White House convenes oil CEOs as bust threatens US boom

President Donald Trump offered assurances of better times and coronavirus tests to oil CEOs at a White House summit Friday, but no firm proposals for easing the industry's way as the coronavirus pandemic and plunging petroleum prices threaten America's yearslong fracking boom.

Executives of Chevron, Exxon and other large and medium-size petroleum companies and industry trade groups, as well as Republican lawmakers, met with Trump in hopes of hammering out a U.S. response. Ramped-up oil and gas production from Saudi Arabia and Russia and the economic slump from the coronavirus outbreak have created a global oil glut, dropping oil prices well below $30 a barrel.

“We'll work this out,” Trump promised the oil executives.

No new action was immediately announced at Friday's gathering — other than Trump offering to try to get the oil executives tests for coronavirus, if they chose.

“Would anybody like to be tested?” Trump asked. “We might be able to do that.”

"Let’s test these guys,” Trump added. “Listen, they gave us millions of jobs. If anybody wants to be tested, we’ll test them.”

Trump had talked Thursday night of working with Saudi Arabia and Russia to persuade them to ease up on oil pumping, which is helping pull down oil prices and threatens more expensive U.S. shale oil production. The two countries “are fighting over this, and as everybody knows, it’s, you know, really killing an industry,” Trump said then.

But at least one oil industry expert is urging the White House and oil company executives to focus instead on dealing with looming domestic problems from the oil market crisis, rather than fixate on the industry's bottom lines.

Amy Myers Jaffe, director of the energy security program at the Council for Foreign Relations, pointed to the possibility of U.S. disruptions in diesel fuel for trucking -- trucks that Americans homebound by the pandemic increasingly depend upon — amid the market chaos.

“This really requires ... a national coordinated response,” Jaffe said, referring to bottlenecks in U.S. fuel supplies arising from the current petroleum glut. “You have to think about national security."

Oil companies are pitching wildly varying actions for the administration. Some GOP lawmakers and small and medium-size oil companies are asking for measures including an oil embargo on Saudi Arabia or tariffs and other punitive measures to persuade the Gulf kingdom to stop flooding the global market with oil.

In attendance Friday was Harold Hamm, executive chairman of the shale oil company Continental Resources, who has asked the Commerce Department to investigate what he contends is illegal dumping of below-cost crude oil onto the market by Saudi Arabia and Russia. Hamm and Continental together donated more than $1.5 million to Trump’s campaign and political action committee.

Other big industry players who attended have been donors. Kelcy Warren, chairman and CEO of Energy Transfer Partners, and his wife have given over $2.1 million to Trump, his inaugural committee and his election efforts. Exxon Mobil gave $500,000 to Trump’s 2017 inaugural committee, while Chevron donated $525,000.

Small and medium oil producers — who are some of Trump’s and the GOP’s loyalist campaign supporters — want Trump to press global mediation to encourage major oil producers to ease back on pumping.

One oil industry regulator in Texas, Ryan Sitton, has been floating the idea of production caps and reaching out to leaders from OPEC and Russia, suggesting that offering to cut production in some way might be a negotiation chip the U.S. could bring to the table.

Oil giants, meanwhile — with cash reserves that smaller producers don’t have — have been more willing to let the markets run as they will, knowing they are in better position to ride it out.

The American Petroleum Institute, which represents oil and gas producers as well as refineries, said in a letter to Trump that the group does not want the administration to take any steps that would restrict oil supply.

The summit has oil companies “sitting before the man asking the man to make a decision. And underneath you have this beehive of conversation and activity and who knows how it will turn up,” said Bill Miller, a longtime Texas lobbyist, political analyst and veteran of past U.S. booms and busts.

Oil companies and Republican oil-state lawmakers rallying to their support deny it’s a matter of oil billionaires seeking bailouts.

Hydraulic fracturing and other technological advances unleashed the U.S. shale oil and gas boom over the past two decades, pushing the United States to the top spot among global petroleum producers. Russia and others fault U.S. frackers for the current supply glut.

“You couldn’t tell people who spent their whole lives seeking out reserves and reservoirs” to ease up after fracking opened up a new boom,’ Miller said. It’s ’’hey, I love to eat, and it’s a buffet table.”

A dozen Republican senators also are asking the Trump administration to reduce or suspend royalty payments on public land leases to ease costs for the industry.

And the industry is asking Energy Secretary Dan Brouilette, who attended Friday's meeting, to use the country’s Strategic Petroleum Reserve — the underground reservoir of stockpiled U.S. government oil — to ease the supply glut and price fall for the industry.

“You’d think we’d want to fill in every cavity in the country" with crude, Trump said.

The Trump administration has encouraged the U.S. oil and gas industry to dominate the world’s energy market. The past two weeks alone, the administration has pledged to ease up on environmental and public health enforcement for the oil industry and others during the pandemic, and published a final rule rolling back Obama-era mileage standards, locking in increased gas and diesel consumption by drivers for years.