The special purchase of 30 million bbl of crude oil for the Strategic Petroleum Reserve (SPR) will go ahead after all, despite a decision by Congress to drop its plan for a special appropriation to fund the purchase.
That development emerged from a White House meeting Apr. 3 led by President Trump and including the chief executives of several large oil companies, some members of Congress, and Energy Secretary Dan Brouillette.
“I’m happy to announce that we went to market this week for 30 million barrels,” Brouillette said. “Notwithstanding the desire of Congress not to give us new money to pursue this idea, we have found an alternative financing mechanism.”
He did not explain details of the financial strategy.
Senators drafting the big coronavirus economic assistance package had included an appropriation for the SPR purchase. But it was removed from the bill at the insistence of House Speaker Nancy Pelosi (D-Calif.), according to Rep. Kevin McCarthy (R-Calif.), also speaking at the White House meeting.
The Energy Department also will make 30 million bbl of space available in the SPR for US oil companies to store surplus oil, a step to help companies cope with the fact that depressed oil consumption is causing commercial oil storage tanks to fill up and forcing companies to begin shutting in oil fields.
No tariffs for now
Hanging over the White House meeting was the question of whether Trump would adopt other strategies to help struggling oil companies. Some, including Harold Hamm, executive chairman of Continental Resources Inc., have argued for such policies as import tariffs on crude oil.
President Trump was asked about a tariff at a press conference following the Apr. 3 meeting. “Am I thinking about imposing it as of this moment? No. But if we’re not treated fairly, it’s certainly a tool in the toolbox,” he said.
He then said low oil prices in a glutted global market were hurting Saudi Arabia and Russia enough that they would agree to new output restraints.
“I think they’re going to settle their dispute pretty quickly,” Trump said. “Ultimately the market is going to get them to stop.”
‘No’ vote on royalty cuts
Federal royalty cuts also have been suggested to aid the oil industry. Sixteen House Democrats led by Rep. Raul Grijalva (D-Ariz.) sent a letter Apr. 6 to Interior Secretary David Bernhardt to reject such appeals. Bernhardt, too, was at the White House meeting.
An across-the-board cut in royalties would be illegal and unnecessary, the Democrats said. Interior only has authority to cut royalties for a specific production site if necessary to keep that particular site operating, the lawmakers said.
Executives at the White House meeting included Hamm of Continental Resources; Greg Garland, CEO of Phillips 66 Co.; Dave Hager, CEO of Devon Energy Corp.; Jeff Hildebrand, CEO of Hilcorp Energy Co.; Vicki Hollub, CEO of Occidental Petroleum Corp.; Mike Wirth, CEO of Chevron Corp., Darren Woods, CEO of ExxonMobil Corp.; Kelcy Warren, CEO of Energy Transfer LP; and Mike Sommers, president of American Petroleum Institute.