Landnews

Federal Reserve to extend lending program to oil and gas industry

  • 1.  Federal Reserve to extend lending program to oil and gas industry

    Posted 04-30-2020 19:29

    April 30 -- Today, the Federal Reserve announced changes to a lending program that paves the way for the oil and gas industry to get government financing amid the COVID-19 pandemic. The expanded criteria to qualify for the Main Street Lending Program follows requests from Sen. Ted Cruz (R-TX) and a push by small and mid-sized oil producers who said financing was needed to save the industry from bankruptcy. 

    The guidelines released today ease restrictions on borrowing for heavily indebted companies and also allows them to use the loans to refinance existing debts — a departure from the first set of criteria released by the board. “Because of these restrictions, small- and medium-sized oil and gas companies, who desperately need liquidity because of massive demand disruption caused by COVID-19 and foreign oil aggressive overproduction and price discounts, are unable to access the short-term liquidity they need to avoid bankruptcy,” Cruz wrote in a letter to the Treasury Department and the Federal Resource Board last week. This change to the lending program will alleviate those concerns.

    Read more: https://www.cruz.senate.gov/?p=press_release&id=5071

    Federal Reserve announcement and lending guidance: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200430a.htm

    For further information: https://thehill.com/policy/energy-environment/495549-feds-expanded-lending-program-opens-funding-to-oil-and-gas-industry



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    Russell Cohen
    AAPL Governmental Affairs
    rcohen@landman.org
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  • 2.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 05-01-2020 12:47
    I'm afraid I don't see how this will really help producers with typical RBLs.  Yes, the Fed has changed borrower restrictions and loan limits and added a libor calculation in response to comments, but the lender covenants have also changed.  I just don't see banks signing on to give up their control over existing debt for four years.  Maybe I'm missing something.

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    Cecilia Wallen CPL
    Corpus Christi TX
    (361) 882-3046
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  • 3.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 05-01-2020 16:39
    Ceci,

    Thank you for your comment. I just saw this article which more fully details how the Federal Reserve loan program can aid oil and gas companies. It may be of interest.

    https://www.washingtonpost.com/news/powerpost/paloma/the-energy-202/2020/05/01/the-energy-202-oil-and-gas-companies-stand-to-gain-from-fed-loosening-coronavirus-loan-rules/5eab0bda602ff15fb0021673/

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    Russell Cohen
    AAPL Governmental Affairs
    rcohen@landman.org
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  • 4.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 05-04-2020 10:06
    If they really wanted to help The Fed would cut all income taxes to 10%

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    Robert Rooney RPL
    Perennial Energy Partners, LLC
    Dallas TX
    (405) 317-1985
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  • 5.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 05-05-2020 12:17
    Robert - the Fed has nothing to do with income taxes!

    Anyway, how will we pay for all this economic stimulus without RAISING income taxes to post-WW II levels?

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    Steven Creger CPL
    Independent
    Houston TX
    (713) 208-9580
    StevenCregerIndependentsteve.creger@att.net(713) 208-9580
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  • 6.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 05-05-2020 12:47
    10% flat income tax, if the government goes broke, how about the shutter the EPA, of one of the 17 Intel agencies ?  Or maybe the FBI which open tried a coup de tat against President Trump

    Turner

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    Robert Rooney RPL
    Perennial Energy Partners, LLC
    Dallas TX
    (405) 317-1985
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  • 7.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 05-06-2020 12:01
    The way I see it, there are only a few ways to pay for this stimulus:
    1.  Raise taxes
    2.  Cut expenditures
    3.  Borrow borrow borrow
    4.  Print money and let inflation increase dramatically

    Any other ideas?

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    Vikki Gray CPL
    Independent
    Arvada CO
    (303) 842-9629
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  • 8.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 30 days ago
    Edited by Phillip David Haskett 29 days ago
    #5 - Repudiate China's $1.3 trillion treasury debt holdings, and float a new US currency backed by the 8,134 tons of gold bullion held by the United States, which is more that four times China's holdings, and almost as much as the combined holdings of the next three countries, viz.- Germany, France & Italy.​

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    Phillip David Haskett
    General Manager
    (719) 502-1077
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  • 9.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 30 days ago

    Vikki et al,

    Econ 101-  Repay stimulus  tools      1. Yes Raise taxes   2. Yes Borrow     3. Yes Print   4. Cut expenditures- No won't happen 

    It will be up to the middle class working slob to pay the horrendous bill just like after WWII.  These bailouts have the same

    macro effects as public works projects of the late 1930's and even WWII if you want to call it a public works project. 

     

    Like it or not, we are a mixed economy of capitalism and socialism.   But who pays?  According to Texas billionaire  Ed Bosarge's

    former wife his attitude was "only dumb people pay taxes" and  I am one of these.

    Oh well

     

    Best  Regards,

    Bob Knudsen

    General Certified Real Estate Appraiser

    Spokane WA

     






  • 10.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 30 days ago
    It will be so easy to pay for all of the government's "stimulus" efforts, without raising taxes.

    First, subsidies to one person or one company will be paid for indirectly by relative losses incurred by those people and companies who do not get the subsidies.  This is largely a zero sum game where there is no more wealth created by the subsidy, but some people now have more money to compete for that wealth, relative to those who did not get subsidies.

    Second, the government borrows money now and in the future pays it back with money the government prints later.

    Third, the government buys bonds - corporate and government, with money it prints, giving the sellers the new money.  Later, the government sells those bonds for money held by the public, giving the government more money (trillions of dollars) to spend without raising taxes.  The result is a lot more money in circulation competing for the same goods and services.  This does not necessarily produce inflation - general increases in prices - because some sectors of the economy are always becoming more productive, tending to drive prices downward.  This has happened with many technical products and services, where prices have actually dropped in recent years.  When companies become more productive, they can make profits without raising prices.  This benefits producers and consumers but the government does not like it because it is hard to tax.  The government steps in and confiscates much of the increases in productivity when it prints new money.

    When the government prints (digitally issues, actually) too much new money (trillions of dollars) out of thin air, to buy Treasury bonds or corporate bonds, that may well result in obvious inflation in some asset values.  If this new money results in higher prices for stocks and bonds, houses, etc., investors and owners will see imaginary gains on which they will owe increased taxes when they sell their assets.  The government has recently injected into the economy trillions of dollars it just created.  Magically, the stock market is now rising (in nominal dollar terms) in the midst of a government-mandated economic suppression.

    There is no need to raise taxes when the government can just print new money to pay its bills.  Raising taxes is unpopular, until the Democrats control Congress, when they do it to win votes.

    The government never needs to cut expenditures or balance its budget, because that would be unpopular.  Modern Monetary Theory teaches that deficits are not a problem - borrow all you want, there will never be a day of reckoning.  That's music to the politicians and they will keep playing that tune until reality brings their con game - and the economy - crashing down.  In the long run, reality will never be cheated.

    In the meantime, all acts of government to "stimulate" the economy will distort the economy, helping some and hurting others.  No one will be able to measure or even see all the damage done but politicians will say they "helped."  Those companies and individuals who benefit will agree.  That's "crony capitalism."  More stimulus efforts will be needed in the future to fix what they didn't fix the first time.  The Soviets revisited their plans periodically, and called such efforts "5 Year Plans."  They never worked but that never discouraged the central planners.

    The best action the government can take, the only real and honest stimulus, is to get out of the way, let people get back to work, let companies explore and innovate and produce, let people buy and sell and trade and innovate freely.  Let free people operating in the marketplace decide what the future will bring.

    So, however you look at this, we don't need to raise taxes!

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    [Paul] [Grant]
    Landman-Lawyer
    Denver, Colorado
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  • 11.  RE: Federal Reserve to extend lending program to oil and gas industry

    Posted 30 days ago
    Agree with you Vicki, the government has NO money of their own. Only what they tax or borrow! So we end up paying for it in the end. They give us money then we end up paying it back at an inflated rate either in higher taxes or increased costs of goods, etc. We can rest assured they will not take any paycuts. The entire system is broken.

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    Michelle Smith
    VP Land
    The Quiat Companies
    Denver, CO
    720 723 2770
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