Kevin Cramer has worked the hardest of anyone in Congress to lobby President Trump to act to counter a historic oil price crash battering the U.S. shale industry, a course of action in tension with Trump’s instinctive support for lower prices.
The North Dakota Republican, 59, a talkative first-term senator who says he speaks with the president once a week on oil policy matters, was Trump’s energy adviser during the 2016 campaign. But his voice during the pandemic-fueled oil market “crisis” has been louder and persistent.
“It’s not that I’m having a moment as much as the moment has come to me,” Cramer told the Washington Examiner in an interview. “The crisis that is hitting oil, particularly in North Dakota, is dramatic. It’s about the survival of my state and lots of jobs.”
Now, Cramer is claiming victory, with oil prices stabilizing in recent weeks at about $30-per-barrel from a low of below zero. Despite Trump not delivering most of the measures he called for, Cramer is giving the president credit.
“We threw it all out there, realizing we wouldn’t get it all,” Cramer said. “To the president’s credit, he let everything be on the table.”
“There is nothing like $10 oil to make $30 oil look good,” Cramer added. “I have been a little surprised it has come back as quickly as it has.”
Cramer, who served in the House for six years before running for the Senate in 2018, has experienced mixed results with Trump. He certainly knows how to reach him.
Last month, Cramer tweeted at Trump, calling on him to “prevent” Saudi Arabia from unloading an armada of oil tankers headed for the United States, which threatened to worsen a glut caused by a dramatic slowdown in travel due to the pandemic.
The Saudi tankers have begun arriving on U.S. shores, and Trump has not stopped them.
Trump has threatened tariffs on oil imports, but he has not imposed them, and his administration hasn’t launched an anti-dumping investigation into Saudi Arabia, rejecting two more Cramer requests. Cramer, with GOP allies on the Armed Services Committee, unsuccessfully pushed for the administration to withdraw troops and missile defense systems in Saudi Arabia.
But at Cramer’s behest, Trump engaged in whirlwind diplomacy in prodding Saudi Arabia to stop flooding the market with low-priced crude, convincing the controversial long-time ally to instead join Russia and other oil-producing nations to enact an unprecedented agreement to cut production.
“While the Saudis came late to the table, they came pretty big. That’s been helpful,” Cramer said. “The goal was not to stop all Saudi oil. The goal was always to change behavior. To that end, we succeeded in that.”
Still, Cramer has provoked criticism from allies along the way. Oil lobbying groups such as the American Petroleum Institute have opposed Cramer’s push for tariffs and other import restrictions on the grounds that such policies are antithetical to free markets.
API represents large oil majors such as ExxonMobil and Chevron that could emerge from the oil price crash stronger by capitalizing on smaller competitors folding.
The Bakken Shale formation in Cramer’s home state of North Dakota is mostly made up of small- and medium-sized oil producers.
“While I am not unsympathetic to what some of the large multinational companies are saying, that is what’s in the best interest of their shareholders,” Cramer said. “I am looking out for the people of North Dakota. I don’t mind disagreeing with them on this topic.”
“What I don’t want to see is further consolidation in the oil industry,” Cramer added. “If we are left with a half dozen major producers, that investment will follow where there is the best return, not in the Bakken of North Dakota but in Saudi Arabia or other places.”
Cramer is also not totally ready to celebrate the recent oil price rally.
For oil producers in the Bakken, $30-per-barrel oil is below their break-even price, representing the minimum level a producer needs to meet its costs of business. For those producers, transportation costs are high because they do not have easy access to pipelines.
Ron Ness, president of the North Dakota Petroleum Council and an ally of Cramer, has previously told the Washington Examiner that prices would need to reach $55 or $60-per-barrel for oil producers to invest new capital in the Bakken.
While some demand is recovering in North Dakota, producers in the Bakken have cut production by more than 500,000 barrels per day due to low prices, helping to balance the market. There were only 11 drilling rigs operating in the Bakken as of Thursday.
Cramer is worried some producers could be tempted to restore wells they shut down prematurely while demand experiences ups and downs, putting more negative pressure on prices.
“One thing I know about oil producers, their DNA is about producing, it’s not about slowing down,” Cramer said. “Hopefully, they won’t come back too fast and shoot themselves in the foot.”
Cramer is also uncertain about the long-term prospects of oil as consumers change travel and working habits, perhaps for the good, in response to the pandemic. Some oil industry leaders and analysts predict the world will return to consuming 100 million barrels per day of oil as it normally did, absent stronger policy to encourage fossil fuel alternatives. Cramer, who sees himself as a keen energy market observer from his time in the early and mid-2000s as a member of North Dakota’s utility regulator, is unsure.
“It’s hard for me to see us getting back to the same level even in a growing economy,” Cramer said. “I have learned how to use Zoom. It’s pretty slick. I am an expert at Skype. This is changing human behavior, and the market may not be the same.”
