Trump Pledges Support for Embattled Oil Industry
Timothy Puko, Christopher M. Matthews 1 day ago
WASHINGTON—President Trump promised oil-industry leaders the government would help revive the sector during a much anticipated White House meeting Friday.
Chief executives of Exxon Mobil Corp. and Chevron Corp. and leaders of seven other energy companies joined the president as the new coronavirus pandemic slows the economy and ravages the energy business. Dwindling demand has helped to halve crude prices since January and more than 70 U.S. oil companies, already heavy with debt, are at risk of bankruptcy, energy analytics firm Rystad Energy said Friday.
“The entire world is shut down trying to get rid of this scourge,†President Trump said about the pandemic before introducing oil executives at the meeting. “We’ll work this out and we’ll get our energy business back.â€
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The first part of the meeting, mostly introductions and platitudes, ended after an hour. President Trump said there would be a news conference to discuss more developments later Friday.
https://www.msn.com/en-us/money/markets/trump-pledges-support-for-embattled-oil-industry/ar-BB1298uL?ocid=spartanntp
The problem with this article is that it blames the energy sector's woes on the Virus.
NO.
About three days before the virus story broke and sluiced most else off the pages and the air, the Russians and Saudis met trying to hammer out a production quotas so as to avoid overproduction and glutting the market. That meeting failed, miserably, with both determined to produce so much oil the price would crash to punish the other.
The Saudis are going hard at it, and as a result, the price of oil went from over $40 to $20 and rebounded slightly.
That surplus production knocked prices below lift costs or sustainable revenue levels for a large number of the oil producing nations out there, and those revenue losses are hurting all parties involved.
But the virus really didn't have lot to do with that price drop.
What the virus did was add a reduction in demand to an already oversupplied market, keeping it from rebounding and making any future response to decreases in supply or increases in demand likely to be sluggish at best.
While that means cheap gasoline for now, (and perhaps, for the moment that is a good thing reducing operating costs for the owner operators and freight outfits keeping America supplied) in the long run, it means shut in wells, idled equipment, bankruptcy for some oil companies, and in the long run, another boom. But for now, tens of thousands of jobs have been lost in the upstream end of the industry, in the oilfield service sector, and that impact added to all the other jobs lost is sending an economic shockwave through oil patch towns.
What The POTUS is attempting to do is to get the Saudis and Russians back to the table so thy will hammer out an agreement that will be good for all interests concerned.
