OVERNIGHT ENERGY: Oil trades at lowest price in history after slipping into negative pricing | Democratic Deepwater Horizon anniversary report criticizes administration’s offshore drilling policies | Biden floats expansion of climate platform

OIL IS FREE (FALLING): Oil prices sunk to their lowest level in history Monday, dropping into negative pricing as supplies overwhelm the globe’s storage capacity.

Oil hit $0.01 a barrel before falling to as low as negative $40 and eventually settling at negative $37.63, the lowest level recorded since the New York Mercantile Exchange began trading oil futures in 1983.

OK, but why?

The low prices for West Texas Intermediate oil come as demand has fallen 30 percent as people quarantine because of the coronavirus, leading to a massive surplus of unneeded oil and fuel. 

Negative pricing reflects a willingness of oil producers to pay futures traders to deal with the excess oil.

“There is such a massive supply surplus and very little places to store it, and that’s what’s driving this,” Jim Burkhard, vice president and head of oil markets at IHS Markit, told The Hill. 

So, what’s the industry doing about it?

Companies have already begun limiting their production, temporarily capping wells.

U.S. production is expected to drop by a little less than 5 percent for the rest of the year, according to market analysis by the Energy Information Administration.

But, in the short term, those efforts haven’t been enough to combat the oversupply.

“Some companies want to wait out the market before shutting in production, so they’ll pay someone to take it,” Burkhard said, using a term for pausing production at wells. 

Experts said Monday’s free fall was an oddity. Oil trading is centered on monthly contracts, a reflection of the time needed to get the product to market. Monday was the last day to purchase oil under a small volume of May contracts, with tomorrow’s bidding on June expected to raise prices.

And what could be next?

But it’s a market rarity that could repeat itself in a month’s time if oil storage remains scarce. Rystad Energy estimates there may be only 21 million barrels’ worth of free storage left in the world.

And oil production has not yet gone low enough to make up for the lack of demand. Shutting in wells and later turning them back on can be expensive, and oil companies may not have the cash to do so. The process can also damage a well’s productivity, another reason producers may be willing to pay for others to take the oil. 

“The potential for long-term damage and the costs necessary to start up again are why producers say, ‘I might take a loss on oil right now because it’s better than shutting in production and incurring those costs,'” said Christopher Page, a market analyst with Rystad Energy.

Read more about what happened in the oil market today here.

IT’S MONDAY! Welcome to Overnight Energy, The Hill’s roundup of the latest energy and environment news. Please send tips and comments to Rebecca Beitsch at rbeitsch@digital-release.thehill.com. Follow her on Twitter: @rebeccabeitsch. Reach Rachel Frazin at rfrazin@digital-release.thehill.com or follow her on Twitter: @RachelFrazin.

CLICK HERE to subscribe to our newsletter.

A DEEP DIVE: House Democrats criticized the Trump administration’s offshore drilling policies in a report issued on Monday, which marked the 10th anniversary of the Deepwater Horizon oil spill. 

“The Trump administration has prioritized ‘energy dominance,’ which means less focus on worker safety and environmental protection and more emphasis on ensuring higher profits and lower costs for the oil and gas industry,” the report reads.

The report was issued by Democrats on the House Natural Resources Committee. 

It particularly takes issue with the administration’s actions to remove some of the safety mandates on the oil and gas industry and pointed to an analysis from a left-wing think tank that found that spills and injuries were on the rise during the Trump administration. 

It concluded that the administration’s actions “have increased the odds that workers, local businesses, community members, and taxpayers will once again pay the price of an offshore disaster.”

Interior Department spokesperson Conner Swanson slammed the report as “overtly political” in a statement to The Hill and said that it “could not be further from the truth.”

“Since day one, the Trump Administration and the Department have taken actions to ensure energy development is conducted in a safe and smart manner,” Swanson said. 

The department has also previously defended its loosening of requirements, saying it was getting rid of “unnecessary regulatory burdens while maintaining safety and environmental protection offshore.”

Monday’s report additionally decried “industry access to leadership,” and pointed to one instance in which a former Interior Department official went on to work for a company that his policy work had allegedly helped. 

Read more about the report here.

PLANNING ON EXPANDING: Presumptive Democratic presidential nominee Joe Biden said Monday that he would expand his environmental platform amid calls from some environmental groups aligned with former primary challenger Sen. Bernie Sanders (I-Vt.). 

“I outlined a bold plan to lead a clean energy revolution and fight for environmental justice. But the best policy work is continuous, creative, and keeps reaching for greater ambition and impact. In the months ahead, expanding this plan will be one of my key objectives,” Biden said in a statement while accepting an endorsement from the League of Conservation Voters (LCV) Action Fund. 

“I have asked my campaign to commence a process to meaningfully engage with more voices from the climate movement — including environmental justice leaders and worker organizations, and collaborate on additional policies in areas ranging from environmental justice to new, concrete goals we can achieve within a decade, to more investments in a clean energy economy,” the former vice president added. 

His statement followed calls from some environmentalists for Biden to expand his climate platform following Sanders’s exit from the race.

Meanwhile, Ex-Inslee staffers are hoping Biden and Congress will adopt some of their own ideas…

Ex-campaign staffers for former presidential candidate Jay Inslee are reviving the Washington governor’s ambitious climate plan by pitching an updated proposal to congressional Democrats and the Biden campaign.

The new plan is a condensed version of Inslee’s 200-page climate manifesto but contains many of the same objectives: transitioning to 100 percent clean electricity by 2035, slashing subsidies for the fossil fuel industry, creating a Climate Conservation Corps and revitalizing the economy through investment in green technology and clean energy.

The revised proposal has been sent to the Biden campaign, Democratic congressional leaders and the Select Committee on the Climate Crisis in both chambers, in hopes that some of the ideas might gain enough traction to garner stimulus funding or be implemented if Biden wins in November.

“Essentially the concept was: How can we take the assets of a presidential campaign, including smart, thoughtful policy and communications and media and organizing capacity, but put it in service of policy and the movement rather than an individual?” said Bracken Hendricks, a former Inslee staffer who authored the plan alongside two other colleagues from the campaign.

They are part of a new organization called Evergreen Action, a nod to both Inslee’s home state and what the group’s founders see as the durability of the proposal.

Jared Leopold, a former Inslee spokesman, described the new plan as “a road map and action agenda of what Congress and the next president can do.”

“It takes its inspiration from Gov. Inslee’s plan, which was designed to meet the scientific need of a national mobilization to defeat climate change,” Leopold said. “This is intended to pick up where he left off on driving the policy and the politics of climate change.”

Read more about LCV Action’s endorsement of Biden here and read more about Evergreen Action here. 

MAILBAG: Sixteen Democratic senators wrote a letter to the chamber’s leadership asking for the next stimulus package to include assistance for communities that face disparate impacts of environmental issues. 

“As you know, the COVID-19 virus currently imperiling our Nation has life-threatening impacts on people with underlying health conditions. We are concerned that this leaves environmental justice communities particularly vulnerable as members of these communities are more likely than others to experience asthma and have diabetes,” they wrote.  

OUTSIDE THE BELTWAY:

A decade after BP spill, Gulf of Mexico has rebounded, but wounds still visible, NOLA.com reports.

‘Dead in the water’: New York’s clean energy sector looks for a jump-start, Politico reports.

Green energy could drive Covid-19 recovery, The Guardian reports.

ICYMI: Stories from Monday and the weekend… 

White House pushed EPA for looser ‘forever chemical’ regulation: documents

Court rules Montana landowners need EPA approval for clean up measures

AGs from 18 states argue for further restrictions on ‘forever chemicals’

Stocks sink as oil prices plunge below $1 per barrel

Jane Goodall hopes pandemic creates movement ‘of people who’ve never before breathed clean air in cities’