The Absurdity Of Trump’s Bid To Bail Out The Oil And Gas Industry
S E E D E D C O N T E N T
Pump jacks swing in the Midway Sunset oilfield in California, near a large
shale formation. LUCY NICHOLSON / REUTERS
As the Trump administration considers aid for companies hurt by the coronavirus pandemic, it’ll be difficult to defend including oil drillers and gas frackers.
The White House’s nascent effort to bail out oil and gas producers struggling with plunging oil prices could become a political boondoggle, legal and industry experts say, given the difficulty of finding congressional support for offering federal dollars to an industry plagued by reckless financing and devastating effects on the climate.
The price war that broke out between Saudi Arabia and Russia on Sunday pushed the price of crude into its steepest single-day nosedive since 1991. Both producers vowed to continue oversupplying the market even as the panic over the coronavirus pandemic grounded planes and shuttered factories, significantly reducing demand. The combined effect sent the price of oil below $33 a barrel Wednesday and threatened what one analyst called a “ financial bloodbath ” for the U.S. fracking industry, whose rapid expansion over the past decade was fueled by precarious debt.
In response, the Trump administration , which has aggressively bolstered the oil and gas sector, this week began “strongly considering” offering low-interest government loans to drillers, The Washington Post reported Tuesday.
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Mnuchin, according to a separate Washington Post report , insisted four times that such a program would not amount to a bailout and specifically zeroed in on airlines, hotels and cruises. Legal experts said those industries may be an easier sell than assisting the oil industry.
Unlike previously bailed out industries, such as banking or travel, which provide economically vital services that are difficult to replace if companies go out of business, oil and gas resources don’t go away if the firms that tap them do, said Ed Crooks, vice chairman of the energy research consultancy Wood Mackenzie.
By stepping in, he said, the federal government would effectively penalize energy companies that borrowed money cautiously and prevent overdue bankruptcies that he surmised would lead to a necessary consolidation of the industry. He compared the process to a “sobering up.”
Let the oil industry save itself....... They've had their time at the trough all while fighting every competing industry for decades.
Worried about workers.... they can learn to install and service all sorts of clean energy technology that is out there.
I agree. fuck therm. how many of them are still american owned anyway? they were a significant contributor to the bush depression with their $4 a gallon prices. the federal welfare they receive yearly is more icing on the cake. they insulated themselves by contracting all drilling and production labor to small businesses during the fracking boom. those are the people that are getting hurt. the crash started last summer in an over leveraged business. mergers, acquisitions, layoffs and bankruptcies soon followed. all big oil does now is shuffle paper to pay ridiculous 7 figure salaries to do nothing executives. let them shed a lot of those jobs to save their own asses. now that we know what it takes to keep their heads out of the water, with current prices at the pump, set price controls at the pump and then negotiate any bailout for big oil after that. terminate all subsidies and change US bankruptcy laws for foreign owned oil companies operating here and bar them from bidding on gov't leases on US soil. stop republican sponsored corporations from selling out US taxpayers, only to be exploited by foreigners.