Extreme Temperature Diary- Tuesday April 21st, 2020/Main Topic: Climate Ramifications From Very Cheap Oil Due To COVID-19

Tuesday April 21st… Dear Diary. The main purpose of this ongoing blog will be to track United States extreme or record temperatures related to climate change. Any reports I see of ETs will be listed below the main topic of the day. I’ll refer to extreme or record temperatures as ETs (not extraterrestrials).😉

Main Topic: Climate Ramifications From Very Cheap Oil Due To COVID-19

Dear Diary. Let’s suppose that the price of heroin or some other harmful recreational drug was nearly free and available on just about every street corner. What would that do for the drug crisis? Would cheap drugs wean society off harmful substances or ramp up the problem? Cheap drugs would obviously be harmful in my book. We now learn that due to the nearly instantaneous depression brought about by COVID-19 oil prices have literally gone through the floor, trading yesterday at negative prices. There is so much of a glut of oil that you can’t give the stuff away.

What a difference a decade makes. Your friendly neighborhood Climate Guy and prognosticator honestly never saw this coming, During the late 2000s before the fracking boom gasoline prices were nosing above $4.00 a gallon. Soon gasoline prices will be well below $1.00 in the United States but may go back up if restrictions on the economy are allowed to relax…perhaps too soon…in association with COVID-19. During the 2000s hybrid and high mileage cars became very popular due to those high gasoline prices. Now SUV’s and big pickup trucks, unfortunately, have made a comeback. It’s my opinion that cheap oil won’t be good for the climate at all because there won’t be enough impetus to switch to green energy.

Still, environmentalists insist that we have a great opportunity to put an early stake in the heart of vampire oil companies struggling to make ends meet while they are weak. For much more on all this here is an article written today from the Washington Post:

https://www.washingtonpost.com/news/powerpost/paloma/the-energy-202/2020/04/21/the-energy-202-trump-weighs-options-to-help-oil-companies-after-prices-go-negative/5e9e059788e0fa101a76752f/

The Energy 202: Trump weighs options to help oil companies after prices go negative

By Dino Grandoni April 21 at 8:28 AM

with Paulina Firozi

With the price of oil in the United States dipping below $0 for the first time ever, many allies of the U.S. oil and gas sector are begging the Trump administration for some sort of help to save energy jobs and companies.

The topsy-turvy situation has left President Trump scrambling to consider an array of policy tools to reassure jittery oil executives, many of whom are politically connected to the president.

The grinding halt in economic activity due to the coronavirus pandemic led to the May delivery price of West Texas Intermediate crude — a key benchmark of the health of the American energy sector — to slip into a negative range Monday. This means a seller would have to pay a buyer to take a barrel off their hands, at least in the near-term. 

During a press conference Monday, the president said that unheard-of end-of-day price — negative $37.63 per barrel — represented only a short-term squeeze. “Nobody’s ever heard of negative oil before,” he told reporters, “but it’s for a short-term.”

President Trump speaks during the daily briefing on the novel coronavirus Monday. (Photo by Mandel NganAFP via Getty Images)

Trump recognizes more needs to be done to comfort markets. 

Trump on Monday called on Congress to appropriate funds for the federal government to take advantage of the dirt-cheap prices and buy 75 million barrels to fill the nation’s Strategic Petroleum Reserve.

“This is a great time to buy oil and we’d like to have Congress approve it,” Trump said. 

The problem is the amount of oil Trump is talking about is still a proverbial drop in the bucket when it comes to overall U.S. consumption. And the Trump administration already tried and failed to get that money from Congress after Senate Democrats balked at the idea of any bailout for oil companies in the last coronavirus relief package. 

Contracts beyond May are still showing normal prices; the June delivery price actually went up slightly Monday and settled around $20. “That means that by late spring, traders are betting that oil will still have some value,” Will Englund reports

But the unprecedented drop in near-term prices comes as traders see oil tanks across the country getting close to capacity. And with Americans not driving or flying to avoid spreading the novel coronavirus, few are willing to buy any extra oil still being pumped up. The extraordinary concoction of market conditions means oil, in the near term, has been deemed worthless.

“Trump is about to watch American energy independence go the way of the dodo bird,” said Dan Eberhart, chief executive of oil field services company Canary and a prominent donor to President Trump.

The price collapse is renewing calls from Congress to block foreign oil and protect American firms.

One of the loudest voices in Washington for independent oil producers, Sen. Kevin Cramer, used the price drop to renew his call for Trump to block Saudi oil tankers from reaching U.S. shores. 

“The dramatic low underscores why we cannot allow Saudi Arabia to flood the market, especially given our storage capacity dwindling,” the Republican from North Dakota tweeted.

Trump said he would consider Cramer’s proposal to halt Saudi tankers. “Well, we’ll look at it,” he said Monday when asked about the idea. “I’d heard just as I’m walking into the room.”

And with all eyes on Cushing, Okla., a major crude trading hub where the price of WTI is settled and where space is running out to store oil, James M. Inhofe (R), the state’s senior senator, re-upped his call Monday for the administration to investigate both Saudi Arabia and Russia for manipulating the global market.

At stake for them is the fate of oil and gas firms in their states that employ thousands and are now threatened with bankruptcy. A number of large firms, including oil-field services behemoth Halliburton and producers Marathon Oil and Occidental, have lost more than two-thirds of their value, according to CNN. And many more smaller, debt-saddled shale producers are even more vulnerable to going under. 

“As production continues relatively unscathed, storages are filling up by the day,” Bjornar Tonhaugen of Rystad Energy wrote in a note. “The world is using less and less oil and producers now feel how this translates in prices. As always, you will see days with small up and downs, but the trend will certainly be a decline.”

But others in the oil industry are still cautioning against any trade restrictions. 

One of them is Eberhart, who still wants free-market forces to solve the problem. “Ultimately, we need America to open to spur demand,” he said.

And the U.S. refining sector, which turns foreign crude into useable fuels like gasoline, continues to oppose anything that hampers imports. “Restricting crude oil imports might seem like a way to support domestic producers, but it would mean certain harm for U.S. refiners,” American Fuel and Petrochemical Manufacturers said in a statement.

The plunge is a sign that Trump’s efforts to prop up prices have not been enough. 

Earlier this month, the president helped negotiate an agreement between Saudi Arabia and Russia to cut production by 10 million barrels a day and end a price war that was exacerbating the slide in crude prices during the pandemic. Trump boasted at the time that the deal “will save hundreds of thousands of energy jobs.” 

But the agreement to cut output begins only in May, and analysts suggest the cuts come too little and too late to make much difference for American oil and gas firms struggling the most.

“The further reduction of oil prices highlights sharply the inadequacy of the production reductions agreed by the Saudis and the Russians,” said Jan Kalicki, an energy expert at the Wilson Center, a nonpartisan think tank.

Climate activists have a different measure: put the oil industry out of its misery.

During the Great Recession, the country’s last economic crisis, the Obama administration used recovery dollars to juice investment in wind and solar energy. 

The Trump administration decidedly is not doing that this time around, having brushed off an effort by congressional Democrats to include clean-energy subsidies in the coronavirus relief package.

Still, for Greenpeace’s Jack Shapiro and other activists, the volatility in oil prices is another sign that petroleum’s time should pass. “This week’s price crash — like last week’s and the week before — is not just another boom-and-bust cycle,” he said. “Economists have warned that fossil fuels are a risky investment for years.”

…………………………………………………………….

Well, I agree. Let’s put big oil out of its misery, but let’s retrain workers in the energy sector to work with renewables. Of course, we are probably kidding ourselves. In lore vampires are very hard to kill and keep popping out of their coffins. As long as oil is very easy to refine the petroleum industry will be with us for a very long time to come…unless it is outlawed. On this last note I will be celebrating from my own grave if that event happens before it is too late to save our climate and humanities’ future.

Now here are some of today’s articles and notes on the horrid COVID-19 pandemic:

Here is more climate and weather news from Tuesday:

(As usual, this will be a fluid post in which more information gets added during the day as it crosses my radar, crediting all who have put it on-line. Items will be archived on this site for posterity. In most instances click on the pictures of each tweet to see each article.)

(If you like these posts and my work please contribute via the PayPal widget, which has recently been added to this site. Thanks in advance for any support.) 

Guy Walton “The Climate Guy”

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