Trump promises to rescue oil companies after prices go negative

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President Donald Trump wants to prevent the looming wave of bankruptcies and mass layoffs in America's beleaguered oil industry.

Trump tweeted Tuesday that he instructed the secretaries of the Energy and Treasury departments to"formulate a plan" to"make funds available" to help oil and gas companies.

Dirt-cheap oil is likely to cause hundreds of US oil companies to go bankrupt -- especially smaller ones that took on too much debt. Countless jobs hang in the balance, including in Texas, a potential battleground state in the November election.The American Petroleum Institute, the largest oil and gas lobby, has said it's not seeking a bailout like the one the airline industry received.

US oil prices shocked the world Monday by dropping below zero -- something that has never happened since oil futures trading launched in 1983. Crude finished at -$37.63 a barrel, marking the worst day in oil history. The May oil contract climbed out of negative territory Tuesday, but just barely. All of this has caused oil barrels to pile up at an unprecedented clip, and the world is running out of space to store it all. Storage costs have skyrocketed to such an extent that oil prices turned negative.Trump downplayed the negative oil price, pointing out that later-dated futures contracts are still safely in positive territory.

These prices are far too low for US shale oil companies to turn a profit. Many will have to shut down production and lay off their workers. Others won't survive at all.

 

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