Aindriu Colgan | NSWA Vice President, Governmental Affairs
Additional Funding for PPP
Last week Congress passed a fourth coronavirus relief bill, dubbed “COVID 3.5,” to replenish the Paycheck Protection Program, which had become so popular it ran out of funding and went without any funds for a week. The latest bill totaled $475 billion, which included $310 billion for the Paycheck Protection Program with $60 billion of that specifically set aside for smaller businesses. The legislation also includes $60 billion for disaster loans at the Small Business Administration (SBA), $75 billion for the healthcare sector, and $75 billion for a nationwide testing program.
Additionally, it was reported that publicly traded businesses and institutions able to receive financing elsewhere will return any funds obtained through the PPP program and will no be able to use the program. The decision came after several large businesses and institutions like Shake Shack, Ruth Chris’ Steakhouse, and Harvard University either received funds from the program or were considering it.
Aid Options to Oil Industry Limited
Last week, the White House announced that it was exploring a plan to have the Treasury Department lend money to struggling oil producers in exchange for controlling stakes in their companies to force them to cut production. This plan is the latest from an Administration that has proposed and then dropped plans to fill the Strategic Petroleum Reserve (SPR), eliminate royalty payments for federal leases, and direct payments to oil companies to halt production. After Democrats in Congress rejected the Administration’s request for $3 billion to fill the SPR, President Trump has been scrambling to find a strategy that his Administration could employ independently of Congress to protect the struggling oil industry.
Unfortunately, this latest idea is the least workable of those proposed. Besides what amounts to nationalizing the oil industry, it would cost the most and require both authorization and appropriations from Congress, and, if Democrats in Congress refused $3 billion for the SPR, it remains extremely unlikely that they would agree to appropriate even more money to purchase stakes in publicly traded oil companies.
While Republican lawmakers, particularly oil state lawmakers, continue to plead publicly for assistance to the hard-hit industry, Democrats remain united in opposition to providing any aid to the oil industry. Last week, Sen. Ed Markey (D-MA) and Rep. Nanette Barragan (D-CA) sent a letter Thursday to Federal Reserve Chairman Powell demanding that he not allow oil companies to use new federal reserve lending programs to pay off existing debt. This comes after large groups of Democrat lawmakers tried to block fossil fuel companies from accessing the PPP or other federal lending programs, and some, like Rep. Alexandra Ocasio-Cortez, cheered the oil industry’s woes.
With a Democrat-controlled House and a 60-vote requirement to pass legislation in the Senate, the White House and Senate majority need Democrat votes to provide any assistance to the oil industry. Almost all of the Administration’s executive tools were developed in the 1970s to combat high oil prices; its tools to combat low oil prices are limited. As a result, the oil industry’s best hope for assistance is a broad and bipartisan infrastructure or stimulus package later this year where oil-state lawmakers can trade assistance to oil and gas companies in exchange for renewable energy policy priorities.