The US fossil fuel industry received billions in government bailouts to support companies during the coronavirus pandemic, according to a report.
The analysis by BailoutWatch, Public Citizen, and Friends of the Earth, titled Bailed Out & Propped Up, claims that President Donald Trump’s administration has backed the nation’s fossil fuel industry with between $10.4bn and $15.2bn in direct economic relief.
This comes as companies have been significantly challenged by the low oil prices, as the West Texas Intermediate (WTI) fell into negative price territory for the first time ever earlier this year, combined with a drastic drop in energy demand due to the pandemic.
26,000 US fossil fuel companies received government stimulus efforts
The report notes that more than 26,000 coal, oil, and gas companies benefited directly from government stimulus efforts, of which the majority received “forgivable loans” from the Small Business Administration’s Paycheck Protection Program, which dispersed up to $669bn to all types of companies in the hope that they would “keep workers on payroll”.
It added: “During a year of massive economic losses caused by climate change-driven wildfires and hurricanes, the US government has sent billions in pandemic-related economic aid to the fossil fuel companies most responsible for catastrophic climate damage.
“These direct benefits were magnified by indirect lifelines, most notably the implied seal of approval conferred on some companies’ debt when the Federal Reserve bought $432m in oil and gas bonds from private investors on the secondary market.
“By demonstrating its willingness to take on fossil fuel debt as well as junk-rated bonds from other sectors, the Fed drew private investors back into a shaky market.
“This fuelled a lending boom of more than $93bn in new bond issuances by oil and gas companies since the Fed intervened in March – the fastest rate of energy bond issuance since at least 2010.”
Pandemic bailouts for US fossil fuel companies came “numerous government entities”
The report highlights that pandemic-related assistance for the fossil fuel industry has come from “numerous government entities”, including the Fed, Treasury Department, Interior Department and Congress.
It added that oil and gas companies have benefited from diverse means of support, including direct loans, tax cuts, and waived fees for drilling on public property, while these companies “benefited disproportionately” from tax refunds and forgivable loans, despite, or even because of their “weak financial footing going into the pandemic”.
Five major fossil fuel companies enjoyed the biggest cumulative government benefits, banking more than 10% of the $110bn in direct benefits like tax refunds and indirect support in the form of bond issuances, even as their “finances continued a years-long decline”, according to the report.
It added that more than 60 others double or triple-dipped into government programmes, collecting tax refunds and subsidised or forgivable loans while paying less money to drill on public lands due to pandemic-related giveaways.
“Viewed together, these benefits amount to a multi-pronged government bailout for the fossil fuel industry,” the report noted.
“By directing aid to companies whose problems long predated the pandemic, the government has artificially prolonged the industry’s decline and postponed the coming transition to clean energy sources.”
