Trump might pursue aid for shale firms hit by oil price plunge, virus

WASHINGTON — The White House is strongly considering pushing federal assistance for oil and natural gas producers hit by plummeting oil prices amid the coronavirus outbreak, according to four people familiar with internal administration deliberations.

President Donald Trump has touted the growth of oil and natural gas production under his administration, celebrating their rise in politically crucial swing states such as Pennsylvania. But many oil and gas firms were hammered Monday by the price war that broke out between Saudi Arabia and Russia, driving oil prices down to their steepest one-day drop in almost 30 years.

White House officials are alarmed at the prospect that numerous shale companies, many of them deep in debt, could be driven out of business should the downturn in oil prices turn into a prolonged crisis for the industry. The federal assistance is likely to take the form of low-interest government loans to the shale companies, whose lines of credit to major financial institutions have been choked off, three people said.

Even major oil companies are threatened by the oil price slump. Occidental Petroleum on Tuesday slashed its dividend to 11 cents a share from 79 cents and cut capital spending by a third.

Mr. Trump pitched his proposed payroll tax break Tuesday on Capitol Hill as pressure mounts on the administration and Congress to work more vigorously to contain the coronavirus outbreak and respond to the financial fallout.

Mr. Trump’s economic team joined in presenting the economic stimulus package privately to wary Senate Republicans, who have been cool to additional spending at this stage. Democrats are preparing their own package of low-cost virus testing, unemployment insurance and sick pay for workers struggling to keep paychecks coming as the outbreak disrupts workplaces.

“We’re taking this unbelievably seriously,” Mr. Trump said after his meeting at the Capitol. “It will go away; just stay calm.”

Mr. Trump said at a news conference Monday that the administration will seek to provide help for parts of the economy hard hit by the coronavirus, including the hospitality, cruise and travel industries. A senior administration official said Tuesday the shale industry would likely be included for help but may not be at the top of the list.

One of the companies hardest hit was Continental Resources, founded by Harold Hamm, a Trump supporter and an adviser to the president on energy issues. It lost more than half its market value on Monday, though it recovered about 8% by midday Tuesday. Mr. Hamm’s 77% personal stake in the company lost $2 billion of its value on Monday.

Mr. Hamm said in an interview Tuesday he had reached out to the administration but had not made “direct” contact. He said the administration should consider using illegal dumping laws to prevent Russia and Saudi Arabia from slashing prices of oil sold in the United States.

“I don’t want to prescribe what the president would or shouldn’t do. He’s very capable of handling this situation,” he said. But Mr. Hamm said he wanted to discuss the number of jobs at stake. He added that while Continental was in strong financial condition, other companies would be likely to draw on a government lending program.

It is unclear exactly what form a federal program would take.

“It’s one area we will be looking at for targeted assistance,” one senior administration official said. Another senior administration official confirmed the relief for shale companies was under consideration but cautioned political blowback over the idea may eventually lead advisers to talk Mr. Trump out of it.

Mike Sommers, CEO of the American Petroleum Institute, told reporters on Monday that the oil and gas industry is not seeking a bailout.

Moody’s Investor Services reports that oil and gas firms have $40 billion in debt coming due this year. Given the sector’s shaky outlook, investors have been reluctant to put more money into the industry. Also, help for natural gas producers may prove a politically difficult lift, in part because they faced sagging prices even before the coronavirus outbreak, some experts said.

Liberal economists have said the administration should provide a tax rebate for millions of workers.