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President Donald Trump's best efforts to put a polish on horrendous business losses are proving useless. On April 9, he called a tentative deal crafted by Saudi Arabia and Russia to cut oil production "very acceptable" and "a very good call."
“I think it’s really hitting bottom, we’ve had a bottom,” Trump said then of oil prices, “but now at $23 and $25 [per barrel], and probably heading up." This week, however, the bottom fell out of the market as it never has before, leaving some companies paying others to take crude off their hands.
Before the COVID-19 pandemic forced general lockdowns from one nation to the next, Trump could tout low gasoline prices as a kind of tax cut for consumers. But now, as major producers, U.S. oil firms are shattered by the steep fall in demand.
Trump on Tuesday issued bromides. "We will never let the great U.S. Oil & Gas Industry down," he tweeted. "I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!"
Stock markets fell Tuesday. Rendered irrelevant for the moment were Trump's talk of helping a neighboring oil producer, Mexico, make production-cut quotas in a multinational bid to prop up the prices. “The United States will help Mexico along, and they’ll reimburse us at a later date when they’re prepared to do so," Trump said the week before last.
"Reopening" of economies in the U.S. and other countries beckons somewhere in the hazy future. That's likely linked to when tests can show the extent of COVID-19 spread.
There also are technical and logistical issues that make shutdowns and later resumption of oil production complicated for the producers as well as consumers. The cascade effect of what experts call an unprecedented plunge into the unknown became apparent, too.
For instance, Moody's Investors Service said Monday: “The coronavirus outbreak as well as the oil price shock will have a direct negative impact on the asset quality of rated financial institutions." Later in the day, however, Trump portrayed the trouble as "more of a financial thing than an oil situation," saying it will be "very short term." But it is widely expected to take months before oil production comes into line with lesser demand, even assuming some recovery.
Trump has talked about plans to add as much as 75 million barrels of oil to the Strategic Petroleum Reserve. "We'll get it for the right price," he said. Republican lawmakers, meanwhile, have been pushing for a block on Saudi crude imports that could help U.S. oil shale interests. "Well, I'll look at it," Trump said Monday. What else he can do now to help is unclear.