USA TODAY – Former Energy Secretary Rick Perry believes that the oil industry could collapse because of the dramatic decrease in demand worldwide caused by the coronavirus outbreak and a steep decline in prices.
“Our capacity is full. The Saudis are flooding this market with cheap oil,” Perry told Fox News host Tucker Carlson on Tuesday night. “I’m telling you, we are on the verge of a massive collapse of an industry that we worked awfully hard, over the course of the last three or four years, to build up to the number one oil and gas producing country in the world, giving Americans some affordable energy resources.”
Many U.S. states and countries around the world have ordered their citizens to stay home in order to contain the spread of the virus. And airlines have dramatically cut back on flights as the number of passengers has fallen off. Fewer cars on the road and planes in the sky means far less demand for oil.
Coupled with a dispute between Saudi Arabia and Russia that has resulted in an oil surplus, the price for crude as well as gasoline has plunged. The national average for gas in the U.S. is now below $2 a gallon.
Perry, a former governor of oil-producing Texas, said that could destroy smaller, independent companies and hurt the people who depend on them for jobs.
“There’s this host of Americans who their entire future – taking care of their family paying their mortgages – is tied directly to the energy industry,” Perry said. “It’s a driver of a massive amount of our American economy.”
And he said the loss of those smaller companies would have long term consequences for the American consumer.
“If we woke up a year from now, and there were five big companies because all of these independents were gone out of business … I would suggest that would make a lot of Americans really nervous,” he said.
Perry’s concerns appeared prescient Wednesday after the Whiting Petroleum Corporation announced it was filing for Chapter 11 bankruptcy. In announcing the decision, CEO Bradley Holly cited “the severe downturn in oil and gas prices driven by uncertainty around the duration of the Saudi / Russia oil price war and the COVID-19 pandemic.”
As one measure to address the crisis, Perry said that he would advise President Donald Trump to tell refineries to only use U.S. crude oil for 60 to 90 days to stave off a potential collapse.
Perry said that would “give a buffer to the market” and “send a clear message that we’re just not going to let foreign oil flow in here” and “bust our oil industry.”
U.S. national security is at stake, Perry said.
“If our independent operators – who have led the shale revolution, who have made America the number one gas-producing country in the world – if we lose that, we’d go back to 1974,” Perry said. “I remember what that was like, where we were beholden to countries that didn’t necessarily have our best interests in mind.”
Perry also suggested that the Treasury Department should buy up oil futures to help buoy the industry.
Perry was one of the longest-serving members of Trump Cabinet before he resigned in October amid scrutiny of his role in the Ukraine scandal that led to Trump’s impeachment.