By Christopher M. Matthews and Timothy Puko
President Trump is set to meet Friday with the heads of some of
the largest U.S. oil companies to discuss measures to help the
industry weather an unprecedented oil crash, people familiar with
the matter said.
The meeting is to take place at the White House and will include
Exxon Mobil Corp. Chief Executive Darren Woods, Chevron Corp. Chief
Executive Mike Wirth, Harold Hamm, executive chairman of
Continental Resources Inc., and other top executives, the people
said.
But the options are limited for Washington to help beleaguered
U.S. oil-and- gas producers, and there are strong differences
between major oil companies and some independent shale drillers
about whether aggressive government actions are even necessary,
making the prospect of any agreement challenging, some of the
people said.
Mr. Trump is unlikely to endorse direct federal aid or market
interventions during Friday's meeting, according to a senior U.S.
official, but may consider smaller actions including a waiver of a
law that requires American vessels be used to transport goods,
including oil, between U.S. ports. The president wants to show
support, even if policy opinions are limited for now, the official
said.
The U.S. oil-and-gas industry has been pummeled recently by the
dual shock of plummeting oil demand because of the coronavirus
pandemic and surging supply as Russia and Saudi Arabia are locked
in a price war and flood the market with crude. Oil prices plunged
this week to just above $20 a barrel, the lowest level in nearly
two decades.
Mr. Hamm, a fracking pioneer who founded Continental, has called
for the Trump administration to intervene in the Saudi-Russian
price war, potentially putting tariffs on oil imports from the
countries, while other shale companies have called on state
regulators to enforce mandatory production cuts in Texas.
But Exxon, Chevron and other large companies don't support any
intervention in oil and gas markets, which they plan to express to
the president during the meeting, some of the people familiar with
the matter said.
"We believe in markets and we've got to believe in markets in
good times and in tough times," said Mr. Wirth of Chevron, in an
interview last month. "Market interventions are often
well-intentioned but less effective than things that support the
broad-based economy."
An official for the American Petroleum Institute, one of the
industry's largest trade groups, said its members weren't seeking
any government subsidies or industry-specific intervention.
Other chief executives set to attend Friday's meeting include
Vicki Hollub of Occidental Petroleum Corp., David Hager of Devon
Energy Corp., Greg Garland of Phillips 66 and Kelcy Warren of
Energy Transfer, according to two people.
While Congress and the Trump administration have taken steps to
assist struggling industries in recent weeks, they haven't found
agreement on how and whether to assist oil and gas producers.
The coronavirus stimulus package passed last week didn't contain
any energy-specific provisions. A plan to purchase millions of
barrels of U.S. oil for the country's strategic petroleum reserve
was scrapped during negotiations with House Democrats.
The Trump administration instead plans to lease space in the
reserve for producers to store oil, one person said. That will help
companies with a rapidly building crude oversupply but will do
little to raise oil prices.
While some frackers have focused on seeking help from Mr. Trump,
others have lobbied states for assistance. Scott Sheffield, the
chief executive of Pioneer Natural Resources Co., has lobbied the
Railroad Commission of Texas to put limits on production there to
help drive up the price of oil. Pioneer is one of the largest
producers in the Permian Basin, America's most productive oilfield,
which straddles Texas and New Mexico.
Some policy analysts have suggested a mandatory Texas
curtailment could be part of a grand bargain with Russia and Saudi
Arabia to pull back on global production. Many oil executives are
concerned about the long-term unintended consequences of the U.S.
joining such a cartel, and the idea hasn't received support from
the major oil companies or lobbying organizations.
"One of the problems that I think our industry has is that we're
never in agreement," Mr. Sheffield said in an interview. "The only
common thing we're unified in is for Trump to call Saudi Arabia and
Russia and get them to stop the price war."
Mr. Trump is currently unlikely to endorse such a coalition,
administration officials said. Whether Texas regulators support the
idea also remains unclear. Wayne Christian, chairman of the Texas
railroad commission, has expressed reservations about a production
curtailment. A hearing is scheduled for later in the month to
discuss the issue.
While many inside and outside the Trump administration are
skeptical that Friday's talks will result in action, one potential
area of assistance could be a temporary waiver of the Jones Act,
which would allow more ships to transport oil around the U.S.
Such a waiver would allow U.S. oil to be shipped from the
petrochemical hub on the Gulf Coast to markets on the East Coast
and Washington state, which are currently being flooded with
imports from Saudi Arabia and Russia. The U.S. has previously
granted such waivers, typically for about 10 days, during other
emergencies.
The idea is more broadly supported by oil companies, but
ship-builders and trade unions, also important to the president,
will likely oppose it, analysts and lobbyists said.
"The president has few easy or effective options, and nearly all
of them would entail angering one political constituency or
another," said Bob McNally, a former energy adviser to
then-President George W. Bush and now an analyst running Rapidan
Energy Group LLC.
Tag to Rebecca Elliott
(END) Dow Jones Newswires
April 01, 2020 18:02 ET (22:02 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Occidental Petroleum (NYSE:OXY)
Historical Stock Chart
From Aug 2024 to Sep 2024
Occidental Petroleum (NYSE:OXY)
Historical Stock Chart
From Sep 2023 to Sep 2024