Recently, the Federal Reserve announced that it would be loosening its lending guidelines so that more corporations, even those with massive pre-existing debts, could take part in the bailout feeding frenzy. As Alexis Goldstein explains, the main beneficiary of these changes was the group that lobbied hardest for them: the fossil fuel industry. Of all the reasons why coal, oil and gas companies don’t deserve more public support, there’s one that’s particularly glaring: they’re already getting it. That’s right: Every year, for over a century, these companies have gotten tens of billions of dollars in bailouts. They’re just called something different: subsidies.
The level of existing government support for the fossil fuel industry is so widespread that it’s difficult to calculate. Oil Change International, which has tracked fossil fuel subsidies for years, estimates that direct U.S. government subsidies to oil, gas and coal companies total around $20 billion a year. These figures don’t account for the high costs that fossil fuels impose on our environment and public health, nor the $81 billion the military spends each year on defending oil reserves overseas, costs that all end up being borne by the public.
When you factor these costs to get a sense of the total subsidies the industry is receiving each year, the numbers skyrocket. According to a 2019 working paper by the International Monetary Fund, the true cost of U.S. fossil fuel subsidies is something closer to $649 billion a year. That’s nearly 10 times the Department of Education’s budget ($68 billion). It’s also roughly 15 times the $42 billion that went to the National Institutes of Health in 2020.
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These subsidies have gone on in various forms for over a century. Over that time, have oil and gas companies used this extravagant government support to create a stable energy industry that sustains workers and communities so they’re well-equipped to weather crises like the current COVID-19 pandemic? No, just the opposite.
Over the last decade, oil and gas companies have been on a reckless spending spree, taking on huge amounts of debt to drill ever more wells and pump ever more carbon into the atmosphere. The resulting glut of oil has led to mass layoffs across the country. Between 2014 and 2016, long before COVID-19 and the current price war, oil and gas companies laid off 195,000 workers because of cheap oil prices — and many of these jobs never returned when prices increased. Oil and gas companies also failed to deliver for investors, including the millions of Americans who own stocks in the sector because their pension funds have yet to divest from fossil fuels: As a category, oil and gas stocks placed dead last in the S&P 500’s index from 2010 to 2019.
So, who’s really benefiting from these lavish government subsidies? The CEOs, of course.
According to the Houston Chronicle, “If the 10 Houston executives who made the most in 2018 were punching a time clock, they each would’ve made about $8,600 an hour.” In other words, oil and gas CEOs made more in nine minutes than the $1,200 the government is sending to Americans impacted by COVID-19. Whiting Petroleum Corp, the first major fracking company to go bust during the crisis, provided $14.6 million in cash bonuses for top executives, including $6.4 million for CEO Brad Holly, just days before filing for bankruptcy.
On top of these pre-existing subsidies, the Trump administration has already taken dozens of actions since the COVID-19 pandemic began in order to help oil and gas companies, often at a cost to the environment and public health. We’ve been documenting these handouts at NoBigOilBailout.com, and the list goes on for pages. Here are just a few:
- On March 25, the Trump administration provided “regulatory relief” from the Toxic Substances Control Act for chemical and petrochemical manufacturers.
- On March 26, after lobbying by the American Petroleum Institute, Trump’s Environmental Protection Agency (EPA) stopped enforcing environmental and public health protections indefinitely.
- On March 27, Trump’s EPA announced it is allowing the sale of dirtier “winter fuel” gasoline during the COVID-19 shutdown, worsening air quality in the midst of a respiratory virus pandemic.
- On April 16, Trump’s Department of Transportation initiated a rollback of pipeline safety rules, including the creation of spill response plans.
- On April 21, Trump’s EPA finalized its rollback of wetland and stream protections, weakening clean water requirements for various industrial facilities, including power plants and petrochemical plants.
Now, Big Oil and its allies in Congress are lobbying for even more handouts. Ahead of a meeting for oil and gas executives at the White House this April, a group of more than 40 House Republicans wrote a letter to the administration, urging it to boost support for fossil fuels (the letter neglected to ask for any support for clean energy workers, 100,000 of whom lost their jobs in March). They’re no doubt salivating over the latest rule changes at the Fed, which allow fossil fuel companies, no matter how nightmarish their balance sheets, to suck up money that was meant for small businesses. Meanwhile, Trump is still busy tweeting that he will “never let the great U.S. Oil & Gas Industry down” and that he’s instructed his administration to “formulate a plan.”
A real plan for the oil and gas sector would involve immediately halting industry expansion and gradually winding down production in line with the Paris agreement target of limiting planetary warming to 1.5 degrees Celsius, while providing workers and local communities with a just transition. Whether that comes through nationalization, as some have suggested, or strict regulation, as others have championed, seems less important than the overall goal: ending our dependence on the fossil fuel industry so that we can address the other great global crisis we face — the climate emergency.
This plan would start with finally ending all fossil fuel subsidies and government handouts, as United Nations Secretary General António Guterres and many others have repeatedly called for, and G20 nations have promised to do for over a decade. Because no matter how you calculate it, we can’t afford to keep bailing out the fossil fuel industry and picking up the tab for its destructive behavior. The industry has already received trillions of our public dollars — it doesn’t deserve a penny more.