Energy workers in America are grateful to President Trump and leaders in Congress for pressuring Russia, Saudi Arabia, and other global oil producers to end their opportunistic and destructive price war in the middle of the COVID-19 crisis. Convincing these nations to stop dumping oil into the world market, and to cut their output instead, could help save the U.S. oil and natural gas sector, working families, and businesses all across the economy that depend on domestic energy production.
But, clearly, more work needs to be done.
The recent market volatility, including a historic and unprecedented domestic oil price drop, continues to show an oversupplied market further affected by a global decrease in demand as the coronavirus pandemic effectively shuts down much of the economy and creates additional oil storage capacity issues in the United States.
Our government, and our society, needs to first address the health crisis, but our elected leaders also need to start offering reasonable and realistic solutions to get more people back to work and opening businesses so global markets can begin to function again.
A continued free fall in oil prices will be devastating to the tax base of energy producing states, where the oil and gas industry is a major source of tax revenue for public schools and other essential government services. And it will hurt working families across the country.
In the blink of an eye, we could lose our nation’s newfound energy security and geopolitical strength.
We have spent the past few years in a period of domestic energy abundance, which has kept prices low for consumers but also has allowed us to begin exporting the cleaner energy developed here to our partners across the globe. But all of that could be at risk.
We don’t want to go back to a time when we were beholden to cartels and dictators for our energy, and Americans spent time in gas lines and spent a greater portion of their income on basic necessities such as heat and food.
Standing up to Russia and the Saudi-led OPEC oil cartel was the right thing to do, and President Trump was backed to the hilt by congressional leaders, including Sens. Cory Gardner of Colorado, Kevin Cramer of North Dakota, and Lisa Murkowski of Alaska, in demanding an end to the price war.
But more action is needed to repair the damage done and build stronger defenses against Russia, OPEC, or any other foreign power that tries to undermine the U.S. economy, and energy security, at this critical time.
We can start by filling the U.S. Strategic Petroleum Reserve to its billion-barrel capacity and work with our allies in Asia and Europe to increase their own national stockpiles at today’s low prices. This increased demand, together with production cuts, will put a stronger floor under prices and help energy markets start to recover.
Congress also needs to take the appropriate steps to ensure oil and gas producers, and others, have appropriate access to bridge loans that will allow them to survive this economic downturn.
The Independent Petroleum Association of America recently asked the Federal Reserve to reconsider a provision of its forthcoming Main Street Lending Program that bars eligible borrowers from using the cash to repay other loan balances and requires borrowers to promise to repay the Fed before other debt of equal or lower priority.
“Oil and natural gas producers are not looking for a government handout; they are seeking a bridge to help survive this economic disruption,” the IPAA, which represents thousands of independent oil and natural gas producers, wrote in a letter.
Now is not the time for government to pick winners and losers but rather a time for our elected leaders to get back to the basics of economic development.
The energy sector helped pull America out of the last recession. With the right policies to prevent foreign interference, we are ready to do it again.
Dan Haley is president and CEO of the Colorado Oil & Gas Association in Denver.
