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From The New York Times, I’m Michael Barbaro. This is “The Daily.”

Today: For decades, the United States has feared the consequences of running out of oil. Because of the pandemic, it now has far too much of it. Reporter Cliff Krauss on the energy crisis that nobody saw coming. It’s Monday, April 27.

Cliff, tell me about this moment when oil prices collapse.

So, it was late at night, I’m about to go to bed, but I put on Bloomberg television.

Because I’m a wonky guy. [LAUGHTER]

And I see, suddenly, the oil prices are collapsing.

And I write a quick note to my editors, saying, you’re going to see this. It’s weird. But this is a technical issue. It’s a contract. It’s a futures contract that’s going to roll over in 24 hours. It may not mean much.

Mhm.

Then I get up in the morning, and we’re in negative territory.

Which had never happened before.

Just a few years ago, we had $147 — that’s a plus — barrel oil. And it’s bounced around in recent years between 40 and 60. But negative 37?

Negative $37. Negative $37. Never happened before.

Never. Preposterous.

Right. I remember hearing this news the next morning, after you had flagged it to your editors, Cliff, and being genuinely confused by this. I mean, how can oil be worth less than $0? Right? Like, not just worthless, but somehow having a negative value.

Well, since this had never happened before in history, everybody was confused. But nobody wanted the oil. So people had to actually pay to get rid of it.

Hmm. I mean, why is it that people would need to pay to get rid of what we regard, universally, as the most precious commodity on Earth?

Well, it gets very technical, and I don’t want to get into the technicalities of this. But basically, these were futures contracts that rolled over. And so this was a phenomena that occurred over a 12 to 24-hour period. So there’s something a bit artificial about it. But it does reflect something that’s real. Nobody wants the oil. It is not a precious commodity right now because people are not driving, people are not flying, cruise ships are not cruising, and industry is not burning as much fuel as it was. And yet the world is still producing this oil.

What you’re saying is that the pandemic basically destroyed the normal demand for oil across the world?

That’s right. So now the world is roughly producing 30 million barrels a day more than we’re consuming.

Wow.

So the world is awash in oil. We’re flooded.

This problem, which is an immediate problem, the seeds of it go back many, many years.

What do you mean?

Well, there have been a series of traumas, perhaps three major ones that go back to my college days, actually, in the 1970s.

archived recording

Good evening. It is an all-out war.

In 1973 —

During the Arab-Israeli War, the Yom Kippur War, as some still call it —

Arab countries were attacking Israel and almost overran Israel until the Nixon administration —

At the last minute —

— decided to send Israel a massive amount of weapons.

Which, of course, made many of the oil-producing countries that we were becoming dependent on in the Middle East quite upset. And all they could do in retaliation was —

— to inflict an embargo, an oil embargo on the United States and other Western countries that were aiding Israel.

And this was a trauma for Americans, causing long lines at the gas pump.

Certainly, people of my generation recall this. I was in college. I had a new, sporty, red Capri. [LAUGHTER] And I loved tooling around. And then suddenly —

— you had to wait on line. I was in college in Poughkeepsie, New York, at Vassar.

I remember that I would wait as long as possible, till I was almost on empty, to fill up the tank.

It was a real bother to do that.

Now my problem was small compared to people who had to rely on their cars

to get to work every day and drive long distances.

So that was a trauma. And it was a political problem and an economic problem for the country. Prices skyrocketed. The economy was badly damaged. We’d just lost the war in Vietnam. And now we don’t even have a secure supply of energy. And we’re dependent on countries such as Saudi Arabia, far away. We barely understand these countries. And they’re not friendly.

Mhm.

We’re in trouble.

And so from that pain comes a dream: energy independence.

And the leadership of the country —

— basically, Nixon, Ford, Carter —

— over those years made energy independence a, basically, keystone to all of their policies. The dream is that we can produce our own energy supply so that we don’t feel this vulnerability anymore. That was the dream.

And what do we start to do to achieve that dream?

Those three administrations did several things.

There was the establishment of a strategic petroleum reserve in 1975.

So we would have a reserve when there would be a war or a natural catastrophe.

We built the Trans-Alaska Pipeline.

The Department of Energy was created.

We started to use more coal to burn for power.

We went to war —

— years later, in the Middle East —

Right.

— over the invasion of Kuwait by Iraq.

In part, not just to liberate oil fields in Kuwait, but to defend our gas station, Saudi Arabia.

Because suddenly, those foreign sources of oil that we still needed, because we weren’t quite energy independent, they were at risk of being overtaken by Saddam Hussein?

That’s right. So all of those things were done. But all that was accomplished, and it was something, was to stem the bleeding. And that brings us to the second trauma, which is the early years of the current century. When suddenly, our production is in decline again. China is growing by leaps and bounds. India is starting to grow by leaps and bounds. A middle class is growing around the developing world. So demand is going up, like, 5 million barrels a day around the world. And the Middle East is suddenly more unstable. And so prices skyrocket between the years of about 2004 and 2007.

And when you say skyrocketing, what do you mean?

I mean, prices skyrocket to as high as $147 a barrel.

Hm. Correct me if I’m wrong. This is the point where U.S. gasoline prices at the pump reach $5 a gallon.

Yes.

And I remember how upsetting that was to consumers and to voters.

Yes. It was very, very upsetting. And for those of a certain age, it was a reminder of the 1970s.

Huh.

We were right back in the same problem, dependent on foreign oil, which was very expensive. But then something big happened.

There was a Texas oil man named George Mitchell. And for years and years, he had been experimenting with hydraulic fracturing, which is basically splitting up shale, hard, shale rock which had been useless when drilled vertically. George Mitchell came up with the idea of drilling horizontally through these layers of rock and unleashing the oil in the rock by basically exploding the rock and then introducing sand and water to keep the cracks open, releasing the oil.

Fracking.

Fracking.

Suddenly, they were able to release enormous amounts of oil in fields that big companies had given up on years before.

We were able to do it in North Dakota, Texas, Colorado, Oklahoma, a few other places.

And it’s occurring because the price of oil was so high. That incentivized innovation.

And Cliff, what does fracking for oil mean for this still quite unfinished American dream of energy independence?

Well, it means that we actually, at least momentarily, seem to almost reach that independence. Because American oil production more than doubled in about five years.

Wow.

The United States became an exporter of oil for the first time in many years. And last year, actually leapfrogged over Russia and Saudi Arabia as the biggest oil producer in the world.

So this seems like a pretty good problem to have, right? I mean, too much American oil for the first time, basically, in our history.

Economically speaking, no question about it. By 2014, we were bringing down gasoline prices for consumers. It was part of our recovery from the recession. And all of this American production puts the United States in a extremely powerful position economically, employing millions of people and producing revenues for state and local governments across much of the country. Also giving the United States the freedom to act in foreign policy in ways that would have been unheard-of years before, such as putting pressure on Iran without endangering our energy supply. It was basically the culmination of the dream from the 1970s. And it was hard to imagine, just a few months ago, what could happen that could undercut that dream.

Like a pandemic?

Like a pandemic that would suddenly destroy the demand for oil and kneecap the American oil industry that had produced all of this oil in the first place.

We’ll be right back.

So Cliff, when this third trauma arrives, the pandemic, the world at this point, and the United States, in particular, is awash in oil. And from what you’re saying, demand for that oil has instantly plunged. So what’s actually happening to all of this overproduced oil?

So the oil has no place to go. And it’s rapidly filling up tank farms, strategic reserves around the world. Refineries are running out of space to put the oil. And so the inventories are building to a point where there’ll be no physical space to put the oil. You now have tankers which, you know, used to ship oil from place to place, just storing the oil and sitting out off of the shores of Los Angeles, for instance, and other places. And these are the people who are making a lot of money. They’re getting paid to just hold the oil.

So this explains those negative oil prices, right? They’re producing so much oil that they have nowhere to store it. So they end up having to pay people to take it.

Exactly.

Cliff, maybe this is a bit of a stupid question, but why don’t oil producers, knowing that there’s just way too much oil, and that, if they keep producing it, they’re going to hurt their own ability to command meaningful prices, just stop pumping or fracking oil? Just leave it in the ground.

Well, that’s beginning to happen, but it’s a cumbersome, complex process. First of all, you have thousands of producers in the United States. We don’t have a national oil company which is taking orders from the government, such as in Saudi Arabia. And then there are complications that go along with shutting in wells. It’s an expensive process. You can actually damage the resource to the point where, when you restart the oil, you’ll actually pump less oil out. And then, you have all of these companies that, even when they’re losing money, they need cash flow. They need cash flow to meet their payroll, to meet their debt responsibilities. So what oil companies prefer to do, you let the well, basically, slowly decline.

So if we can’t easily turn off the pumps, and we can’t suddenly overnight create enough storage for all this oil, what can — and I guess what is — the U.S. doing about this glut of oil?

Well, there are a number of things that are being considered, such as stopping imports from coming in, particularly imports from Saudi Arabia that are on their way in tankers.

But there are probably American refiners who have already paid for it.

And so you would be hurting American refiners. That’s not something that the administration would like to do, I’m sure. So they don’t have a lot of options. But meanwhile, small oil producers are in dire straits and on the verge of bankruptcy. And that could be the future, especially if our demand is going to be depressed for a long time.

So Cliff, how is this new reality of the glut and the small producers struggling within that glut, how is that starting to look on the ground in America’s biggest oil towns, including, I’m sure, yours, which is in Texas?

Well, thousands of people are losing their jobs. Others are being furloughed. Probably, it’s only going to get worse. You have oil states that rely on what’s called severance taxes, which is dependent on the price of oil. So that will have an impact on state and local services. And it will have an impact on people who actually earn money because oil is coming out of fields on their private property. So there’s going to be a big macroeconomic impact in these oil-producing states.

Cliff there are going to be people who hear this and think, this is what happens when a country like the United States becomes overly focused in this discussion of energy and dependence on old line forms of energy, on oil, rather than on newer, greener forms of energy. And what do you say to that?

So there are definitely going to be a lot of people who will celebrate the demise of the American oil industry.

Mhm.

And there is a strong argument to be made that we need to diversify our energy supply. And we have done that successfully when it comes to power. We are now using wind and solar. But not for our cars. The electrical age, the electric cars, they’re coming. There’s no question about it. But it’s going to take decades. Because the average car today is on the road for 10 years. So it takes a long time to change the transportation fleet. And our transportation fleet is overwhelmingly dependent on gasoline and diesel.

Right. Which comes, of course, from oil.

Exactly.

Cliff, what’s so interesting about the history that you have described here is that it feels like every decision the United States has made about oil was about avoiding a single scenario, which is that we would run out of oil and we would be beholden to our adversaries to get that oil. And it feels like we never really prepared for the opposite scenario, which is the situation we’re in now.

That’s right. Nobody anticipated a pandemic that would destroy demand. And no one is to blame for this, but we are now facing an entirely new set of problems.

Right.

And of course, if we had anticipated this problem, we would not have solved the problem that we had being dependent on producers in the Middle East and other unfriendly powers.

Mhm.

So my big takeaway, and it may be obvious to everyone, is the idea of energy security is simply an illusion.

Hm.

We are not energy secure when we have little oil. And we’re not energy secure when we have a lot of oil. It’s hard to get it just right.

Thank you, Cliff.

Thank you.

We’ll be right back.

Here’s what else you need to know today. On Sunday, the head of the White House task force on the coronavirus, Dr. Deborah Birx, said that social distancing rules would likely remain in place throughout the summer, even as some states begin reopening their economies. During an interview on NBC’s “Meet The Press,” Birx was asked about President Trump’s unproven claim, made last week, that an injection of a disinfectant like bleach could combat the virus.

The president’s statement was widely condemned and prompted local health officials, and the makers of cleaning supplies, to warn Americans not to ingest or inject their products. As of Sunday night, the coronavirus had infected more than 938,000 Americans and has killed at least 50,000 of them.

That’s it for “The Daily.” I’m Michael Barbaro. See you tomorrow.