Dozens of individuals and groups urging states to reopen amid the Covid-19 pandemic have historical financial ties to coal and oil and gas companies and conservative billionaires who have invested in climate disinformation.
Past funders of the current critics of stay-at-home orders include the bankrupt coal company Murray Energy and oil giant ExxonMobil, as well as Koch and Mercer family foundations, according to DeSmog, a group that tracks the money behind anti-climate-action campaigns.
Some of the contributions tallied are recent and others are at least five years old or older. ExxonMobil, for example, had broken ties with two of the groups in this story by 2006. There is no evidence that these companies and foundations are funding ongoing campaigns to reopen businesses.
But Brendan DeMelle, executive director of DeSmog, said the “information echo chamber” of interests downplaying both the climate crisis and the pandemic would not be what it is today without fossil fuel funding.
“While we don’t have direct evidence of specific grant money going for Covid denial, none of these operations would exist without their support over the years,” DeMelle said.
Donations to not-for-profit thinktanks are nearly impossible to track in real time because of a lag in reporting. It could take years to reveal which interests are currently funneling money to the groups helping to organize and expand shutdown protests. Even then, much of the funds could be hidden, donated anonymously through third-party not-for-profits, DeMelle said.
But DeSmog’s research shows many of the calls to end stay-at-home orders are coming from people associated with a wide-ranging network of organizations that together seek to limit the power of government and thwart intervention in business. That web of thinktanks was built years ago on contributions from the fossil fuel industry and conservative philanthropists.
Now, the fossil fuel industry is struggling amid government lockdowns aimed at preventing the spread of the coronavirus, and allowing people to move freely and return to work would help the sector by boosting energy demand.
As Donald Trump has advocated for a quicker reopening, often against the recommendations of his expert advisers, Republican voters’ views on how to handle the coronavirus have shifted substantially.
Just 43% say it is more important for the government to address the spread of the virus than the economy, down from 65% about a month ago.
Trump’s calls for a quicker return to regular life have grown in popularity as they have been echoed throughout conservative media, often backed by thinktanks connected to the oil and coal industries.
In Wisconsin, where people have protested against a stay-at-home order, the Koch-backed group Americans for Prosperity (AFP) filed an amicus brief with the state supreme court challenging the authority of the governor and the health department to continue to require people to stay home without sign-off from the Republican-controlled legislature. The court last week struck down the state’s order, calling it a “vast seizure of power”.
Charles Koch, the 20th-richest billionaire in the world, runs Koch Industries, which is involved in oil operations and energy-intensive industries. He and his late brother, David, have funded a network of conservative thinktanks.
Phil Kerpen, a Koch political operative, has argued that lockdowns are “unscientific”, and “medieval” and don’t save lives. Kerpen is president of American Commitment, a group that through 2016 has received at least $6.9m from Freedom Partners, which is partially funded by the Kochs, according to DeSmog. He was previously vice-president of AFP until 2012.
An AFP spokesman said the group has been “unambiguous” in its position that “the choice between full shutdown and immediately opening everything is a false choice”, and that it is working with officials and businesses to develop standards to “safely reopen the economy without jeopardizing public health”.
“Past grants do not define our position on reopening the economy – to suggest otherwise is disingenuous,” the AFP spokesman said. “None of the grants referenced have anything to do with stay-at-home orders and some of them were made many years ago.”
The Washington Post has reported that the Convention of States, a project launched in 2015 with money from the family foundation of the billionaire Republican donor Robert Mercer, has helped to coordinate activism against the stay-at-home orders around the country.
The conservative thinktank the Manhattan Institute – which over the years has takenat least $1m from ExxonMobil through 2018, according to the environment group Greenpeace USA, as well as $3.2m from Koch foundations and $2.2m from the Mercer Family Foundation – has published commentary questioning the value of shutdowns.
Brian Riedl, writing in the Manhattan Institute publication City Journal, called the shutdowns unsustainable, saying just a few months “will cost the government and the economy trillions of dollars”.
An ExxonMobil spokesman, Casey Norton, noted the company had not contributed to most of the groups in this story for years and said it was not pushing to lift stay-at-home orders.
“We continually evaluate our memberships and participation in organizations, and we do not contribute to organizations if we are not actively involved,” Norton said.
“As for return to work, our focus right now is on ensuring the safety and health of our entire workforce and to do our part to limit the spread of the novel coronavirus in the community.”
The Daily Caller, a news organization that has received $3.5m through 2017 from Koch foundations through its non-profit, has run articles suggesting Democrats want to kill the economy to keep Trump from getting re-elected.
“The mainstream media, which works for the Democrat party, wanted us shut down more, and for longer,” said opinion contributor Ron Hart.
Often, funding by the fossil fuel industry is less obvious and more difficult to follow. Bits and pieces of financial connections are revealed in regulatory and court filings, but many are hidden behind dark money groups.
One shutdown critic, author Alex Epstein, runs the for-profit thinktank the Center for Industrial Progress. Epstein has said his clients include the president of the Kentucky Coal Association and thecoaltruth.com, a project DeSmog links to employees of Alliance Coal.
Epstein in a podcast compared the coronavirus to the seasonal flu and said “the purpose of the government is not to extend people’s lives. It’s to leave us free to live our lives as we judge best.”
Epstein told the Guardian his clients pay him “solely to advise them on *their* messaging”, and that “none of them have any influence on what I say publicly, on this or any other issue”.
Other critics of reopening are connected with the Competitive Enterprise Institute, the American Council for Capital Formation and the Heartland Institute.
Chris Horner, a former fellow at CEI, in an op-ed in the Washington Times in March warned that “the current ‘coronavirus economy’ could become legally mandated, with no recovery permitted but only worsening, in the name of climate change”. Horner received funding from the coal company Alpha Natural Resources, according to a bankruptcy filing.
Joel Zinberg, of CEI, and Richard Rahn – who is chairman of the Institute for Global Economic Growth and board member of ACCF – have also criticized stay-at-home orders. Rahn has called Covid-19 the “Chinese Communist party virus”.
CEI received $2.1m from ExxonMobil through 2005 and has taken $200,000 from Murray Energy more recently. ACCF has gotten $1.8m from ExxonMobil through 2015 and $600,000 from Koch groups through 2015.
ACCF as an organization “has taken no position on the stay-at-home orders or any prospective timeline for reopening the economy”, said the group’s CEO, Mark Bloomfield.
The Heartland Institute, which denies the severity of anthropogenic climate change, has received $6.7m through 2017 from the Mercer Family Foundation, as well as $130,000 from coal company Murray Energy. The group received $25,000 from a Koch foundation for one specific project and got money from ExxonMobil until 2006.
A Heartland spokesman, Jim Lakely, has argued “leftists” are “stoking Covid-19 panic” and has called lockdown orders unconstitutional.
“What’s the time limit on being labeled ‘Koch-funded’ or ‘Exxon-funded’? A decade? Two? Also, who cares?” Lakely said. He did not respond to questions about Mercer funding.
Stimulus tax change helps translate losses into instant cash
Oil companies are uniquely poised to benefit, analysts say
As it headed toward bankruptcy, Diamond Offshore Drilling Inc. took advantage of a little-noticed provision in the stimulus bill Congress passed in March to get a $9.7 million tax refund. Then, it asked a bankruptcy judge to authorize the same amount as bonuses to nine executives.
The rig operator is one of dozens of oil companies and contractors now claiming hundreds of millions of dollars in tax rebates. They are employing a provision of the $2.2 trillion stimulus law, called the CARES act, that gives them more latitude to deduct recent losses.
“This is a stealth bailout for the oil and gas industry,” said Jesse Coleman, a senior researcher with Documented, a watchdog group tracking the tax claims. It’s geared to companies “that have been losing money over the last few years — and now they get that money back as a check from the taxpayers. That’s exactly what the oil industry has been doing.”
The change wasn’t aimed only at the oil industry. However, its structure uniquely benefits energy companies that were raking in record profits in 2018 as crude prices reached $76.41 per barrel, only to see their fortunes flip a year later.
More than $1.9 billion in CARES Act tax benefits are being claimed by at least 37 oil companies, service firms and contractors, according to a Bloomberg News review of recent filings with the Securities and Exchange Commission. Besides Diamond Offshore, which declined to comment, recipients include oil producer Occidental Petroleum Corp. and refiner Marathon Petroleum Corp.
Other oil companies say they didn’t lobby Congress for the change, which is widely available across all industries. “We did not request any benefit, but we are obligated to follow the tax laws as passed by Congress, which apply to all corporate manufacturers nationwide,” said Jamal Kheiry, a spokesman for Marathon, which got a $411 million benefit.
Congress embedded the tax change governing losses in the stimulus measure early on, as lawmakers moved rapidly in March to steer trillions of dollars in aid to coronavirus-ravaged workers and companies. Alongside expanded unemployment payments and payroll loan programs, lawmakers saw an opportunity to harness the tax code to help get cash flowing to companies struggling to pay rent, workers and insurance.
It “was sold as help for the little guy — help for small business,” said Steve Rosenthal, a senior fellow with the Urban-Brookings Tax Policy Center. “In the name of ‘small business,’ we’re shoveling out billions of dollars to big corporations and rich guys.”
The provision loosened rules governing how businesses deduct net operating losses — incurred when deductible expenses exceed gross income. For years, companies were able to apply those net operating loss deductions to previous tax returns as well as going forward — but Congress ruled out retroactive relief as part of the 2017 tax cut law.
That new forward-focused approach works well when the economy is expanding, but the promise of using today’s losses as tomorrow’s deductions isn’t much help to coronavirus-battered companies with no guarantee they will survive long enough to claim them. So in the stimulus package, Congress gave businesses the chance to carry back all their losses — and claim immediate tax refunds — for five years from 2018, 2019 and 2020.
“The thought was temporarily we should bring them back so that firms that are seeing significant losses in the next year or over the past year or two can carry those back and get some short-term liquidity,” said Garrett Watson, a senior policy analyst at the Tax Foundation, a non-profit that supports pro-growth tax policies.
Traditionally, the ability to deduct net operating losses is meant to ensure companies get fair tax treatment even amid volatility, Watson said — a plus for the notoriously boom-and-bust oil industry. “You are going to see the biggest benefits for firms like oil and gas that are seeing volatile profits — and now, of course, extreme losses,” he said.
The combination of big losses now and the congressional tax changes mean it may be years before some oil companies have to pay corporate income taxes at all.
“We’re going to have some large losses this year,” ConocoPhillips Executive Vice President Don Wallette said in an April 30 earnings call. The company is in “a zero-tax-paying position in the U.S. and expect to remain there for quite some time,” Wallette said.
There’s no limit on how the new refunds can be used — and even bankrupt firms can get them.
Consider Diamond Offshore. Once one of the world’s largest drilling rig contractors, it filed for Chapter 11 bankruptcy protection on April 26 after crude prices plunged along with demand for its high-tech drillships.
In a first quarter filing, Diamond, which is majority owned by Loews Corp., said it had recognized a tax benefit of $9.7 million as a result of the carryback change. In an emergency motion filed with a federal bankruptcy court May 1, the company asked for the freedom to dole out $16.7 million in cash incentives to 85 of its 2,300 full-time employees, including as much as $9.7 million for nine senior executives.
The company said at the time that deteriorating market conditions and the collapse of Diamond’s stock had made its existing equity-based bonus program “largely worthless.” The tax filing did not specify how the $9.7 million would be used.
Dozens of other oil businesses have reported reaping the benefits, including $55 million for Denver-based Antero Midstream Corp., $41.2 million for supplier Oil States International Inc. and $96 million for Oklahoma-based producer Devon Energy Corp.
Occidental Petroleum, which enlisted its employees to ask Congress to “provide liquidity to the energy industry,” said it now anticipates a cash refund of about $195 million as a result of the carryback provision and a separate change in the stimulus bill that allows the immediate refund of unused alternative minimum tax credits. An Occidental spokesperson declined to comment.
Millions in Refunds
National Oilwell Varco Inc., a manufacturer of oil and gas equipment, expects a $123 million refund by carrying back its 2019 losses and applying them to its 2014 tax filing.
San Antonio-based refiner Valero Energy Corp. recognized an extra $110 million by carrying back losses to 2015 — when the corporate tax rate was 35% instead of the current 21%.
Valero spokeswoman Lillian Riojas said that is tied to tax losses generated in the first quarter, since the company did not generate a net operating loss for federal income tax purposes in 2018 or 2019. And she said the actual refund will be dependent “not only on the company’s performance for the remainder of the year, but also on the impact” of other tax provisions.
The benefits are “turbo-charged,” said Rosenthal, with the Urban-Brookings Tax Policy Center. That’s because businesses can carry back losses to offset income at a higher corporate tax rate of 35%, before the 2017 tax cut law lowered it 14 points. “Getting those losses at 35% is very, very favorable — especially in 2020 when the losses are going to be devastatingly large.”
The filings themselves reveal only part of the picture. Private companies are able to generate tax refunds too — without disclosing it to the SEC. And while some public companies said they benefited from the tax break, they didn’t reveal by how much.
For instance, refiner Phillips 66 boasted an effective income tax rate of just 2% for the first quarter — well below the federal statutory income tax rate of 21% — partly because of the carryback. But the company did not specify the amount of its expected refund.
Dennis Nuss, a spokesman for Phillips 66, declined to comment when reached by phone Thursday. Representatives for Oil States, National Oilwell Varco, Antero and Devon didn’t respond to messages seeking comment.
The importance of the provision hasn’t been lost on President Donald Trump’s administration. Energy Secretary Dan Brouillette recommended oil companies consider taking advantage of the expanded deduction in an April 21 interview with Bloomberg TV, calling it one of several “important liquidity tools that are going to help the industry.”
Congressional tax analysts initially estimated that the expanded loss carryback provision would cost $25 billion over 10 years — just when used by corporations. Now, some are questioning whether the final pricetag could be much higher, and Democrats are seeking to limit the value of the tax break after raising concerns it overwhelmingly helps corporations and the wealthy.
In a new stimulus bill advanced Tuesday, House Democrats proposed scaling back the provision so companies could only apply losses back to 2018. Their plan also would prevent companies with “excessive” executive compensation or stock buybacks from claiming the tax break — a change that would be retroactive back to March.
Rosenthal stressed that it was logical for Congress to help businesses that were profitable before the pandemic. “But the CARES Act goes too far, tilting its benefits overwhelmingly to the wealthiest Americans,” he said in an essay. “I think Congress did not know the extent of what it was doing.”
— With assistance by Ari Natter, Laura Davison, David Wethe, Kevin Crowley, Leslie Pappas, and Rachel Adams-Heard
As countries across the world go into lockdown in response to Covid-19, economies are in free fall. Almost every sector is taking a hit, hemorrhaging jobs and value. And almost every sector will be shaped, for years to come, by the speed, amount, and nature of public assistance it receives. There is a finite amount of time, resources, and political will available to get economies going again; not every sector will get what it wants or needs.
In short, the decisions legislators make in response to the coronavirus crisis will have an enormous influence on what kind of economies emerge on the other side.
In this post, I want to take a look at why it is equally shortsighted for President Trump and congressional Republicans to remain so devoted to the fossil fuel industry.
The dominant narrative is still that fossil fuels are a pillar of the US economy, with giant companies like Exxon Mobilproducing revenue and jobs that the US can’t afford to do without. Even among those eager to address climate change by movingpast fossil fuels to clean energy— a class that includes a majority of Americans — there is a lingering mythology that US fossil fuels are, to use the familiar phrase, too big to fail.
But the position of fossil fuels in the US economy is less secure than it might appear. In fact, the fossil fuel industry is facing substantial structural challenges that will be exacerbated by, but will not end with, the Covid-19 crisis. For years, the industry has been shedding value, taking on debt, losing favor among financial institutions and investors, and turning more and more to lobbying governments to survive.
It is, in short, a turkey. CNBC financial analyst Jim Cramerput it best, back in late January, before Covid-19 had even become a crisis in the US: “I’m done with fossil fuels. They’re done. They’re just done.”
“We’re in the death knell phase,” he said “The world has turned on [fossil fuels].”
Cramer’s take is not yet conventional wisdom, but he’s right. Evidence in support appears in a new report from the Center for International Environmental Law (CIEL) called “Pandemic Crisis, Systemic Decline.” Let’s walk through it.
Fossil fuels are furiously lobbying for, and receiving, largesse from the US government
The UK-based think tank InfluenceMap recently did an analysis that tracks corporate lobbying in the face of the Covid-19 crisis. It found that, across the globe, the oil and gas sector has been the most active in lobbying for interventions, seeking, as CIEL summarizes, “direct and indirect support, including bailouts, buyouts, regulatory rollbacks, exemption from measures designed to protect the health of workers and the public, non-enforcement of environmental laws, and criminalization of protest, among others.” In Canada, Australia, and the UK, the industry is arguing that it must be subsidized and deregulated in order to survive.
In the US alone, the industry is seeking access to a range of stimulus funds, relief from a variety of pollution regulations, and use of the strategic petroleum reserve to bolster prices. Journalist Amy Westervelt is tracking at least a dozen other lobbying efforts.
The petrochemical and plastics industry, which is in large part an extension of the oil and gas industry, is exploiting the crisis as well. It has lobbied the federal government to declare an official preference for single-use plastic bags and suggested that more fresh produce should be wrapped in plastic.
Across the board, the administration is doing everything it can to help fossil fuels. But it’s a mug’s game. The industry is faltering for reasons that well predate Covid-19.
Fossil fuels were already facing structural problems before the coronavirus
US coal is in terminal decline, for reasons I’ve written about many times before. No amount of stimulus money or weaker pollution regulations can save it.
But on the surface, things look different for oil and gas. Thanks to fracking, production has been booming for the past decade, vaulting the US ahead of Saudi Arabia and Russia to become the the world’s leading oil and gas producer.
And the same goes for petrochemicals and especially plastics, which have been forecast to be the main drivers of rising petroleum demand in coming years. The industry has issued rosy projections of plastics’ growth and invested $200 billion in new petrochemical and plastics infrastructure.
But dig below the surface and things don’t look so good.
First, fracking was a financial wreck long before Covid-19 hit. US fracking operations have been losing money for a decade, to the tune of around $280 billion. Overproduction has produced a supply glut, low prices, and an accumulating surplus in storage.
Since 2015, over 200 drillers have gone bankrupt, with 32 declaring bankruptcy in 2019. At the beginning of 2020, the industry continued to struggle as natural gas prices remained low due to sluggish demand growth. By the end of the first quarter, another seven drillers had declared bankruptcy, six additional drillers had their credit outlook downgraded, and several major banks had written down the expected value of many drillers’ reserves. A recent analysis from Rystad Energy indicated that, at prevailing oil and gas prices, almost all new fracking wells drilled would lose money.
Even as its prospects grow dimmer, the enormous debt the industry has taken on over the years is coming back to bite it. Some $40 billion will come due this year alone, and around $200 billion in the next four years. In the hours after this article was first published on April 20, oil futures for May fell to negative prices. Mind-boggling.
Second, both oil and gas prices were persistently low leading into 2019. Due to oversupply and mild winters in the US and Europe, there is a glut of both natural gas and oil, such that the entire world’s spare oil storage is in danger of being filled. Many big oil deals in “frontier countries” with as-yet-unexploited reserves, like Guyana, Argentina, and Mozambique, are falling through as low prices drag on.
Third, renewable energy and electric vehicles are threatening oil and gas’s dominance in both transportation, which represents 70 percent of global demand, and electricity. Natural gas’s status as a “bridge fuel” in the power sector is in increasing doubt; since 2014, orders for new gas turbines (to generate power) have fallen by half. As for transportation, a recent report from the international banking group BNP Paribas concluded that “the economics of oil for gasoline and diesel vehicles versus wind- and solar-powered EVs are now in relentless and irreversible decline.”
Fourth, oil and gas majors are revealing their own weakness by writing down assets — effectively conceding that certain reserves cannot be profitably exploited. In 2019, Chevron wrote down $11 billion worth; Spanish oil company Repsol recently wrote down $5 billion worth. Exxon Mobil, after adding Canadian tar sands assets to its books in 2017, reversed course and wrote down 3.2 billion barrels last year.
Fifth, financial institutions — “institutional and retail investors, banks, insurers, and credit rating agencies” — are catching wind of fossil fuels’ weakness and beginning to back away. Many, like Wells Fargo, BlackRock, the European Investment Bank, and the World Bank Group, are restricting investments in carbon-intensive projects. As of March 2020, asset investors worth $12 trillion had declared that they would divest from fossil fuels.
As financial institutions divest, the ones still invested in carbon-intensive projects face increasing vulnerability to lawsuits charging them with ignoring material risks. “As the risks of investing in the oil and gas sector become ever more apparent,” CIEL writes, “more and more investors subject to fiduciary duties will likely choose to steer clear of these companies.”
Like these other dismal trends, the financial turn from fossil fuels was underway well before Covid-19. Over the past decade, companies in the sector have spent more on stock buybacks and dividends than they have brought in through revenue, leading to a greater and greater debt burden. Declining confidence in the sector has made it the worst-performing sector on the S&P Index.
Finally, plastics, the great hope of the oil and gas sector, do not appear to be growing fast enough to justify the industry’s optimistic projections. Much of the US plastics industry is geared for export, but countries across the world (127 and counting) are adopting restrictions on single-use plastics. The most recent such restrictions were adopted by China, the world’s largest plastic producer and consumer. Plastics, like oil and gas, are suffering from the dual malady of overexpansion and underconsumption.
As an example that encompasses all these structural problems, CIEL cites Exxon Mobil. The company’s plan for growth involves growth in its petrochemical operations, which is now in doubt; fracking in the Permian Basin, which is now in doubt; and expanding oil production in Guyana, which is now (owing to political instability) in doubt.
All these doubts are converging as Moody’s recently revised the company’s outlook to negative. It fell out of the S&P’s top 10 for the first time, its stock hit its lowest price in a decade, the rapid rise of renewables and electric vehicles rendered billions (and perhaps soon trillions) of dollars of its assets worthless, and it is keeping shareholders happy with debt-financed dividends. The Institute for Energy Economics and Financial Analysis found that over the past decade, Exxon Mobil has spent $64.5 billion more on payouts to stockholders than it earned in free cash flow. That can’t go on much longer.
Again: All of these structural trends predate Covid-19. But the global lockdown in response to the virus has accelerated all of them.
Oil and gas are caught in a historic downturn
Into this already dismal situation for fossil fuels came the virus and the subsequent lockdown. The vertiginous plunge in consumer demand has hit every sector of the economy, but oil and gas, already facing oversupply and persistent low prices, were particularly vulnerable.
“Oil, gas, and petrochemical stocks have been affected more rapidly and much more deeply than almost any other sector,” CIEL writes. “The oil and gas sector lost more than 45% of its total value from the beginning of January to early April 2020.”
The already declining stocks of Exxon Mobil, Royal Dutch Shell, and Occidental Petroleum were sent tumbling even faster. In July 2014, Exxon stock hit a high of $107; as of early April 2020, it was at $42, its lowest level in decades.
Transportation represents 70 percent of petroleum consumption, but no one is moving. Rystad Energy estimates that as of March 2020, global traffic is down 40 percent. As lockdowns remain, that number will likely drop further.
Air travel has been the fastest-growing source of demand for transport fuels, but no one is flying. “In the final week of March 2020,” CIEL writes, “commercial air traffic was almost 63% lower than in 2019.”
Public health officials warn that there could be periodic outbreaks for months or even years. Meanwhile, there are rapid advances being made everywhere in the infrastructure, technology, and practices of working remotely, from home. It’s entirely possible that auto and air travel won’t reach their pre-virus levels in the US for years, if ever.
Travel by ship is also taking a hit. Cruise ships, beset by a series of viral horror stories, have suspended operations and many analysts doubt they will ever fully recover.
Meanwhile, oversupply, exacerbated by the drop in demand, is taxing the nation’s storage capacity — the International Energy Agency says global capacity is about 85 percent full. “Nearly all observers have concluded that at projected levels of demand destruction,” CIEL writes, “the total global capacity for storing unneeded oil and gas will soon be exceeded.” At that point, many producers will be forced to simply shut down operations and write-downs will accelerate.
When storage capacity runs out, producers are forced to pay people to take oil off their hands. (Raise your hand if you had “negative oil prices” on your 21st-century bingo card.) Even if storage doesn’t completely run out, it will be close to full, serving to suppress prices, for years. Petrochemicals and plastics don’t have it much better, with major investors delaying or dropping out of projects left and right.
“In the medium term,” CIEL writes, “the prospect of a full recovery for many of these revenue streams is, at best, uncertain, and, in many cases, unlikely.” Fossil fuels and petrochemicals could struggle for years.
And even if they eventually manage to achieve something like their pre-virus trajectory, that trajectory was sloping downward. As CIEL summarizes: “the pandemic exposes and exacerbates fundamental weaknesses throughout the sector that both predate the current crisis and will outlast it.”
Wasting stimulus money on fossil fuels makes no sense, so Trump will probably do it
Slowly but surely, the world is beginning to take global warming seriously, shifting attention and investment to materials and sources of energy that do not produce greenhouse gas emissions. As more and more jurisdictions, institutions, and investors turn away from fossil fuels, explicitly citing climate change, those left holding carbon-intensive assets will become targets of increasingly intense legal and civic activism holding them responsible for the damages.
CIEL concludes with recommendations to investors, frontier countries, and local communities: Take heed of fossil fuels’ long-term weakness when making decisions about the future. CIEL also argues that public officials “should not waste limited response and recovery resources on bailouts, debt relief, or similar supports for oil, gas, and petrochemical companies.”
Given the well-established inclinations of Trump and congressional Republicans, that recommendation is likely to fall on deaf ears, at least in the US. If Democrats do not muster the courage to stop them — and it does not seem they will — the GOP is likely to continue showering the fossil fuel industry with favors while dismissing aid to the clean energy industry as frivolous.
At best, they can slow down the transition to clean energy a bit. They cannot stop it. Adding stimulus money to fossil fuels’ already subsidy-rich diet will allow a little more pollution and a little more damage to public health for a little longer, but it’s only a delay. Meanwhile, other countries will be establishing a commanding position in some of the biggest growth industries of the 21st century.
It would be a shame to emerge from this crisis still clinging to the past rather than facing, and preparing for, the future.
Update, April 20, 4 pm ET: After this article was first published, oil futures fell to negative prices.
Thousands of Americans are dying, millions have filed for unemployment, and frontline health care workers are risking their lives as the coronavirus pandemic sweeps across the U.S. In the midst of this crisis, the fossil fuel industry, particularly the oil and gas sector, has been actively seeking both financial relief and deregulation or dismantling of environmental protection measures.
A new briefing by UK-based think tank InfluenceMap summarizes this fossil fuel lobbying during the time of the pandemic, pointing to specific examples of how fossil fuel interests around the world are using the cover of the coronavirus crisis to advance their agenda.
InfluenceMap, which tracks and measures corporate influence over climate policy, focused on recent corporate lobbying for both financial interventions and relating to climate or energy regulations. “The oil and gas sector appears to be the most active globally in the above two lobbying areas, demanding both financial support and deregulation in response to the COVID-19 crisis,” the report states.
In the U.S., the top oil and gas producer in the world, this activity has been particularly pronounced. While the oil and gas sector is struggling amid plummeting prices and demand, the struggle is due to factors far beyond the pandemic, and mostly of the industry’s own making.
Nevertheless, the Trump administration and Republican lawmakers have looked to use the COVID-19 crisis as an excuse to shore up the petroleum producers. In mid-March, the President announced his intention to buy up crude oil to fill the government’s Strategic Petroleum Reserve, which Democrats and climate advocates slammed as a reckless bailout of Big Oil.
Republicans in Congress tried unsuccessfully to give away $3 billion in the recent economic stimulus package to fund that emergency oil stock-up, but the package still contains nearly $500 billion for broad corporate interests with little oversight that oil companies will likely look to access. Senator Lisa Murkowski (R-AK), chair of the Senate Committee on Energy and Natural Resources, sent a letter on April 1 to Treasury Secretary Steve Mnuchin urging him to use the CARES Act stimulus funds to support oil and gas companies.
The rapidly declining coal industry, with many companies already bankrupt, has likewise turned to the government for financial assistance. The National Mining Association wrote to President Trump and Congress asking to suspend royalties and fees, including payments that support victims of black lung disease. Congress did not include the trade group’s requests in the stimulus package, but the group has said it will continue to make its demands.
Beyond seeking their own financial relief through the government’s coronavirus response, fossil fuel interests are using front groups to push back against attempts to include clean energy or climate-related measures in the economic relief bills.
“U.S.-based think tanks linked to fossil fuel-based interests such as [the] Koch brothers have been active in opposing support for green energy programs in the U.S. federal government’s response to the crisis,” InfluenceMap said in a emailed statement. The InfluenceMap briefing cites a new project of the Texas Public Policy Foundation (TPPF) called Life:Powered, which promotes fossil fuels and was originally launched under the name “Fueling Freedom” in 2015 “to combat the Obama-era Clean Power Plan.”
A coalition of over two dozen right-wing, free market think tanks, led by TPPF and the Competitive Enterprise Institute, sent a letter to Congress on March 23 under the umbrella of the Life:Powered project urging lawmakers to reject any incentives or support for “unreliable ‘green’ energy” in the latest stimulus package. The letter includes several false claims about renewable energy and argues, “climate change is not an immediate threat to humanity.”
Some of these same conservative free market groups, members of the State Policy Network, have been buying ads on social media attacking efforts to use the COVID-19 economic relief efforts to also address climate change, which medical experts have said poses “unprecedented threats to public health and safety.”
Deregulation is another form of assistance the oil and gas industry has pursued. And whether by weakening existing climate policies like Obama-era clean car standards or waiving environmental compliance requirements, the Trump administration has granted much on the industry’s wish list.
One example cited in the InfluenceMap briefing is the Environmental Protection Agency’s (EPA) recent policy suspending civil enforcement of environmental rules and relaxing compliance requirements. The American Petroleum Institute sent a letter to President Trump and EPA Administrator Andrew Wheeler specifically asking for relief from environmental compliance.
Outside the U.S., corporate interests including oil and gas have also used the pandemic to lobby for their agendas, which run counter to the Paris climate agreement and actions necessary to address climate change. Examples cited in the InfluenceMap briefing include:
The European Automobile Manufacturers Association (ACEA) recently sent a letter to the president of the EU Commission asking for laxer timelines for complying with the EU vehicle climate regulations.
“Oil and Gas UK produced a business outlook report that referenced the COVID-19 crisis, while arguing that protecting the UK oil and gas industry is essential in ensuring the sector can contribute to providing the UK with net-zero emissions solutions.”
“The Australian Petroleum Production and Exploration Association Chief Executive Andrew McConville referenced the need for measures to ensure economic recovery from COVID-19 pandemic while commenting in favor of a draft government commission report published on Australian resource sector regulation. APPEA stated support for a number of findings, including advice against bans on natural gas exploration. McConville argued the report constituted an ‘an important contribution as we consider vital recovery measures.’”
Several Canadian oil and gas companies and the Business Council of Alberta are calling on the Canadian federal government to postpone any regulatory changes or tax increases including a planned increase to the carbon tax. The Canadian Association of Petroleum Producers has also been gunning for a $15 billion bailout package from the federal government.
Trump Meets With Oil CEOs
President Trump is scheduled to hold an in-person meeting Friday, April 3 with the heads of leading oil and gas companies to discuss their concerns, such as the Russia-Saudi Arabia oil price war and depressed demand as a result of the pandemic response.
According to Greenpeace USA, the executives expected to meet with Trump personally earned at least a combined $100 million in 2018 alone between salaries, bonuses, stock options, and other compensation.
In honor of the Oil CEOs who are going to the White House to beg Trump for corporate bailouts, here’s a running list of terrible things the fossil fuel industry has been doing during the #COVID19Pandemic
“Where the rest of the world sees a global health and economic crisis, fossil fuel CEOs see an opportunity to line their pockets,” Greenpeace USA Climate Campaign Director Janet Redman said in a statement. “We cannot let our government’s response to the COVID-19 pandemic be driven by corporate executives looking to exploit a crisis for their own gain instead of supporting health care providers and working families. Nurses need masks. Hospitals need ventilators. Workers need paychecks. People need help all over this country. And what is Trump doing? He’s making sure oil executives have golden pandemic parachutes. It’s disgraceful.”
You must be logged in to post a comment.