The Trump administration won’t be taking equity stakes in oil companies as part of an emergency loan program for the reeling oil industry.
“The Trump Administration is not taking equity positions in or nationalizing energy companies,” Shaylyn Hynes, an Energy Department spokesperson, told the Washington Examiner. “Media reports to the contrary are categorically false.”
Treasury Secretary Steven Mnuchin said last week that the idea of the government taking equity in oil companies in exchange for loans was “one of the alternatives” being considered by the Trump administration. But the idea was opposed by oil lobbying groups, along with conservatives.
The American Petroleum Institute, the largest U.S. oil lobby, opposed the idea, preferring the industry have access to broad-based lending facilities set up in the CARES Act passed by Congress, rather than being treated as special.
The American Exploration & Production Council, a group representing independent shale oil producers, also opposed the idea, with its CEO, Anne Bradbury, describing it as moving “our industry toward nationalization.”
The Federal Reserve, however, did provide more opportunity for giving financial aid to the oil industry on Thursday, as companies suffer from a historic price crash from the coronavirus stopping travel. It altered a coronavirus lending program in ways that would allow more indebted oil companies to qualify for funding.
The Fed announced it was expanding the Main Street program to help “midsize” companies with up to 15,000 employees, up from the previous guidelines of 500 to 10,000 employees and $5 billion in revenue, double the earlier amount.
The changes also enable lenders to give out loans to more indebted companies that could use the money to pay off prior loans. And the Fed raised the maximum loan administered to companies from $150 million to $200 million. Energy Secretary Dan Brouillette has previously said lending programs need “to be something closer to $200 or $250 (million) to be of any real benefit” to oil companies.
The changes to the Fed program are broad and not limited to oil companies, but Democratic critics and environmentalists accused the Trump administration of favoring oil.
