US Senate again fails to advance aid package with SPR, airline relief

The US Senate failed for a second time Monday to advance an economic stimulus package to respond to the coronavirus pandemic, with measures including $3 billion for crude purchases to fill the Strategic Petroleum Reserve and $58 billion in relief for the reeling airline industry.

Preliminary motions to start debate on the legislation failed Sunday and Monday, with Republican leaders unable to secure 60 votes in the face of Democratic opposition. Several Republican senators were unable to vote after one tested positive for the virus and others were in isolation for possible exposure.

The Trump administration has asked Congress for $3 billion to buy US-origin crude to fill the government's emergency oil stockpile.

Based on Friday's NYMEX crude close of $22.43/b, the SPR purchase would have a maximum supply impact of about 380,000 b/d for 2020, according to a note Sunday by Kevin Book, managing director of ClearView Energy Partners. That corresponds to about 48 days of commuter gasoline-demand destruction from social distancing, assuming 60% of US commuters stay home, he added.

Book said $3 billion could cover the purchase of up to 147 million barrels of crude at current prices, which would outstrip the SPR's capacity and potentially mean the US government may end up buying commercial inventories and leaving them in place.

The Department of Energy took the first step Thursday in seeking 77 million barrels of medium and heavy sour crudes to fill the emergency oil stockpile while prices are low.

US Energy Secretary Dan Brouillette said the administration asked Congress for $3 billion to account for potentially higher crude prices in the coming months.

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Parts of the energy sector may also qualify for loans or loan guarantees under a provision that triples the Treasury secretary's authority to help "severely distressed" industries up to $450 billion, according to the ClearView note.

The failure of the second procedural motion throws the legislative timeline into further uncertainty.

On Sunday, Senator Rand Paul, Republican-Kentucky, announced he had tested positive for the coronavirus, and several colleagues who interacted with him in recent days have isolated themselves.

Stefanie Miller, co-founder of Sandhill Strategy, said the news could delay the Senate's action by hours, not days, "because of the urgency felt to address the enormous health and economic issues felt across the country."

However, no deal on the stimulus package has been reached between Republican leaders of the Senate and Democrats in the House of Representatives.