A20 eZ re the washington post.saturday, april 4 , 2020
the coronavirus pandemic
viser Harold Hamm, who attend-
ed Friday’s meeting.
Hamm has suggested that the
administration file anti-dumping
charges against Saudi Arabia,
though Saudi production is so
low it would be hard to prove that
it was selling in the United States
below cost.
With reporters in the room at
Friday’s meeting, Hamm thanked
Trump for his efforts with Saudi
Arabia and Russia.
“Really appreciate your leader-
ship, also the friendship that
you’ve kept with the Saudis — the
Saudi crown minister, or crown
prince, and also Vladimir Putin. I
know those haven’t been easy
sometimes, but at this time, it
was particularly needed,” he said.
Trump said that both leaders
“want something to happen bad-
ly. Certainly terrible for them,
what’s happening, too. So they
want to see something happen.”
For consumers, the price war is
about the only piece of good
economic news. The Energy In-
formation Administration said
that last week the price of gaso-
line averaged $2 a gallon. This
week it has fallen further. One
motorist emailed a photo of a
New Orleans station selling gaso-
line for just 87 cents a gallon.
The independent companies
have relied heavily on oil prices of
as little as $30 and as much as
$50.
Now with oil prices hovering
just above $20 a barrel, compa-
nies’ finances are under stress.
This week, Whiting Petroleum,
one of the most active shale oil
and gas drillers in the United
States, declared bankruptcy, and
analysts feared that it was just the
first domino to fall. Just u nder six
years ago its stock traded at more
than $350 a share; its shares on
Friday were trading at just under
50 cents. The company’s annual
report says that Whiting had
interests in more than 5,
wells and had debts of more than
$2.7 billion at the end of 2019.
[email protected]
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[email protected]BY ANNE GEARAN,
STEVEN MUFSON
AND WILL ENGLUNDPresident Trump promised
federal support Friday for oil
companies battered by the novel
coronavirus pandemic, which has
depressed the United States’ de-
mand for oil at the same time
Saudi Arabia and Russia, whose
authoritarian leaders Trump has
courted, have waged a price war
that has sent worldwide prices
plunging.
Trump said he assured oil
firms that the federal govern-
ment will make room in its Stra-
tegic Petroleum Reserve so that
American producers can store oil
that would fetch a better price in
the future.
T he Energy Department said
Thursday that it will try to make
30 million barrels of the reserve’s
oil storage capacity available to
U.S. oil producers that face the
challenge of storing petroleum
few are now willing to buy.
The pandemic “knocked the
hell out of the market,” Trump
said Friday at a White House
briefing on the coronavirus.
He m et w ith U.S. oil executives,
U.S. officials and Republican law-
makers from oil-producing states
earlier Friday. The session at the
White House came at a critical
time for the industry, which has
been struggling with the lowest
prices, adjusted for inflation,
seen since before the Arab oil
boycott of 1974.
“There’s a tremendous abun-
dance of oil, primarily because of
the virus,” Trump said. “The virus
has just stopped demand of ev-
erything, including oil. So we’re
working with our great energy
companies. These great compa-
nies employ tens of thousands,
hundreds of thousands of peo-
ple.”
The oil companies have been
hammered by dual forces: a col-
lapse of demand as the world
spins into a deep recession or
depression related to the pan-
demic and the tit-for-tat price
war between Saudi Arabia and
Russia over who should be re-
sponsible for cutting production
to help balance the markets.
The Energy Department does
not have the authorization to buy
the oil it has offered to store, but
said it was making the space
available to private companies. It
said it plans to take an additional
47 million barrels at a later date.
Trump’s praise for oil firms as
they seek ways to raise global
prices was the latest twist in a
head-spinning presidential re-
versal. Trump had pressed for
lower oil prices for years, and is
now trying to leverage increases.
As recently as last month, Trump
had cast the plunge in oil prices
as good news for American mo-
torists, even as Americans were
told to stay home.
By Thursday, Trump tweeted
that he had interceded with Saudi
Crown Prince Mohammed bin
Salman. He had spoken earlier in
the week with Russian President
Vladimir Putin.
“Just spoke to my friend MBS
(Crown Prince) of Saudi Arabia,
who spoke with President Putin
of Russia, & I expect & hope that
they will be cutting back approxi-
mately 10 Million Barrels, and
maybe substantially more which,
if it happens, will be GREAT for
the oil & gas industry!” Trump
wrote.
He added, “Could be as high as
15 Million Barrels. Good (GREAT)Trump promises
oil firms will get help
to o≠set e≠ects on prices
BY DAVID J. LYNCH,
ERICA WERNER
AND PAUL KANEThe economy shed 701,
jobs in March, sending the un-
employment rate to its sharpest
one-month rise since 1975 and
prompting key Democrats to
launch talks about a fresh round
of government aid to ward off
what some economists warn
could be a depression.
Just one week after President
Trump signed a $2 trillion finan-
cial rescue bill — the third legis-
lative response to the coronavi-
rus pandemic and the costliest
such effort in U. S. history — the
deteriorating labor market has
jolted lawmakers to begin plan-
ning additional action. House
Speaker Nancy Pelosi (D) said
Friday that more federal spend-
ing is needed for unemployment
insurance, small businesses, hos-
pitals and state and municipal
governments.
“We can find common ground
as we go forward. Let’s do the
same bill we just did, make some
changes as to make it current
and correct some of the things,”
she told The Washington Post in
a brief interview.
After encountering stiff Re-
publican resistance earlier this
week to her call for a mammoth
“phase four” bill focused on in-
frastructure spending, Pelosi
now backs a more modest mea-
sure some have dubbed “phase
3.5” t hat would b uild o n previous
legislation.
The speaker wants to extend
bulked-up unemployment pay-
ments to six months from four
and provide funds for state gov-
ernments to handle a crush of
applications from the newly job-
less. Democrats have also begun
talks about sending millions of
Americans a second stimulus
check, and some White House
officials have signaled an open-
ness to the extra measures.
An existing $3 49 billion small-
business loan program, which
endured a somewhat chaotic
rollout on Friday, “is not going to
be enough. We’re just going to
have to do that again,” Pelosi
said.
Treasury Secretary Steven
Mnuchin has said he would seek
additional funding from Con-
gress if the small-business loan
program, designed to tide com-
panies over until the state-man-
dated shutdowns end, were ex-
hausted. But publicly, the Trump
administration has sent mixed
signals about the need for fur-
ther legislation.
House aides are drafting legis-
lation that could be ready for
lawmakers on April 2 0, when
they are scheduled to return to
Washington. Asked about Pelo-
si’s push for early action, Nation-
al Economic Council Director
Larry Kudlow demurred.
“Let’s wait and see. The key
right now is executing this pack-
age,” he said, referring to the
measure the president signed
March 27.
A few hours later, during a
meeting with energy industry
executives, the president said he
would b e “doing a big package on
infrastructure fairly soon,” an
idea Senate Majority Leader
Mitch McConnell (R) has already
rejected as “premature.”
But Trump’s comment showed
how both parties have begun
planning a spate of new spend-
ing measures as signs of the
economy’s tumble come into
sharper focus.
A senior administration offi-
cial, who spoke on the condition
of anonymity to discuss internal
thinking, said the White House
would consider a follow-up move
along the lines Pelosi discussed.
“If t here’s a n eed f or c ontinued
help for the American peopleand our economy, we don’t rule
out additional action on a phase
3.5,” t he official said.
The political debate is moving
quickly, but it is struggling to
keep pace with the economic
erosion. As the pandemic has
forced more and more Ameri-
cans to stay home, the likely
financial toll has mushroomed.
On Friday, Bank of America said
the e conomy will shrink this year
by almost $1.3 trillion.
Almost two-thirds of the
March employment decline —
459 ,000 jobs — occurred in the
leisure and hospitality sector,
mainly in restaurants and bars,
according to the Labor Depart-
ment report. But government
economists said “notable” job
cuts also hit several other sec-
tors, including health care, pro-
fessional and business services,
retail and construction.
From shuttered dentist offices
to deserted clothing stores, the
coronavirus claimed American
jobs. Blue-collar workers were
hit hard as manufacturing em-
ployment — a top priority for
Trump — fell by 18, 000 and theconstruction industry let go of
29,000 employees.
Hispanic workers suffered an
especially sharp increase in their
jobless rate last month to 6 per-
cent from 4.4 percent.
The losses were the worst
since 2009 and ended the econo-
my’s 113-month streak of job
growth, but represented only the
first signs of the unprecedented
damage being inflicted on the
labor market. In the past two
weeks, 10 million Americans
have filed first-time claims for
unemployment insurance, the
result of mandatory social dis-
tancing that is keeping most
people from working normally.
Along with the financial hard-
ship hitting millions o f American
families, the labor market melt-
down is also shredding key ele-
ments of Trump’s reelection
pitch. The president for months
has boasted about the economy’s
record-long expansion, record-
high stock market and half-cen-
tury low in the unemployment
rate.
Now, in little more than one
month, all three have been up-ended by the battle against the
coronavirus.
“It bankrupts every one of his
reelection themes: the economy,
keeping America safe and run-
ning against socialism,” said
Chris Krueger, a strategist with
Cowen Washington Research
Group. “It’s hard to think of a
more devastating event.”
In recent days, a raft of top
U. S. companies have announced
layoffs or furloughs, including
General Electric, Macy’s, Boeing
and Marriott. Even the Tr ump
Organization is laying off work-
ers and t emporarily closing some
of its properties.
The president and Congress
have raced to construct a safety
net to prevent the coronavirus-
related shutdown from doing
permanent economic damage.
The financial rescue bill Trump
signed a week ago includes
$1, 200 payments for most Amer-
icans, as well as a $454 billion
fund to aid battered industries,
including the nation’s airlines.
The $349 billion small-busi-
ness loan program that began
taking applications on Friday,however, got off to a rocky start.
The Treasury Department re-
leased detailed guidance for the
nation’s largest banks less than
24 hours before the program
went live. Some would-be bor-
rowers have complained about
receiving inconsistent or confus-
ing information from their local
lenders.
One-quarter of small business-
es said they are two months or
less from closing permanently,
according to a poll by the U.S.
Chamber of Commerce and
MetLife.
The job losses in March were
larger than the 100 ,000 decline
economists had forecast. But in-
vestors dismissed Friday’s Labor
Department report as outdated,
since it was based on a monthly
survey that was completed on
March 14 — before many state
governments ordered the econo-
my to a halt in hopes of disrupt-
ing the spread of the sometimes-
fatal respiratory illness.
“It’s largely irrelevant in light
of what we’re expecting to see in
April,” said Gregory Daco, chief
U. S. economist for Oxford Eco-
nomics. “It’s going to be really
bad.”
As laid-off workers continue
streaming into state unemploy-
ment offices, next month’s job
losses could reach an astonish-
ing 24 million, Daco said. That
would push the total number of
jobless Americans to roughly 30
million, nearly twice the total at
the 2009 depths of the global
financial crisis.
The U.S. economy has endured
11 recessions since World War II,
but it has never experienced
anything like what is now occur-
ring. Official stay-at-home or-
ders intended to arrest the pan-
demic are keeping Americans
from working and consuming.
“The month of April will have
the first depression-magnitude
job losses the country has seen
since the 1930 s,” e conomist Chris
Rupkey of MUFG Union Bank
wrote in a research note. “...
The labor market could easily
become depression-like very
quickly where one out of four of
your neighbors is no longer get-
ting a paycheck.”
The Labor Department said it
also had revised down its previ-
ous estimates of job gains for
January and February by a total
of 57,00 0 positions. January’s
non-farm payroll employment
was cut by 59,0 00 to 214,
from an original estimate of
273,000. February’s total was
revised up by 2,0 00 to 275, 000
from 273, 00 0.
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[email protected]March jobless rate spikes as talk of new stimulus starts
Matt Mcclain/the Washington Post
A person wears a mask Sunday as they walk by a closed restaurant in Alexandria, Va. Congressional aides are drafting legislation for an
additional economic rescue package that could be ready for lawmakers on April 2 0, when they are scheduled to return to Washington.news for everyone!”
The Saudis and Russians have
yet to acknowledge a deal, though
Saudi Arabia on Friday called on
OPEC nations as well as Russia
and the other members of the
group called OPEC+ to take part
in a video conference Monday to
discuss production cuts.
That could herald the end of
the price war that the two coun-
tries have been waging for the
past month, as they promised to
increase their outputs by several
million barrels a day.
“Ultimately the market is go-
ing to get them to stop,” Trump
said Friday.
The Russians said Friday that
they will take part. Energy Minis-
ter Alexander Novak met with
Putin and they agreed that cuts of
10 million barrels a day are in
order, the Kremlin said.Novak said that the world’s
leading oil-producing nations
should all participate in reaching
that goal.
“It’s important that all major
producers take part in our joint
efforts, including Russia, Saudi
Arabia, the U.S.A. and other
countries both in and out of
OPEC,” he said.
American shale producers,
who have higher costs, have tak-
en the biggest hit from the skid —
bigger than either the Saudis or
the Russians have suffered. Pro-
duction costs in Russia and Saudi
Arabia are much lower than the
cost of drilling shale in the United
States.
But rather than celebrate low
oil prices and the benefits for
consumers, the administration is
trying to figure out a way to prop
up prices and stabilize the mar-ket. One beneficiary would be big
independent producers of shale
oil, who have given the president
much support.
Since the 1970 s, the Organiza-
tion of the Petroleum Exporting
Countries, led by Saudi Arabia,
has played an important role in
setting prices. And the United
States became a huge net import-
er of oil, which meant its balance
of trade and consumers suffered
during periods of high prices.
But the recent development of
shale oil has made the United
States a small exporter, and
strengthened the political hand
of so-called independent oil com-
panies that concentrate on explo-
ration and production. Among
the biggest are Devon Energy,
Pioneer Resources and Continen-
tal Resources, founded by
Trump’s friend and sometime ad-Jabin botsford/the Washington Post
President Trump speaks at a coronavirus briefing at the White House on Thursday. On Friday, he said
the government will make room in its Strategic Petroleum Reserve so that U.S. producers can store oil.