A group of Democratic lawmakers, including three former presidential candidates, called on the chair of the Federal Reserve on May 14 to cut oil and gas firms out of a federal lending program designed to aid the "Main Street" economy through the coronavirus pandemic.
The lawmakers, led by Michigan Congresswoman Rashida Tlaib, Oregon Senator Jeff Merkley and including former candidates Bernie Sanders and Elizabeth Warren, raised concerns about an April 30 move by the Fed that expanded the Main Street Lending Facility to companies with up 15,000 employees and $5 billion in revenue—up from a cap of 10,000 workers and $2.5 billion in revenue when the program was first announced on April 9.
That expansion allowed a larger number of oil and gas drillers to access the program.
The letter to Fed Chairman Jerome Powell said the expansion was a "back-door bailout of the oil and gas sector, done at the urging of President Trump."
"We request that you undo this lending facility’s expansion and refrain from engaging in future actions targeted at any industry, especially the oil and gas industry," they wrote.
They argued that the Fed, an independent body, should "guard itself" against lobbying and political pressure and that extending lending to oil and gas companies could harm financial stability because of volatility in the oil markets.
"These companies have created systemic-level risks to the U.S. financial system," they wrote.
The lending program has not yet been launched, so no companies have yet applied for financial assistance.
The American Petroleum Institute (API), which represents the oil and gas industry, said its member companies should have access to federal programs designed to help companies survive the economic upheaval due to the pandemic.
“We are focused on ensuring that our industry has the same access as other industries to these economy-wide programs that Congress authorized to provide systemic liquidity and promote employment during this period of economic decline," Frank Macchiarola, senior vice president for Policy, Economics and Regulatory Affairs at API said in an email.
Energy Secretary Dan Brouilette told Bloomberg TV on May 13 that the Trump administration had asked the Fed to "ensure that there is access for these energy industries to those programs."
Recommended Reading
US Raises Crude Production Growth Forecast for 2024
2024-03-12 - U.S. crude oil production will rise by 260,000 bbl/d to 13.19 MMbbl/d this year, the EIA said in its Short-Term Energy Outlook.
US Drillers Cut Oil, Gas Rigs for Fourth Week in a Row-Baker Hughes
2024-04-12 - The oil and gas rig count, an early indicator of future output, fell by three to 617 in the week to April 12, the lowest since November.
Exxon Mobil Green-lights $12.7B Whiptail Project Offshore Guyana
2024-04-12 - Exxon Mobil’s sixth development in the Stabroek Block will add 250,000 bbl/d capacity when it starts production in 2027.
US Drillers Add Oil, Gas Rigs for First Time in Five Weeks
2024-04-19 - The oil and gas rig count, an early indicator of future output, rose by two to 619 in the week to April 19.
US Drillers Cut Oil, Gas Rigs for Third Week in a Row
2024-04-05 - The oil and gas rig count, an early indicator of future output, fell by one to 620 in the week to April 5, the lowest since early February.