One of those ideas includes the government taking equity stakes in oil companies in exchange for loans, possibly with the requirement that recipients shut in production to help relieve a historic glut, sources told Josh.

That possibility is being met with pushback from oil industry groups and conservative Trump administration allies.

One former Trump administration official told Josh it would be rife with peril.

“There’s lots of oversupply out there — empty restaurants, hotels. If we used the same logic, then government could take control of every shuttered business,” he said. “This is an awfully steep slippery slope.”

The American Petroleum Institute, the largest U.S. oil lobby, opposes the idea too, preferring the oil industry have access to broad-based lending facilities set up in the CARES Act, rather than being treated as special.

“This idea would be particularly objectionable from the broader industry and not something we would support,” Bethany Aronhalt, an API spokeswoman, told Josh. “We have not heard any of our members call for this. We are not asking for any industry-specific support like this.”

How it would work, and who would bite: Nonetheless, Kevin Book, managing director of research firm ClearView Energy, said he thinks Treasury is seriously looking at the idea, and believes the administration has plenty of flexibility to manage bailout lending programs authorized by Congress in response to the coronavirus.

“The Fed-backed and Treasury-only lending facilities created by the CARES Act are extraordinarily powerful tools and probably very versatile, too,” Book told Josh.

He said companies that don’t have strong balance sheets, hedges, or low-cost assets “could very well take the bet” and allow the government to take equity in it.

It’s a risky bet: Most companies, however, will be leery of other risks, like restrictions the Treasury/Fed authorities could impose, including limits on dividends, share buybacks, executive compensation, and employment requirements.

That’s not to mention the possibility that a future Biden administration would inherit voting equity in Treasury-backed oil companies and could use that power to compel carbon reduction efforts, or even force it to shut production — more than temporarily.

“It’s a terrible idea,” Mike McKenna, a fossil fuel lobbyist who recently was deputy director of legislative affairs in the Trump White House, told Josh. “Let’s try a thought experiment. What happens if the Democrats take the White House? Does anyone really want Mary Nichols in charge of any part of the oil industry?”

Nichols, if you’re wondering, is California’s top air official implementing its carbon-reduction programs.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email jsiegel@washingtonexaminer.co.uk or asmith@washingtonexaminer.co.uk for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

RELATED…FED PLEDGES TRANSPARENCY ON BAILOUT MONEY: The Federal Reserve said Thursday it will provide “substantial amounts of information” for its emergency lending programs created in the CARES Act, including the names of companies receiving help, how much they borrowed and at what rate, and the overall costs, revenue and fees for each emergency facility, the central bank said.

TRUMP PRESSURED TO STOP DELUGE OF SAUDI CRUDE: President Trump is facing pressure to do something about a deluge of Saudi oil on its way to the U.S., threatening to worsen an already historic glut and price crash.

Trump has said he’s looking into the situation when asked this week whether he’d use emergency authorities to stop the oil from coming here.

The tankers are carrying more than 40 million barrels of crude to arrive over the next four weeks, according to S&P Global Platts trade flow service cFlow.

Saudi Arabia could still reroute at least some of the oil to places where economies are coming back online, like Asia, energy analysts say. But lobbying groups representing oil producers and refiners oppose a blockade of Saudi oil coming into the U.S. because it would disrupt the global energy market, which is interdependent and complicated.

“U.S. refiners bought the oil not just because of the low price, but also because it is a heavier crude than what is produced in the U.S., and this heavier crude is what the U.S. refineries were built to run to produce products like gasoline, jet fuel, and diesel,” Joe McMonigle, a former Energy Department chief of staff in the George W. Bush administration, told Josh.

Who owns the oil? At least some of the incoming oil is under contract by U.S. refiners, and many of the contracts were likely signed prior to the oil market crisis in early March or late February.

“The oil is from Saudi Arabia, but American companies own it now,” said Matt Reed, vice president of the energy consultancy Foreign Reports.

“Titles have changed hands. Saudi Arabia can’t turn these ships around because it’s not their oil anymore,” Reed told Josh.

But some of the incoming oil will be going to the Motiva refinery in Port Arthur, Texas, the country’s largest, which is owned by Saudi Arabia’s state oil company, Saudi Aramco.

That means Saudi Arabia should be able to divert the oil if Trump forced or convinced it to.

“Trump can probably convince Saudi Arabia, by the force of his will, to get that oil sent somewhere else,” said Jim Krane, energy geopolitics fellow at Rice University’s Baker Institute.

MORE OIL PRESSURE ON CHINA: The American Petroleum Institute joined the ranks of oil lobbyists pushing the Trump administration to press China to keep its commitments to buy U.S. energy as part of a Phase One trade agreement.

“China will need access to energy in the near-term and the United States is well-positioned to provide for this need,” API CEO Mike Sommers wrote in a letter Thursday to Commerce Secretary Wilbur Ross, Energy Secretary Dan Brouillette, and U.S. trade representative Robert Lighthizer.

Anne Bradbury, CEO of the American Exploration and Production Council, wrote a similar letter to Lighthizer earlier this week.

SUPREME COURT SETS A NEW CLEAN WATER ACT TEST: In a 6-3 opinion Thursday, the Supreme Court rejected the Trump administration’s interpretation, instead setting its own test for agencies and regulated facilities to use when determining whether polluters must obtain Clean Water Act permits if they’re indirectly contaminating a regulated water body.

The court said the Trump administration’s view would create a “large and obvious loophole” restricting the EPA’s ability to limit pollution in oceans, rivers, and other regulated water bodies.

Environmentalists are calling the ruling a victory: Clean water advocates had brought the lawsuit against Maui County for pumping partially treated sewage underground, which would then seep through groundwater to the Pacific Ocean. The Trump administration and the county argued it didn’t need a permit because it wasn’t discharging directly into the ocean.

The Supreme Court’s new test, though, is far from settled: Justice Stephen Breyer, who wrote the opinion, even acknowledged that the test they set out — that a facility must get a permit for indirect contamination if it’s the “functional equivalent” of dumping pollutants directly into regulated waters — will have to be fleshed out by the lower courts and the EPA over time.

WESTERMAN SEES OPENING FOR HIS TRILLION TREES ACT: Republican Rep. Bruce Westerman, lead sponsor of the Trump-backed Trillion Trees Act, has not given up on passing his legislation, despite activity in Congress being completely focused on the coronavirus.

“It’s obviously been disruptive, but we have kept working on it,” Westerman told Josh in a phone call from his home in Hot Springs, Arkansas, in between feeding his two labradors, Clyde and Clara.

He actually sees an opening for the bill, arguing the public will have a greater appreciation for environmental performance and its link to the economy, as emissions have fallen while activity has come to a standstill. Planting a bunch of trees, he posits, would absorb lots of carbon, while creating economic opportunity. The bill also creates a new tax credit to encourage homebuilders and commercial developers to use less carbon-intensive materials and conserve energy.

“It does relate to the bigger picture of a healthy environment and healthy people,” Westerman said. “This can be part of the solution of creating a healthy environment and economic growth and recovery.”

As Westerman was talking, Trump was planting trees at the White House for Earth Day, while touting his support for the Trillion Trees Initiative. Westerman said he’d be planting trees in his home garden for Arbor Day (which is today).

“My garden is in better shape than normal,” he said.

But Democrats have resisted supporting Westerman’s tree-planting bill, arguing the Republican-led effort means little if the party won’t also back efforts to limit fossil fuel use.

“Don’t let perfect be the enemy of the good,” Westerman offered to Democrats.

CLIMATE POLICY IN A POST-PANDEMIC WORLD: Governments must use the pandemic recovery to devote “vast resources” to climate change resilience and mitigation efforts, McKinsey analysts wrote in a blog post Thursday. Countries also need to build better capacity to model climate risk, rethink “existing subsidy regimes that accelerate climate change,” and encourage broad alignment across governments on sustainability, they add.

The McKinsey analysts also call on companies to “seize the moment to decarbonize” by prioritizing the retirement of carbon-intensive assets. In addition, companies have “fresh opportunities” to change up operations to both make them more resilient to the effects of climate change and reduce their emissions, they say.

JUST ONE BIG US BANK REMAINS: Morgan Stanley became the latest big U.S. bank to say it won’t fund new oil and gas drilling in the Arctic, leaving Bank of America as the outlier that hasn’t yet changed its policies.

Morgan Stanley included the change in an updated environmental policy statement released yesterday. The bank also said it won’t support new coal-fired power plant builds unless they include carbon capture and storage, and it will phase out funding for thermal mining companies “that do not have a diversification strategy within a reasonable timeframe.”

Several other U.S. banks have changed their policies on Arctic drilling in recent months, bowing to intense pressure from activists, including Goldman Sachs, JPMorgan Chase, Wells Fargo, and Citigroup.

ENERGY DEPARTMENT TO FUND INDUSTRIAL CARBON CAPTURE: “Adapting these new carbon capture technologies to make them applicable to industrial sources of emissions is just one of the ways the Trump Administration is using innovation over regulation to reduce emissions while using all of the reliable energy sources at our disposal,” said Brouillette, announcing the new $46 million funding opportunity.

The Energy Department also announced it had selected five carbon capture projects for money under a previously announced $85 million funding opportunity focused on wide-scale deployment of the technology.

The Rundown

Wall Street Journal Some oil producers have secret weapon in hedging

Huffington Post Falling oil prices breathe new life into an old idea: nationalize the industry

New York Times Here’s how coronavirus could raise cities’ risk for climate disasters

Bloomberg Hamm’s shale explorer invokes force majeure, citing negative oil

Politico Global climate battle shifts to “once-in-a-generation” government spending

Calendar

FRIDAY | APRIL 24

Neither the Senate nor the House is expected to meet before May 4.