‘A $100 Billion Lifeline While Most Americans Are Being Left Behind’
“Big Oil is exploiting Covid-19 to go on an unprecedented borrowing binge, and the Trump administration is to blame.”
Thursday, October 1
Oil and gas companies have issued nearly $100 billion in bonds since the Fed launched its corporate rescue program in March, according to a new analysis, a no-strings-attached bailout of the fossil fuel industry pushed by the Trump administration.
While the central bank refused this summer to release documents revealing the extent to which oil and gas companies took advantage of the Fed’s so-called Main Street Lending Program as requested by environmental group Food & Water Action, an internal government watchdog report published last week demonstrated that the fossil fuel industry benefited disproportionately from the Fed’s bond purchasing program, as Common Dreams reported.
The analysis by Friends of the Earth, Public Citizen, and BailoutWatch focuses on bonds issued by dirty energy companies, which were already heavily indebted before the coronavirus pandemic arrived and were then hit hard by falling prices, plunging demand, and global oversupply.
Researchers found that a total of 56 oil and gas companies have issued $99.3 billion of bonds since the Fed initiated its bailout of corporate debt markets in March. As of late August, the central bank has purchased just over $355 million in fossil fuel bonds.
A spreadsheet listing all of the energy bond issuances since March 23 can be found here.
According to the report, the “easy money” provided by the central bank includes “a wave of refinancing often resulting in later payment deadlines, substantially lower borrowing costs, or both.”
“In effect,” the Fed’s emergency financing is “forestalling the demise of an industry that has always relied on government largesse” the report notes.
“Fossil fuel companies are still headed for a financial cliff, but this bailout handed them a bit more road,” said Dan Wagner, editor of BailoutWatch. “This is prolonging the life of the fossil fuel industry at a time when it needs to be phased out for communities and the climate.”
Earlier this year, numerous progressive lawmakers and climate advocates made the case for turning the unique circumstances surrounding the Covid-19 crisis into an opportunity to “wind down this abusive industry that has always relied on massive public subsidies” and “cover the full salaries of fossil fuel workers while they retrain for the clean economy,” as Naomi Klein put it this spring.
“The response here should be to rescue the workers and provide relief to state and local governments straining to meet the many challenges of this pandemic at the same time as their revenues decline sharply,” David Arkush, managing director of Public Citizen’s climate program, said in late April. “It should not be to rescue reckless, polluting, humanity-endangering, and often dishonest companies that were in plenty of trouble of their own making well before this pandemic began.”
“The real concern in the oil and gas industry,” Arkush explained, “is that workers are losing jobs, as they are in so many other sectors.”
President Donald Trump feigned concern for employees in the fossil fuel industry in April when he tweeted about securing oil and gas jobs “long into the future,” but new reporting from the Daily Poster reveals the hollowness of Trump’s alleged commitment to the well-being of energy workers.
We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!
— Donald J. Trump (@realDonaldTrump) April 21, 2020
In early May, the Interstate Oil and Gas Compact Commission, a coalition of 31 oil-producing states, asked the Trump administration for federal funds to hire laid off energy workers to plug over two million abandoned oil and gas wells, which “pose serious environmental and safety risks if left to leach pollutants into the air and water,” as Reuters explained.
“Instead, the Trump White House funneled nearly $100 billion in bailouts to oil and gas corporations through the Federal Reserve,” the Daily Poster pointed out.
The Trump administration’s efforts to divert federal aid to Trump-supporting fossil fuel executives and investors “stands in stark contrast to the lack of Covid-19 assistance for ailing American families,” Friends of the Earth, Public Citizen, and BailoutWatch said in a joint statement.
Big Oil’s $100 billion “bender” could also leave state governments “on the hook for up to a quarter trillion dollars to plug methane-leaking wells that fossil fuel corporations have abandoned” and “aren’t going to be able to afford” to remediate, according to the Daily Poster, which analyzed a study released Thursday by Carbon Tracker.
“This bailout is an unprecedented rescue of a dying industry,” said Alan Zibel, research director of Public Citizen’s Corporate Presidency Project. “Instead of bailing out climate-destroying fossil fuel companies, we must assist small businesses, local governments, and individuals facing dire financial straits.”
Lukas Ross, program manager with Friends of the Earth, said that “Big Oil is exploiting Covid-19 to go on an unprecedented borrowing binge, and the Trump administration is to blame.”
“Polluters are getting a $100 billion lifeline,” he added, “while most Americans are being left behind.”
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