New legislation involves $3 billion in funding to buy U.S.-produced crude oil
The pandemic plus the price war between Saudi Arabia and Russia have caused U.S. production to nearly come to a halt, storage to fill rapidly, crude prices to tank, and a record amount of well shut-ins and oilfield layoffs.
Markets rebounded slightly Tuesday with hopes that major global oil producers will agree on production cuts during an emergency OPEC meeting on Thursday. But U.S. energy leaders had a meeting of their own Tuesday to discuss solutions.
The payments, benefits, and loans outlined in the CARES Act are available for energy companies and their workers if they need it, but many lawmakers decided to go a step further in helping the oil and gas industry.
Sen. John Hoeven, R-N.D., has introduced a bill to provide $3 billion in funding to purchase American crude oil for the Strategic Petroleum Reserve, in order to support domestic energy production.
The North Dakota Petroleum Council says that this legislation would create important relief for the oil industry as they're in desperate need of capital.
"We've always had demand. And with no demand, this is going to get to be a really tight situation for where these barrels go," said ND Petroleum Council President Ron Ness.
But the Department of Energy says this policy will not just benefit energy producers.
"There's no better return to taxpayers than if we buy it at these low prices, and they're terribly low, but then we can sell it at a later date. That's going to be good for the taxpayers," says Assistant Secretary for Fossil Energy Steven Winberg.
However, the price war is still a huge obstacle. Hoeven says he has been putting pressure on Saudi Arabia to reduce supply.
"One of the things that's been brought up is what is the United States doing, well we're a market-based economy so we're already reducing supply," said Hoeven.
He says we’ll see how other OPEC countries will respond later this week.
For producers that have been affected by the pandemic, Hoeven encourages looking into the many ways that the CARES Act can help.