Trump Admin. To Buy Oil To Boost US Producers

By Mike LaSusa
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Law360 (March 19, 2020, 10:20 PM EDT) -- The U.S. Department of Energy announced on Thursday a solicitation for 30 million barrels of oil, the first step in a plan to fill up the Strategic Petroleum Reserve as a way to boost an energy industry walloped by the ongoing COVID-19 pandemic.

The DOE said in a news release that it would buy "up to 30 million barrels of sweet and sour crude oil with a focus on small to midsize U.S. oil producers."

Under Secretary of Energy Mark W. Menezes said those businesses employ thousands of Americans.

"These businesses have been particularly hard hit by recent events but under President [Donald] Trump's leadership, we are taking swift action to assist hard hit producers and deliver strong returns to the taxpayer," Menezes said.

The 30 million barrel purchase represents an initial step toward a goal announced by the administration last week to fill the Strategic Petroleum Reserve to its maximum level, which will require the purchase of about 77 million total barrels. The DOE said Thursday that it is working with Congress to figure out how to fund the whole purchase.

Rep. Frank Pallone Jr., D-N.J., who chairs the House Energy and Commerce Committee, slammed the administration's move in a statement on Thursday, saying the plan could cost up to $20 billion yet has "nothing to do" with the novel coronavirus.

"This is a thinly-veiled attempt by the Trump Administration to use the coronavirus outbreak as justification for protecting the profits of its oil industry allies — and it is both unconscionable and unworkable," Pallone said.

The official Twitter account of the committee's Republican members issued a message on Thursday praising the administration's effort.

The DOE "needs money to fill our strategic petroleum reserve with American crude, Congress deliver it [and] make sure it's modernized for these critical missions–this creates jobs!" the Republicans said.

The announcement of the goal of filling the oil reserve came as part of a package of measures Trump unveiled last week when he declared a national emergency to help combat the coronavirus pandemic.

The emergency declaration allows agencies to waive rules and allow greater flexibility, especially in health care. Trump said the U.S. Department of Health and Human Services will be able to temporarily drop requirements to allow for telehealth consultations and let health care providers work in states where they may not have licenses, hospitals adjust where patients can be treated, and rehabilitation centers accept patients without a minimum hospital stay beforehand.

Trump signed legislation on Wednesday evening to provide paid sick leave to American workers affected by the COVID-19 outbreak, and the administration has been circulating a memo around Capitol Hill sketching out its plan for a $1 trillion stimulus and relief package, with $300 billion for small business loans, $200 billion for loans to airlines and other industries and $500 billion for direct payments to many Americans.

The DOE didn't respond on Thursday to requests for comment.

--Additional reporting by Andrew Kragie, Keith Goldberg and Stephen Cooper. Editing by Nicole Bleier.

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