SALT LAKE CITY — Coronavirus is hitting the Utah oil producing region hard, not only because of the public health risks but due to a volatile oil market that saw the price per barrel plunge to its lowest level in a generation.

“It is a bloodbath,” said Kathleen Sgamma, president of the Western Energy Alliance, which represents independent oil and gas producers in Utah and elsewhere in the West.

The price per barrel of West Texas intermediate crude was sitting at $63.27 at the beginning of this year. On Wednesday its rapid plunge left the price at $20.69 per barrel.

Sgamma said in Utah and the West, the price per barrel is even lower.

Oilprices.com

“Subtract $10 or $15 off,” she said, “because we are not even getting the low global price of oil.”

Saudi Arabia and Russia flooded the market with oil in March, amping up production, plummeting the price and thus driving U.S. oil shale producers to their knees.

The coronavirus shut down the economies of China and India — among the largest consumers of oil — slashing demand.

“The interesting thing about this is that something like this has never happened,” said Reed Page, an independent energy market consultant who grew up working in Utah’s oil fields and is now based in Lehi. “We’re having a supply shock and a demand shock at the same time.”

Prices are starting to rebound, however, with news that Russia, OPEC and other oil producing countries will meet Monday to discuss ending the carnage-inflicting price war.

Oil prices spiked 25% Thursday after President Donald Trump tweeted that he had expectations that Russia and Saudi Arabia would agree to slash production by 10 million to 15 million of barrels per day.

Although there has been that slight recovery, the hemorrhaging in the industry has already started.

Exxon Mobil slashed production at its Baton Rouge refinery, a move that stranded 1,800 contractors.

Rig counts in the industry across the country dropped by 269, a decrease not seen in five years.

Sgamma predicted the impacts will continue.

“Producers are going to have to shut in production and there is no question there will not be any new development going forward.”

That impacts the entire supply chain, with Sgamma saying any move by the Trump administration to help “Big Oil” is simply not true.

“The rhetoric from the left about ‘Big Oil’ has never been accurate,” she said. “Yes, we all know about Exxon and Chevron and Shell, but the vast majority in the oil and gas industry are small businesses. There are literally thousands of small producers, and if you add in all the service contractors there are literally tens of thousands of small businesses that make up the oil and gas industry. So ‘little oil’ is the thousands of companies who employ millions of people across the nation.”

Uintah County Commission Chairman Bill Stringer said it is too early to see the immediate impacts of the volatile oil market, but they will come.

“As long as economies are not looking for oil and there is an oversupply from major producers, it is going to be hard to operate in the oil field,” he said. “There are many, many people — not just roughnecks or drillers or the president of Exxon. There is a whole economy built around energy, and oil and gas is the lifeblood of that.”

Rikki Hrenko-Browning, president of the Utah Petroleum Association, said the massive reductions in air travel and the drastic decline in demands for motor fuel are already impacting the five Utah refineries that operate in Salt Lake and Davis counties.

“We’ve seen dramatic declines in product demand, jet fuel most rapidly, as well as gasoline due to the COVID-19 response. Refinery rates are down compared to what they had been recently as refineries adjust to market demand as much as possible.”

With so much oil on the market and with nowhere to go, the Trump administration confirmed Thursday it will lease space to U.S. oil producers in the Strategic Petroleum Reserve, freeing up room for 30 million barrels immediately. There are plans to make space available for another 47 million barrels, which would reach the reserve’s capacity.

The move came ahead of a meeting Friday between Trump and executives of some of the top leading oil producers on how to address the crisis.

Trump reassured them.

“I think we will see it (the price) come up quickly.”

That meeting was panned by critics of the oil and gas industry with accusations that Trump is planning a bailout of “Big Oil” companies to save the struggling industry.

Accountable.US, which describes itself as a nonpartisan watchdog group, cited a labyrinth of oil and gas industry donations to the Trump campaign, a string of environmental violations and billionaire oil executives who don’t need taxpayer funded help.

A coalition of GOP Congress members, led by two Utah representatives, were also criticized earlier in the week for asking the federal government to waive or reduce royalty fees paid by the oil, gas and coal industries in light of the COVID-19 crisis.

Athan Manuel, director of the lands protection program for the national Sierra Club, said the plummeting oil prices present a dynamic problem for the organization pushing for a transition to a clean energy economy.

Lower gas prices will encourage consumers to purchase more inefficient fuel vehicles such as SUVs and trucks, Manuel said.

“We know this is going to disruptive,” and may stall the trend for purchasing electric vehicles, he said.

While the organization’s mantra is “Keep it in the Ground,” in terms of fossil fuel production, Manuel stressed the organization wants those in the oil and gas industry to be able to transition to clean energy jobs.

“We want to make sure those people who work in that sector have jobs, but we do think we need to get off fossil fuels and do it quickly.”

The hope is to electrify the entire fleet of vehicles within a couple of generations, he said, but the low oil and gas prices complicates that, and what will happen in that arena remains to be seen.

“In the long term we want to see a just transition for these workers.”

Even if there is financial assistance — whatever its form — it will hinge on unique problems depending on the characteristics of U.S. oil producing areas.

Henrko-Browning said every region’s refineries are different, constructed in such a way to handle specific types of crude oil.

In Utah, the refining capacity is about 200,000 barrels of crude oil per day and much of the oil processed by the refineries is waxy crude produced primarily in the Uinta Basin. Typical crude production is about 93,000 barrels a day, said Henrko-Browning.

“Production declines from the basin (and many other locations) are anticipated given the current and projected global oil price, driven by the COVID-19 pandemic and resulting economic slowdown and demand reductions, not to mention the ongoing situation between OPEC and Russia. There will be knock on effects to our employees, communities and state budgets,” she said.

Page, who spent the better part of five years intensely involved in business transactions with oil and gas producers in the basin, Wyoming, New Mexico and Colorado, said any bailout of struggling oil and gas companies should not happen.

“Bailing out companies that took on outsized risks should not encourage that kind of behavior,” he said. “They should be allowed to suffer. The American Petroleum Institute is against interventions with these companies.”

Page said the companies leveraged too much debt, hoping for profitability around the corner.

“They were using borrowed money to expand capacity and now they are getting crushed. Half of them may go bankrupt,” he said.

While there are cries against helping “Big Oil,” Page said it wasn’t the big players who went after investments in oil shale plays, but the small and midsize companies.

Big companies, overall, stayed with conventional oil production, Page said.

“We are going to be swimming in oil,” he warned, and the result is a constriction in the industry reducing the players — and jobs.

“I don’t see a rescue, I see a consolidation,” he said.

As critics slam the U.S. oil and gas industry, Stringer said he wonders why some citizens prefer dominance in the market by foreign countries, especially when there will still be a need to fuel passenger airlines, motor vehicles and trucks that move freight.

“America, I guess, has a short memory span. We forgot how dependent we were. Let’s say we were dependent on the Middle East like we were in the ’70s and we get hit by COVID-19. When somebody controls your supply chain, you are very vulnerable,” he said. “No matter where you sit, if you are a fan of America, you don’t want any of your critical supply chains in the hands of people who may not be friendly to us. If you decide to throw your industry to the wolves, that is where you will end up and that is a bad idea.”