Oil prices plummeted well below zero Monday as industry advocates and oil state lawmakers continue to scramble over how to protect U.S. interests and shore up the industry.
Prices fell sharply to levels never seen before, closing at negative $37.63 per barrel, down $55.9 from Monday's opening price.
The continuing oil market woes are likely to amplify calls from oil state lawmakers for Congress to move legislation to aid the industry.
Crude prices have continued to fall for several weeks as the coronavirus pandemic slowed global demand, exacerbating market problems brought on by a supply glut and a stalemate between Russia and Saudi Arabia.
Lawmakers from oil states, including Alaska GOP Sens. Lisa Murkowski and Dan Sullivan, and Sen. Kevin Cramer, R-N.D., have continued to push for Congress to make available $3 billion for the Energy Department to buy crude at low prices to soak up excess supply and fill federal stockpiles to the brim. The lawmakers have introduced a draft bill that they want included in a coming coronavirus economic relief package.
"Today's collapse poses a devastating threat to our oil and gas sector, with job losses in the thousands and national security being weakened if the industry cannot recover," Cramer told CQ Roll Call through an aide.
"The dramatic low underscores why we cannot allow Saudi Arabia to flood the market, especially given our storage capacity dwindling. Right now, the highest number of Saudi oil tankers in years is on its way to our shores. Given today's news, I call on President (Donald) Trump to prevent them from unloading in the United States."
In the meantime, the DOE is moving ahead with plans to lease space in the Strategic Petroleum Reserves to oil companies running out of storage because of the low demand and excess supply. The companies will borrow space in the stockpiles and pay for it by leaving some of their oil in the reserves when they withdraw.
Long haul
A deal reached less than two weeks ago between OPEC countries and Russia to stabilize oil markets by cutting their production was not enough to stop the market turmoil.
Oil market analysts say they don't expect the industry to start to rebound at least until the world has overcome the coronavirus pandemic and economies reopen.
Josiah Neeley, a senior fellow focusing on energy issues at the free-market oriented R Street Institute, said buying oil for the national stockpiles may be "sensible" because of the low prices, but it would not be enough to solve the absence of demand because of the pandemic.
"The amount of extra oil that you would be able to take off the market through that mechanism is probably pretty limited compared to the overall situation," Neeley told CQ Roll Call. "It seems like demand is going to be significantly depressed and that's the reality that we're living in."
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