaks, or strategic petroleum reserve purchases — in order to prop up oil companies would be a wasteful misuse of government resources that would exacerbate the climate crisis,” Sens. Ed MarkeyEd MarkeyUS national security policy in the 117th Congress and a new administration OVERNIGHT ENERGY: Biden eyes new leadership at troubled public lands agency | House progressives tout their growing numbers in the chamber at climate rally | Trump administration pushes for rollback of Arctic offshore drilling regulations House progressives tout their growing numbers in the chamber at climate rally MORE (D-Mass.), Jeff MerkleyJeff MerkleySupreme Court declines to hear case challenging unlimited super PAC fundraising Trump supporters demonstrate across the country following Biden-Harris win Merkley wins reelection in Oregon Senate race MORE (D-Ore.) and Bernie SandersBernie SandersBiden: 'Difficult decision' to staff administration with House, Senate members Hillicon Valley: YouTube suspends OANN amid lawmaker pressure | Dems probe Facebook, Twitter over Georgia runoff | FCC reaffirms ZTE's national security risk Biden Cabinet picks largely unify Democrats — so far MORE (I-Vt.) wrote a letter to Trump last month.

But it’s clear Republicans want direct assistance for the energy sector that has been so resisted by Democrats and environmental groups. 

Sen. Lisa MurkowskiLisa Ann MurkowskiTrump transition order follows chorus of GOP criticism The Memo: Trump election loss roils right Whoopi Goldberg blasts Republicans not speaking against Trump: 'This is an attempted coup' MORE (R-Alaska) penned a letter to Treasury Secretary Steven MnuchinSteven Terner MnuchinThe Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Trump OKs transition; Biden taps Treasury, State experience On The Money: Democrats accuse Mnuchin of sabotaging economy in dispute with Fed | Trump administration proposal takes aim at bank pledges to avoid fossil fuel financing | JPMorgan: Economy will shrink in first quarter due to COVID-19 spike Democrats accuse Mnuchin of sabotaging economy in dispute with Fed MORE asking for loans for oil companies.

Cruz used Friday’s meeting for the same push, warning that without access to capital, companies would likely go under.

“There are jobs hanging in the balance,” he said. “We’re going to see bankruptcies at a level this country hasn't seen in decades.”

The meeting yielded few details on Trump’s announcement Thursday that he hopes to broker an agreement between Saudi Arabia and Russia to reduce production by as much as 15 million barrels.

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“They were having a competition,” Trump said at a press conference after the meeting. “We’ll see how it all works out. I think it’s gonna work out very well. It’s gonna take a long time to get rid of that. There's [a] massive excess amount of oil, and gas, massive, like probably there’s never been.” 

He went on to say the free market would help sort it out, remarks likely to calm the nerves of an oil industry opposed to production quotas or tariffs.

“No one wins in a price war, and the Saudis and the Russians aren’t benefiting from their decisions,” the American Petroleum Institute said in a release after the meeting.

“We also urged the administration to avoid U.S. policies that could do more harm than good for American producers.”

Rachel Frazin contributed.

Updated: 6:30 p.m.