Ahead of Stimulus Talks, Voters Back Relief for Renewables More Than for Oil and Gas
by Lisa Martine Jenkins (Morning Consult) — 38% of voters support a bailout for the oil and gas industry, compared to 54% backing for a renewables industry bailout. — Republicans are nearly as supportive of a renewables bailout (49%) as they are an oil and gas bailout (51%). — 59% of voters expect to spend less on gas because of the coronavirus.
While future legislative action to support markets affected by the coronavirus pandemic remains uncertain, lawmakers have floated relief for both the renewable energy and the oil and gas sectors. But as the oil and gas industry faces the combined pressures of low demand and a supply glut, voters are more supportive of financial support for the renewables sector.
Amid talks of a fourth stimulus package, Morning Consult asked registered voters whether they would support the federal government bailing out the two energy industries.
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So far, Democratic lawmakers have been the most vocal in championing relief measures for the renewables sector, which could include tax credit extensions, the removal of the current tax credit phaseout schedule, direct payments or refunds and “extensions of safe harbor continuity.”
The industry is concerned about the imminent expiration of certain tax credits for wind and solar, among others, and continues to face project delays and supply chain disruptions as the pandemic’s impact on the United States has intensified.
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While oil and gas industry bailout funds from Congress remain an open question, President Donald Trump and the Department of Energy took steps to provide help via buying 30 million barrels of oil from U.S. producers and filling the Strategic Petroleum Reserve.
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Separately, DOE announced it will make 30 million barrels of the SPR’s oil storage capacity available to producers “struggling with catastrophic financial losses due to the combined impacts of COVID-19 and the intentional disruption of world oil markets by foreign actors.”
The department expects its first crude deliveries in late April or early May, and plans to eventually make an additional 47 million barrels of storage capacity available in the future.
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Meanwhile, at least seven oil and gas executives are set to meet with Trump on Friday, where other relief measures may be up for discussion. American Fuel and Petrochemicals Manufacturers Chief Executive Chet Thompson and American Petroleum Institute CEO Mike Sommers plan to be in attendance, and will likely discuss their opposition to executive measures constraining oil supply.
In a letter to the White House, Thompson and Sommers explained that they do not want any quotas, tariffs or bans on foreign crude oil that “would exacerbate this already difficult situation.”
“We are not seeking any government subsidies or industry-specific intervention to address the recent market downturn at this time,” said a spokesperson for API.
Trump indicated he will meet with independent U.S. producers — who have demonstrated more interest in government relief measures — on Friday or over the weekend, as well. READ MORE
Oil execs, Trump meet at White House (Politico’s Morning Energy)
Trump to rent storage space to oil producers as demand drops (The Hill)
US shale producers launch anti-Saudi lobbying push (Financial Times)
A Deal to Stop the Saudis From Drowning U.S. Shale Would Come None Too Soon (Foreign Policy)
The Danger That Government ‘Help’ For Oil Frackers Will Only Cause More Mess For Markets (Forbes)
Coronavirus: Oil and Gas Execs Meet With Trump, What About Renewables? (Our Daily Planet)
Remarks by President Trump in Meeting with Energy Sector CEOs (White House)
Trump wanted lower oil prices, but now he’s meeting with industry executives to discuss how to raise prices
For years, President Trump encouraged Saudi Arabia to ramp up production in order to drive prices down. Now, he is calling for cuts. (NBC News)
Trump assures U.S. oil companies that they will get federal help to offset pandemic effects on oil prices (Washington Post)
Coronavirus: Oil and Gas Execs Meet With Trump, What About Renewables? (Our Daily Planet)
Trump threatens OPEC, Russia with tariffs (Politico’s Morning Energy)
Trump opens door to imposing tariffs on oil imports (Axios)
Coronavirus crisis tests Trump’s love for cheap oil (Axios)
SENATORS INTRODUCE SPR BILL: (Politico’s Morning Energy)
The Energy 202: Trump administration rejects holiday on oil and gas royalty payments in response to coronavirus (Washington Post)
The U.S. government has few levers to force American companies to curb production (Politico’s Morning Energy)
Exclusive: U.S. banks prepare to seize energy assets as shale boom goes bust (Reuters)
INTERIOR RESPONDS ON ROYALTY RELIEF: (Politico’s Morning Energy)
DOE TAKES STEP TOWARD FILLING SPR: (Politico’s Morning Energy)
Oil at 18-Year Low Amid Record Collapse in U.S. Fuel Demand (Bloomberg)
Not your average Keep It In The Ground movement (Politico’s Morning Energy)
U.S. Weighs Paying Drillers to Leave Oil in Ground Amid Glut (Bloomberg)
Excerpt from Politico’s Morning Energy: OIL’S WHITE HOUSE MEETING: Trump will meet with oil company executives at the White House this afternoon to discuss how to address the drop in crude oil prices driven by the coronavirus and the price war between Saudi Arabia and Russia.
The guest list: The meeting is expected to include Harold Hamm, a Trump donor and the founder of Continental Resources, who has accused the Saudis of “dumping” oil on the market and has called for import restrictions. It will also include chief executives from Exxon Mobil, Chevron and other large multinational companies that have argued that no direct relief to the oil industry is needed, as Pro’s Ben Lefebvre reports.
The tweet: The meeting comes a day after the president’s tweet that he expected a deal soon between Saudis and Russians to sharply cut oil production by 10 million to 15 million barrels — though that turned out to be more wishful thinking than a concrete commitment. “I hope they make that deal, but that’s what they told me,” Trump said Thursday during a briefing. He added that they did not discuss potential “concessions” from the U.S. in exchange for any production cuts. Still, Ben reports, the Trump administration is pressing OPEC to hold an emergency meeting as early as next week to try to end the standoff in the oil market.
Related: House Republican Reps. Kevin McCarthy, Mac Thornberry and Greg Walden on Thursday called for the State Department to “employ appropriate diplomatic pressure” on Russia and the Saudis.
What are his options? Ahead of today’s meeting, the Energy and Interior departments prepared to send Trump a menu of options the administration could take to provide relief to the domestic oil industry, according to industry officials briefed on the issue. The list of options for Trump are expected to contain measures that Republican lawmakers recommended, including suspending royalty payments for oil produced on federal lands and the extension of federal lease terms. It may also include suspending the Jones Act, which prevents ships that are foreign-owned, -flagged or -crewed from transporting products between U.S. ports.
More than 40 Republican lawmakers, including Minority Whip Steve Scalise, also sent a letter to Trump ahead of the meeting laying out five potential policy options to help U.S. oil and natural gas producers.
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MNUCHIN RESPONDS: Treasury Secretary Steven Mnuchin responded to Senate Energy Chairman Lisa Murkowski‘s letter that asked him to ensure federal loans are available to U.S. oil and gas companies during implementation of coronavirus relief legislation, H.R. 748 (116). “I have very limited ability to do direct loans out of the Treasury,” Mnuchin said during Thursday’s coronavirus briefing, adding that he can do so for passenger airlines, cargo airlines, contractors and national security companies. “Our expectation is the energy companies like all of our other companies will be able to participate it broad-based facilities, whether it is the corporate facility or the main street facility. But not direct lending out of the Treasury.” READ MORE
Excerpt from Our Daily Planet: But the truth is, the renewable energy sector is the source of the fastest-growing jobs in America and a shining example of our ingenuity, despite the fact that our President is hostile toward renewables. However, experts have said that the oil and gas industry faces the gravest challenge in its 100-year history and its executives will be lobbying the President for bailout money as if their lives depended on it. This means that the renewable energy industry and the cleantech sector must make its case to Congress and to the American people. Americans deserve a green future not a return to business as usual. READ MORE
Excerpt from Politico’s Morning Energy: SENATORS INTRODUCE SPR BILL: North Dakota Sen. John Hoeven, and Texas Reps. Lizzie Fletcher and Michael Burgess, said Tuesday they will introduce bipartisan legislation to provide $3 billion in funding to purchase U.S. crude oil for the Strategic Petroleum Reserve, echoing a request from Trump and Energy Secretary Dan Brouillette that was left out of the last coronavirus relief package, H.R. 748 (116). The legislation is co-sponsored by Sens. John Cornyn, Kevin Cramer, Ted Cruz, Lisa Murkowski, Dan Sullivan, and Reps. Kelly Armstrong and Henry Cuellar.
Speaking of SPR: Texas Rep. Mike Conaway and Cuellar led a letter to House leadership, urging them to include support for DOE’s efforts to fill the SPR in any future relief package in order to “bring certainty to these beleaguered communities and American families.” READ MORE
Excerpt from Politico’s Morning Energy: The U.S. government has few levers to force American companies to curb production, Pro’s Ben Lefebvre and Zack Colman report. Instead, two industry officials in contact with the Trump administration told POLITICO that U.S. government officials have told them about an understanding with Saudi Arabia in which Riyadh will push for a production cut from Russia and OPEC, so long as the White House does not offer direct financial assistance to U.S. shale drilling companies.
The administration rejected a Saudi request that U.S. oil companies be barred from receiving business loans under the third coronavirus relief package, H.R. 748 (116). But, the two officials said, the Trump administration instead agreed it would not waive royalty payments to U.S. companies from oil and gas they produced on U.S. federal lands — something both congressional Republicans and industry groups have pushed in recent days.
“The president said no to royalty relief on offshore and onshore federal land,” one industry official briefed on the matter said. “The president had a quid pro quo promise to the Saudis. Saudi implicitly wants the shale guys to die on the vine of natural causes.”
If an agreement is not reached today, Trump said Wednesday he has “a lot of good options” for next steps. “Beauties,” he said. “I might like it even more. Let’s see what happens. Hopefully they can make a deal.”
Still, proponents of royalty relief could see success in pushing for narrower royalty relief. Louisiana Sen. Bill Cassidy said he spoke to Interior Secretary David Bernhardt on Tuesday about royalty relief for producers in the Gulf of Mexico. “He promised to quickly process targeted royalty relief on the outer continental shelf using existing law,” Cassidy said in a statement Wednesday.
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MAKING THEIR CASE: Staale Gjervik, the president of ExxonMobil subsidiary XTO Energy, wrote to the Texas Railroad Commission, saying the oil and gas regulator’s plan to consider pro-rationing oil production “could itself cause disruption and economic waste by voluntarily renouncing Texas’ share of the crude oil market.” The commission’s meeting next week will discuss a complaint from Pioneer Natural Resources and Parsley Energy “to determine reasonable market demand for oil in the state of Texas.”
In separate comments, Environment Texas and its partners wrote to “prioritize production cuts for producers and fields with the worst records of excessive flaring and to develop a plan to ratchet down production of oil throughout the next decade.” READ MORE
Excerpt from Politico’s Morning Energy: INTERIOR RESPONDS ON ROYALTY RELIEF: The Interior Department said it would utilize “long-standing regulatory tools” instead of implementing widespread relief from federal royalty payments for oil, gas and coal production on federal lands amid the Covid-19 pandemic. In response to calls for royalty relief from House and Senate Republicans , acting Assistant Secretary for Land and Minerals Management Casey Hammond wrote that the department already has a process in place for companies to apply for discretionary royalty relief, “as well as processes through which companies may apply for the suspension of operations or production.”
“At this time, it is our intent to continue to use these long-standing regulatory tools,” Hammond wrote, after noting Secretary David Bernhardt spoke with Republican and Democratic governors, lawmaker and industry representatives about actions the department could take. “In general, there is interest in relief that would require a modification of our existing practices,” Hammond added. The letter closes with a recommendation that companies seeking relief submit an application to the appropriate bureau program. READ MORE
Excerpt from Politico’s Morning Energy: NOT YOUR AVERAGE ‘KEEP IT IN THE GROUND’ MOVEMENT: The Energy Department is looking at a plan to pay oil producers to keep crude in the ground, Bloomberg News reports. The effort is being developed by DOE and would involve buying up to 365 million barrels of proven oil reserves using the department’s authority to store up to 1 billion barrels in a Strategic Petroleum Reserve. The companies would be required to produce the oil purchased by DOE in future years.
The effort comes as a global glut of oil has caused prices to drop to historic lows and threatens to bankrupt many U.S. drillers. U.S. oil futures prices dipped briefly below $20 per barrel on Wednesday, after the International Energy Agency said it expected April oil demand to plummet by a massive 29 million barrels per day from the previous year’s mark, reaching levels not seen since 1995, as Pro’s Zack Colman reports.
U.S. crude stockpiles meanwhile increased by a record 19.2 million barrels from the previous week as the drop in demand continues amid the coronavirus pandemic, according to the weekly report from the Energy Information Administration.
“A massive federal Keep It In the Ground policy–designed to deal not with the climate crisis but with the catastrophe of … low oil prices,” tweeted environmentalist and 350.org Founder Bill McKibben, who for years has called for the same tactic, but to halt the emissions of carbon dioxide, of course.
Bloomberg reports the plan would require Congress to appropriate billions — a move that would surely see pushback from Democrats on the Hill. In fact, if the DOE were to purchase the 365 million barrels, it would need Congress to approve about $7 billion in spending at current oil prices, Zack reports. READ MORE