Congress could designate oil industry vital for national security, paving way for bailout

Congress may step in to help designate the oil industry as vital for national security, paving the way for a possible oil industry bailout, says Treasury Secretary Steve Mnuchin

“We’re in the process of putting out guidance,” he said Tuesday. "Obviously the energy business is very important to us. This has national security issues, but different. We look forward to both looking at what existing capabilities we have, and that will be something we may need to go back to Congress and get additional funding for.”

Mnuchin also said President Trump has instructed him to work with the Energy Secretary Dan Brouillette on the matter.

World leaders consider their countries having a robust oil supply a matter of national security for several reasons including having enough for residents and the military during wartime and to safeguard against disruptions in domestic production and international supply chains, which the coronavirus pandemic have threatened. 

Trump said Tuesday the biggest problem for the oil industry is the sharp constriction in demand as a result of the worldwide shelter-in-place orders to slow the spread of the virus.

However, people's fears about contracting the highly contagious virus on public transportation when economies reopen could eventually increase the demand for private vehicles, which would spark the demand for petroleum.

Trump suggests that dynamic, as part of the overall reopening, would be a bigger boon for the oil industry than more production cuts or stimulus funding.

“The biggest thing in the toolbox is to get our country open,” Trump said Tuesday. 

U.S. crude May futures Monday went below zero for the first time, into negative territory.

On Tuesday, the drop in oil prices helped drive the Dow Jones Industrial Average down more than 600 points. Trump said the drop in oil prices allowed for the United States to cheaply fill up its Strategic Petroleum Reserve.

“And based on the record-low price of oil that you've been seeing – it’s at a level that's very interesting to a lot of people. We're filling up our National Petroleum Reserves,” Trump said.

The president wants to put as much as 75 million barrels into the reserves.

"That would top it out," he said. "That would be first time in a long time it's been topped out. We’d get it for the right price.” 

Trump said the negative territory for the U.S. crude futures had more to do with the financial industry taking a hit than the oil industry.

“Like interest rates, they go negative,” Trump said. “Much of it has to do with short sellers. ... If you look a month into the future, I think it's at $25 or $28 a barrel. So a lot of people got caught. ... So if you take a look at it, you'll see it's more of a financial thing than an oil situation.”

Trump said he didn’t see any additional cuts to oil production on the immediate horizon from OPEC+ nations after a deal was passed earlier this month.

“Well, we’ve already done that, where Saudi Arabia is cutting back, Russia is cutting back, Mexico is cutting back, and the OPEC Plus  ... are cutting back,” Trump said.

“And you know, the problem is nobody is driving the car anywhere in the world – essentially, 184 nations. Factories are closed, and businesses are closed. And so, all of a sudden – we had really a lot of energy to start off with, oil in particular. We had a lot. And then, all of a sudden, they lost 40, 50% of their markets. So it just stopped. So it's going to be picking up, and the energy business will be strong. But they cut back."