A proposal by U.S. President Donald Trump’s Department of Energy (DoE) to “leave-oil-in-the-ground” by buying 365 million barrels of crude before its ever extracted is a shameless attempt to bailout shale oil companies, averting bankruptcy for one of the biggest donor bases to his election campaign coffers.
The idea may make into Congress’ next COVID-19 relief bill given that prices for U.S. crude oil went negative yesterday due to the coronavirus’ dramatic drop in oil demand, a global glut of oil due to Saudi-Russian oversupply, and scarce oil storage space soon hitting tank tops.
Turning a concept by climate campaigners on its head (that is, to “keep oil in the ground” forever in order to avoid further polluting our atmosphere), the possible $7 billion purchase (@ $20 per barrel) is instead intended to store oil underground temporarily only until it can be burned later.
Democrats successfully blocked Trump’s previous attempt to allocate $3 billion to purchase oil for the Strategic Petroleum Reserve in the first coronavirus relief bill (CARES Act), when they correctly saw it as a bailout of oil companies.
But now as job losses and crude supplies mount, so is political pressure to accept both deals, which, depending on the price paid for the oil, could cost $10 billion.
It is only one of several emergency steps Trump’s trying to take to save the shale oil industry at the heart of his “American energy dominance” agenda.
The CARES Act gave Treasury Secretary Steve Mnuchin a $500 billion fund from which shale oil companies can apply for loans from the Fed, even if their credit ratings are now junk status.
Wednesday, Apr 22, 2020 · 7:36:51 PM +00:00
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Victor Menotti
Quick update...it appears that no funding for oil specifically is included in the coronavirus bill approved yesterday by the Senate and to be voted upon by the House tomorrow. Let’s look to the “phase four” bill coming when Congress comes back in early May, as indicated by Trump’s tweet that he has instructed his team to formulate plans for saving the domestic oil industry. Also looking to what workers’ orgs are saying in this sector so we can support them before the companies executives and investors. We need just transitions for fossil fuel workers first.