New York, N.Y. — Environmentalists are blasting attempts by oil and gas companies to hijack the Fed’s Main Street Lending Program in order to pay down their debt — debt that began skyrocketing long before the coronavirus impacted the industry.
“Big Oil is looking to steal as big a piece of the stimulus as possible. While first responders work without hazard pay or PPE gear, polluters are looking for a lifeline from taxpayers for their failing industry,” said Lukas Ross, Friends of the Earth Senior Policy Analyst.
According to reporting from Reuters, the Independent Petroleum Association of America (IPAA) is asking the Fed “to reconsider a provision that bars eligible borrowers from using the cash to repay other loan balances and requires borrowers to promise to repay the Fed before other debt of equal or lower priority.” In other words, they’re looking to take the money, use it to pay pre-existing debts, and run.
“This is nothing more than a greedy grab of the people’s bailout by some of the wealthiest corporations in the world,” said Tamara Toles O’Laughlin, North America Director of 350.org. “Big Oil is trying to protect profits for money hungry executives by siphoning dollars desperately needed by small and medium-sized businesses. This isn’t just bad for everyday people, it’s terrible for our climate. It’s time to invest in a renewable energy economy that works for everybody. And it’s past time to stop propping up polluters. Government support should go directly to people losing jobs, wages, and suffering from lack of access to healthcare, not to help pay the debts of billionaires.”
Economists and experts are in widespread agreement that the economic collapse of the oil and gas sector is due to long term structural problems that have only been exacerbated by the coronavirus pandemic and oil price war. Over the last decade the industry has taken on enormous debt while spending billions on massive stock buybacks and dividend payments, and continued to pour money into new production, despite clear warnings that their trajectory endangers the planet, economy, and their own viability.
“This week’s price crash is not just another boom and bust cycle — economists have warned that fossil fuels are a risky investment for years,” said Jack Shapiro, Greenpeace USA Senior Climate Campaigner. “No matter what Trump and climate deniers in Congress do, the transition from oil and gas to renewable energy is inevitable. Justice for workers and communities is not, especially if fossil fuel executives are allowed to write the rules. We must do everything we can to ensure oil CEOs don’t escape with a golden parachute while their workers are left to foot the bill. Congress must guarantee that not a cent of taxpayer money will go to the corporations that created and profited from the climate crisis.”
A report released earlier this week by the Center for International Environmental Law, “Pandemic Crisis, Systemic Decline, Why Exploiting the COVID-19 Crisis Will Not Save the Oil, Gas, and Plastic Industries,” even before the present crisis, oil, gas and plastics companies showed clear signs of systemic weakness, including long-term underperformance on stock markets, massive accumulations of corporate debt, and rapidly slowing growth.
“Oil and gas companies came into this crisis already saddled with hundreds of billions in corporate debt, fracking wells that were leaking cash, a decade-long stock slump, dwindling investor confidence and a business model fundamentally incompatible with a liveable world. No amount of public money can reverse those trends. Throwing taxpayer dollars down such an unfillable hole at a time of national and global crisis is as unconscionable as it is pointless,” said CIEL President Carroll Muffett.
The paper makes clear that diverting COVID-19 support to oil, gas, and plastic companies will take money away from much-needed public health initiatives, and ultimately won’t save these failing industries, as the underlying trends spell long-term decline for oil, gas, and petrochemical companies.
“The oil industry and its financiers have long subordinated protecting the climate and respecting indigenous peoples to their desire for short-term profit. Now they want a bailout when their badly-managed finances are collapsing. This not the time to bail out a failing and harmful industry; it is the time to take care of those most impacted by the Covid-19 pandemic and make our economic and health systems more resilient to the coming climate crisis,” said Moira Birss, Climate and Finance Director at Amazon Watch.
Attempting to hijack a bailout designed to benefit small businesses is just the latest attempt by the oil and gas industry to profit off of federal bailout programs. Since the outset of the coronavirus, the fossil fuel industry has attempted to profiteer off the crisis, lobbying the Trump administration for bailouts and the rollback of environmental protections, while pushing forward with the construction of dangerous projects like the Keystone XL pipeline. This morning, President Trump tweeted that he has instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available to the oil and gas industry.
“The fossil fuel industry wants us to believe its financial woes are just the result of COVID-19, but that’s a lie — these problems have been mounting for years as oil companies and banks made ever-riskier bets on extraction projects hurting communities and wrecking the climate,” said Collin Rees, Senior Campaigner at Oil Change International. “The only special treatment the Fed or any other bank should give the oil and gas industry is an automatic hard pass.”
This latest move by oil and gas companies is a clear reminder why it’s essential that Congress provide better oversight of the Fed bailout programs. That’s especially true for Fed programs that will be managed by Wall Street financial institutions. Groups with the Stop the Money Pipeline campaign have already raised alarms about BlackRock’s management of the Fed’s multi-billion dollar debt purchasing program, moves by the Commodities Futures Trading Association to bailout banks for risky bets in the oil and gas sector, and the news that major US banks are considering direct ownership of oil and gas companies.
“So we’re in a pandemic realizing how fragile we are in this wide world, how much our families and our loved ones matter to us. The federal government bailing out the industries destroying our only home, the only home of generations yet to come, is unconscionable,” said Tara Houska, founder of Giniw Collective. “Mother Nature has reminded us of our place in creation, we should listen.”