Energy & Environment

Treasury considers lending program for oil producers

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The Trump administration is considering the creation of a lending program to provide money for U.S. oil producers, which have seen falling prices in recent days. 

“One of the components we’re looking at is providing a lending facility for the industry,” Treasury Secretary Steven Mnuchin told Bloomberg News on Thursday. 

“We’re looking at a lot of different options and we have not made any conclusions,” he added.

Mnuchin didn’t tell the news outlet whether such a lending program would be done through the Treasury Department or Federal Reserve. 

He did say, however, that for oil companies that are ineligible for assistance from the Federal Reserve, there are discussions about “alternative structures with banks.”

Mnuchin expressed openness to another option for assistance during comments in the Oval Office on Friday: taking equity stakes in energy companies.

“You can assume that’s one of the alternatives, but there’s many of them,” he said.

On Monday, oil prices crashed to as low as negative $40 per barrel. Since then, however, prices have rebounded somewhat. On Friday, they opened at $16.78. 

President Trump this week suggested providing funds for the oil industry after the drop. 

“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,” he tweeted on Tuesday. 

Democrats, meanwhile, have expressed opposition to giving assistance to the industry. 

Sen. Ed Markey (D-Mass.) and Rep. Nanette Diaz Barragán (D-Calif.) urged Federal Reserve Chairman Jerome Powell to “resist the fossil fuel industry’s calls for privileged treatment.”

“Using federal money to prop up the fossil fuel industry would only increase the financial toll of climate change and the environmental degradation it has wrought,” they wrote.  “The costs of inaction on climate change are already high, but continued investment in its root cause of fossil fuels will only drive those costs higher.” 

Updated: 3:45 p.m.

Tags Coronavirus Donald Trump Ed Markey Fossil fuel Steven Mnuchin

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