A (TENTATIVE) DEALS A (TENTATIVE) DEAL: Oil rich nations on Thursday cut a tentative deal to reduce production by 10 million barrels a day, cooling a trade war between Russia and Saudi Arabia as prices at the pump fall amid the coronavirus outbreak.
Saudi Arabia and Russia had both stepped up production as the pandemic began to spread, causing an oversupply of petroleum as demand for oil has dropped by 30 percent in recent weeks.
The deal, negotiated Thursday at a virtual meeting of the Organization of the Petroleum Exporting Countries other oil-producing countries known as OPEC+, represents a 10 percent decrease in global oil production for May and June.
The bulk of those reductions come from Saudi Arabia and Russia, who according to the Financial Times will together reduce production by 5 million barrels while other countries make up the rest.
The deal could be expanded at a coming Group of 20 meeting set for Friday which could deliver a commitment to reduce global production by another 5 million barrels a day.
The production decrease could bring some stability to oil markets. Oil fell below $22 a barrel in March after selling for at $50 a barrel for much of February.
Though a 10 percent drop in production doesnt match the 30 percent decrease in demand, the industry is hopeful it will help make a dent in the oversupply and ease tensions until economies can begin to recover.
“If we were squealing about a 3 million barrel increase or so, a 10 million cut is a pretty big move in the other direction,” Derrick Morgan with the Association of Fuel and Petrochemical Manufacturers, which represents oil refineries, said in reference to the increase in production from Russia and Saudi Arabia.
It may also stave off White House efforts to impose tariffs on crude imports or force U.S. production cuts moves largely opposed by the oil industry.
Trump floated such ideas Monday despite resolving to let market forces settle the problem just a few days before.
“They seem to have stepped up and reacted to urging by the administration to voluntarily restrain their own production, which relieves pressure on any kinds of tariffs or bans or quotas on imports into the U.S. by refineries,” Morgan told The Hill, a relief to refiners who still import about 15 percent of crude from outside North America.
The agreement between Saudi Arabia and Russia follows considerable pressure from both Trump and U.S. lawmakers largely directed at the mideast kingdom.
Failure to address this energy crisis will jeopardize the joint efforts between our nations to collaborate economically and militarily, several House Republicans wrote in a letter earlier this week to Crown Prince Mohammed bin Salman.
If the Kingdom fails to act fairly to reverse this manufactured energy crisis, we would encourage any reciprocal responses that the U.S. government deems appropriate.
Read more on efforts to shore up the industry here.
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NEPA BACKCHANNEL? Sen. Tom CarperThomas (Tom) Richard CarperOvernight Energy: Trump rolls back Obama-era fuel efficiency standards | Controversial Keystone XL construction to proceed | Pressure mounts to close national parks amid pandemicCritics blast Trump mileage rollback, citing environment and health concernsTrump administration rolls back Obama-era fuel efficiency standardsMORE (D-Del.) on Thursday questioned the White House on its transparency in receiving and publishing industry comments on proposed changes to a bedrock environmental law.
Environmental groups have accused the administration of allowing industry to use the email address NEPA-Update@ceq.eop.gov as a back channel to send in comments on the administrations proposed changes to the National Environmental Policy Act (NEPA).
The White House, meanwhile, has denied accusations of a back channel.
It has come to my attention that, in addition to receiving public comments on this rule through www.regulations.gov, the White House accommodated industry requests for the use of an email address, NEPA-Update@ceq.eop.gov, to receive comments on the proposed regulations, wrote Carper in a Thursday letter to Mary Neumayr, the chairwoman of the White Houses Council on Environmental Quality (CEQ).
Comments accepted through this email address do not appear to have been publicly available to others during the comment period, and it is my understanding that they remain unavailable today, added the senator, who is the top Democrat on the chambers Environment and Public Works Committee. This practice appears to violate Section 206(d) of the E-Government Act of 2002, which requires agencies to make dockets and comments submitted on proposed rules available online.
Carper also said he has heard from multiple sources that the White House gave the email address to people, organizations and industry groups to use for their comments.
In doing so, the White House created a two track system to receive and process comments one track for those working closely with the White House and another for the rest of the public, he wrote.
CEQ spokesman Dan Schneider denied the accusations by Carper and the environmental groups.
CEQ did not create any additional email address on its own or at the request of any entity or for any group to submit comments on the proposed rule, Schneider told The Hill in an email.
Read more on the letter here.
EMINENTLY QUOTABLE: It’s important to remember that whether they reach a formal agreement or not, everyone is going to reduce production as long as we have this demand curve being what it is. There is simply no other choice, Energy Sec. Dan Brouillette said on CNBC ahead of todays OPEC+ talks.
When you produce oil, you have two options. You can either use it as part of the demand, or you can store it, and storage is running out. So I mean, at some point, everyone is going to cut production until we turn the economy back on.
OUTSIDE THE BELTWAY:
Cow poop could fuel Californias clean energy future. But not everyones on board, the Los Angeles Times reports
Coronavirus Impact: Gas Prices Fall Below $0.80 In Some Parts Of Minnesota, WCCO reports
The silver lining to coronavirus lockdowns: Air quality is improving, The Washington Post reports
People in India say they’re seeing the Himalayas for first time in decades amid drop in air pollution, we report
ICYMI: News from Thursday
Tentative deal would slash global oil production by 10 percent
Democrat questions WH transparency in rollback of bedrock environmental law
Saudi Arabia, Russia strike deal to reduce oil production amid market tumult: reports
Energy chief Brouillette confident oil price drop will push production cuts
FROM THE HILLS OPINION PAGES:
Trump’s OPEC gambit exposes folly of Arctic drilling, writes Adam Kolton, executive director of Alaska Wilderness League.