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Sen. Cruz: To Weather Perfect Storm, American Energy Producers Need Critical Access to Capital Now

April 29, 2020

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HOUSTON, Texas - With oil prices nosediving by nearly 70 percent and global demand collapsed, the COVID-19 pandemic is wreaking havoc on America's energy producers. To make matters worse, financial institutions and lenders have limited energy producers' critical access to capital, under pressure from Green New Deal enthusiasts. If this continues, the U.S. risks bankrupting a vast majority of its roughly 9,000 energy producers, adding hundreds of thousands of blue-collar workers to the unprecedented number Americans who have already lost their jobs as a result of this crisis.

As news reports have warned:

Allowing our energy producers to go bankrupt, as U.S Sen. Ted Cruz (R-Texas) explained in an op-ed in the Dallas Morning News, won't just affect the men and women who work in the energy industry. It will affect "every household in America, as heating our homes, driving our cars, flying on planes and many other aspects of our daily lives will become more expensive" and it will "make the United States more dependent on foreign countries and foreign oil."

That's why, to help America's energy producers weather this perfect storm, Sen. Cruz has called on Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell to immediately establish a new lending facility - a lifeline - that will provide immediate emergency liquidity for oil and gas businesses.

In a letter to Mnuchin and Powell, Sen. Cruz wrote:

"Under the authority of Section 13(3) of the Federal Reserve Act, the Federal Reserve, with the approval of the Secretary of the Treasury, should immediately create a new lending facility that will provide emergency liquidity for small-and-medium sized businesses that work directly or indirectly with the oil and gas industry. Without any such assistance the United States risks the loss of hundreds of thousands of Americans jobs and irreparable damage to our domestic energy infrastructure."

As Bloomberg News reported following the release of Sen. Cruz's letter:

"In a separate letter on Friday, Cruz insisted that the restrictions would prevent small- and medium-sized oil and gas companies from accessing liquidity needed to avoid bankruptcy. Cruz also urged Mnuchin and Powell to ‘immediately create' a new lending facility to aid small- and medium-sized oil and gas businesses. [...] Oil industry leaders say the need for targeted assistance is urgent. ‘Without a serious lifeline, hundreds of thousands of offshore energy jobs could disappear, unraveling the fabric of countless Gulf Coast communities,' said Erik Milito, head of the National Ocean Industries Association that represents offshore oil and wind developers and support companies."

And as the former associate director for regulatory reform at the White House Council on Environmental Quality, Mario Loyola, wrote:

"If the government wants to help producers, it should focus on their real problem, which is not that they're producing too much, but that they're producing at a loss on the sunk costs of major investments. That can be addressed short-term by easing oil producers' access to emergency COVID-19 credit programs, as Senator Ted Cruz of Texas has asked the administration to do, and long-term by easing tax rules on loss carryforwards and carrybacks to better reflect the cyclical nature of the industry and to ensure adequate continued investment in exploration and development-the best hedge against a catastrophic price rise down the road."

Throughout the COVID-19 pandemic and the economic destruction that has followed, Sen. Cruz has been leading advocate for American energy producers. Specifically, Sen. Cruz:

WATCH: Cruz on Fox News: Relief for Americans, Energy Producers Top Priorities As We Combat COVID-19

READ: Houston Chronicle: Ted Cruz to Saudi Arabia: ‘You're supposed to be our damn friends'

LISTEN: Cruz Talks Protecting Energy Jobs on the Michael Berry Show

WATCH: Sen. Cruz on CNBC Calls on Saudi Arabia to Stop Flooding Oil Market, Driving Down Prices

LISTEN: As Energy Demand Drops Dramatically, Sen. Cruz on the Joe Pags Show Discusses Efforts to Help Small Energy Producers

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