The $2 trillion stimulus bill that Congress passed on March 27 gave billions to industries like the airlines, but it did not explicitly give money to the oil and gas industry. Senate Democrats negotiated out the $3 billion to oil and gas (and lost clean energy provisions in the meantime) that Trump wanted to fill oil reserves “to the top.” The omission was a tiny win for the climate — kind of — but not really.
According to the American Petroleum Institute (API), the industry didn’t even want the money to begin with. Bailouts, as CEO of API Mark Sommers told CNN, explaining the industry’s rationale, can come with strings attached. For instance, in 2008, the banking and auto industry bailouts came with cuts to executive pay and plant closures. “They will never live that down,” said Sommers. Ironically, the oil and gas industry will probably end up getting money anyway, as Amy Westervelt of Drilled News points out.
Why would the API reject money in an extremely precarious time for the industry? Under the right governance, the strings that Sommers references could potentially be bad news for the oil industry — and a great tool for the climate movement. A bailout with massive strings attached could be the beginning of a much larger transformation, when it comes to the government’s relationship with harmful industries.
Among the masses of stimulus ideas all over the political spectrum, one progressive idea is quietly gaining traction: a partial or majority-public takeover of failing or otherwise harmful industries like fossil fuels, otherwise known as nationalization.
“The nationalization of the fossil fuel industry — it has moved, within a few years, from the margins to the mainstream in a way that I think a lot of people could not have projected,” says Johanna Bozuwa, co-manager of the Climate and Energy Program at The Next System Project. Recently, climate writer Kate Aronoff wrote a fossil fuel nationalization proposal that made the rounds online, and advocacy group Food and Water Action recently released a statement supporting fossil fuel buyouts.
Nationalization of the fossil fuel industry could be a key tool in the climate fight, a way for the government to effectively push down emissions and overstep the protests of the money-grubbing oil and gas corporations. Besides, government money for the oil and gas industry is nothing new: It has propped up these companies for ages. “In a way,” Aronoff wrote, “nationalization would merely involve the government correcting for nearly a century of its own market intervention.” Buying up the four largest oil companies in the U.S would only cost about $300 billion, tweeted The Atlantic’s Annie Lowery — a small figure in the context of a $2 trillion stimulus. And it’s an opportune time to do so.
Economists have been expecting the likely upcoming — or ongoing — recession for over a year now, and coronavirus has simply sped up the process. In the meantime, says Amanda Novello, economist and senior policy associate at The Century Foundation, “progressive economists and climate activists have been thinking about [the recession] for a long time: What are we going to propose?” This preparation is part of the reason, Novello says, there’s been such a push by the climate movement for a jobs guarantee and a Green New Deal. However, though some gears can start moving to prepare for a jobs guarantee, the virus is stalling that mobilization. Nationalization, then, is another tool to reach climate goals while moving in the context of bailouts and a global crisis.
“If there was ever a moment for us to buy out the fossil fuel industry in order to keep us under 1.5 [degrees of warming] — I think this is one of the moments right now,” says Bozuwa. Another moment to set up conditions to decrease emissions and support the working class would have been the last recession — but the 2008 bailouts ended up serving corporations and the oil and gas industry in the end.
In 2008, the Federal Reserve set a precedent for the American oil and gas industry that the climate would not soon forget. As the Fed lent out billions of dollars to banks with low interest rates, banks poured those loans into billions of dollars’ worth of investments in shale corporations. The loans would end up snowballing into making the U.S. the largest oil producer in the world, thanks to the rise of fracking.
Over the last 12 years, the U.S. shale oil and gas companies have rarely turned a profit. They operate by borrowing with low interest rates, finding money to pay dividends, doing some questionable math and amassing large amounts of debt. The industry, already teetering on the edge, would undoubtedly be devastated by the current financial crisis without government help. Oil and gas companies are preparing for massive layoffs. Nationalization could provide an avenue to protect those workers while helping to manage the decline of the industry.
The concept of fossil fuel nationalization has become more visible lately in part due to myriad other nationalization ideas that have gained traction on the left. As part of his climate plan, Bernie Sanders has proposed taking over power companies to shift electricity generation to clean energy sources, and movements to nationalize utilities like PG&E have recently grown. Writers across the web have penned proposals to nationalize Facebook, Greyhound, Zoom, Amazon, the internet, airlines, and more. Even traditionally centrist figures like Rachel Maddow and Andrew Cuomo are talking about nationalizing the medical supply chain.
A nationalization plan has even been floated by Trump’s Treasury Secretary, Steven Mnuchin, who in mid-March indicated there was a possibility that the government might take equity stakes in airlines — which ended up in the economic stimulus package. This comes directly on the heels of Trump rejecting calls to nationalize the medical supply chain, however, and raises suspicion of the motives of the administration in taking over companies: Last minute changes by Mnuchin to the conditions of airline grants would, according to labor leaders, actually lead to job loss. Trump has also directed his Environmental Protection Agency to stop enforcing environmental laws indefinitely because of this pandemic, so there’s not much hope that his administration would use nationalization for climate goals.
In fact, just as the COVID-19 crisis was ramping up in the U.S., one of the first pieces of news regarding federal aid was that the White House would pursue money for the shale industry. If it wasn’t clear to the public before, it became clear then: The fight over stimulus bills and bailouts was also going to be about the climate, because most things are about the climate. The question is whether Democrats will take this moment to rally behind climate goals, worker protections or a Green Stimulus by way of popular ideas like nationalization, or whether they will let Republicans continue to prop up the creaky, failing status quo.