Alexander Bolton writes: As the price of oil plunges to its lowest point in 12 years — and threatens to drag the broader U.S. economy down with it — lawmakers say Congress should consider helping teetering energy companies with policy fixes beyond the decision to lift the oil-export ban.
Among the proposals under discussion: Expediting the process for exporting liquefied natural gas, and upgrading infrastructure to move energy to market more quickly and cheaply.
Another top priority is loosening environmental and other regulations. But moves in that direction are highly unlikely while a Democrat remains in the White House.
With oil currently below $33 a barrel, some on Capitol Hill are calling for quick action.
Some lawmakers are floating the possibility of taking retaliatory trade measures against Saudi Arabia, which has flooded the market with cheap oil in what some analysts see as a bid to drive America’s growing shale oil industry out of business.
The House version of the energy legislation includes language to expedite natural gas exports.
The Obama administration has proposed nearly 100 regulations for the oil and gas industry, ranging from restrictions on methane and carbon dioxide to limits on operating on federal land.
Legislation passed last month to lift the four-decade ban on oil exports is expected to boost exports by 500,000 barrels a day but so far it has had little impact on prices.
Goldman Sachs has warned that oil may sink as low as $20 a barrel, which would shake financial markets by sinking energy stocks, driving companies into bankruptcies and setting off a round of junk-bond defaults.
Third Avenue Investment, a New York-based fund, last month blocked clients from pulling their money, prompting a sell-off of high-yield bonds and evoking memories of the 2008 meltdown.
Growing tensions between Saudi Arabia and Iran over the execution of a Shiite cleric might have been thought to have boosted prices by raising the specter of regional conflict. But that had little effect on oil prices this past week.
Bankruptcies among oil and gas companies have hit the highest quarterly level since the midst of the 2008 financial crisis, Bloomberg Business reported last month.
Oil and gas companies have laid off more than 250,000 workers and that number could swell in the months ahead.
Saudi Arabia, taking advantage of its low extraction costs, has refused to curb oil production in a bid to expand market share and undercut competitors. This has raised the prospect of the U.S. government taking action to level the playing field for domestic companies.
If the energy industry continues to sink, other proposals will pop up in the energy negotiations due to kick off next week. There are calls for new infrastructure: the right mix of pipelines, transmission lines, rail, roads,” he said.
