Asking Opec to help save the US oil sector was not part of Donald Trump’s vision of “American energy dominance”. The US president’s role in brokering a deal between Saudi Arabia and Russia to end a damaging price war was intended to prop up oil. Instead the deal fell flat, unable to overcome the collapse in global demand due to coronavirus, and with it went the shale revolution that transformed the US into the world’s top oil producer. The defining moment arrived on what traders have dubbed crude’s “Black Monday” when US oil prices plunged below zero for the first time, leaving even hardened oil executives wondering how a business forced to effectively pay customers to take their oil could recover.
The industry, whose growth allowed Mr Trump to boast of cutting US depend ence on Middle Eastern oil and freed his hand to sanction energy exporters from Iran to Russia, is now on its knees. Producers across the US oil patch, many with higher costs than international rivals, are in acute distress, pleading for Washington to ease the pain by cutting foreign oil imports or including them in coronavirus bailouts to stave off bankruptcy and job losses.
“If I go out of business or shut wells it’s not just me,” says the head of one small oil producer, “it’s the five guys who service the wells, truck the oil, lease their trucks – and the community that depends on their tax dollars.”
In January USpresident Donald Trump heralded the oil industry for having made the country ‘energy independent’ Senators from oil-producing states, including Ted Cruz of Texas, are imploring the US government to include domestic energy producers in credit facilities for failing companies. Aletter they sent on Tuesday said it could be the difference between “maintaining our domestic energy production” and “shedding more US jobs and returning to dependence on foreign sources of oil”.