Politico | Oil prices go negative – and Washington is paralysed over what to do
- Reports that Trump administration was considering paying companies not to pump oil have not comforted oil executives
- One CEO warns that ‘tidal wave of bankruptcies’ is about to hit sector
This story is published in a content partnership with POLITICO. It was originally reported by Ben Lefebvre on politico.com on April 20, 2020.
Airlines, restaurants, retailers, farmers and a slew of other industries are getting billions of dollars in bailouts as the US economy contracts because of the coronavirus pandemic – but America’s oil companies are hitting a dry hole.
US oil futures prices fell to their lowest-ever level on Monday at 1 cent per barrel, breaking the previous record near US$10 set in 1986, as policymakers struggled to address the glut of crude that has seen the industry reverse a decade-long boom and sink into a deep recession that threatens to push dozens of companies into bankruptcy.
US policymakers for decades have focused their policies on ensuring the oil supply shocks that damaged the US economy in the 1970s would not return, and they created a national reserve to backstop the market and ensure supplies were available to fill up the nation's fleet of cars and trucks.
But with US production hitting record levels late last year and storage tanks now brimming with fuel, Washington has few tools at its disposal to lift oil prices to levels needed to sustain the energy industry.