Big Oil And Coal Is In Big Trouble Despite Billions In Bailouts
Trump’s Fossil Fuel Fantasy Is Derailing An Economic Recovery And Hurting Workers
HELENA, MT – Just over a month ago, President Trump claimed victory for saving Big Oil, saying that he ‘created it’ and then he ‘saved it.’ But like many, many claims by the President, this fantasy is false. Despite upwards of $7 billion in taxpayer-backed Paycheck Protection Program loans, billions more in tax breaks, and waiving environmental rules by federal agencies that gave corporations a green light to pollute with impunity, bankruptcies, devaluations, and massive layoffs are sweeping the sector and derailing an economic recovery.
“President Trump and the corrupt lobbyists across his administration have pulled out all the stops in a desperate attempt to bail out the fossil fuel industry while Main Street and workers get table scraps. No matter how hard this administration tries to convince the American people otherwise, this has been a wasteful, futile use of taxpayer money,” said Jayson O’Neill, spokesperson for Accountable.US.
Recent reports have highlighted the harsh reality of an industry that hasn’t been sustainable or profitable without taxpayer subsidies for a decade:
- ExxonMobil will be removed from the Dow Jones Industrial Average at the end of the month. Chevron is the last remaining Big Oil corporation on the Dow but is also in deep financial trouble.
- A new industry jobs report by BW Research paints another bleak picture for the fossil fuel industry. Through July, the industry has shed some 118,000 jobs or 15.5% of the sector’s total employment, with oil states like Texas (39,883), Louisiana (12,287), and Oklahoma (10,727) experiencing the most jobs losses while states like Kentucky (29.4%), Pennsylvania (26.6%) Alaska (25%), and New Mexico (24.6%) saw the largest percentage drop.
- Reports out of coal-producing regions look even bleaker despite Trump’s rhetoric and deregulatory fervor. Coal hasn’t been economical for years, yet taxpayer subsidies have continued to flow to the polluting industry.
- The sector has also seen a wave of bankruptcies and the accumulation of debt according to a report released last month. As of the end of last quarter, 32 oil and gas corporations with debt levels approaching $50 billion have filed for bankruptcy and more are on the horizon.
- And, the forecast for domestic oil to recover to pre-COVID levels won’t occur until 2022 or later, with prices hovering below $50 per barrel until at least the first quarter of 2021. Without massive taxpayer subsidies, oil fracking is not profitable at a per barrel price point that low.
At the root of the problem has been precisely the ‘energy dominance’ policy Trump has been fixated on that led, in part, to a glut of domestic production that is no longer in demand. But that hasn’t stopped Trump’s former oil lobbyist turned-Interior Secretary David Bernhardt and radical extremist turned-Acting Director of the Bureau of Land Management William P. Pendley from fueling the glut with more oil and gas lease sales across the West and in the Arctic National Wildlife Refuge.
The administration’s backward policies have also incentivized production by slashing royalty rates and suspending leases for both on and offshore production under the cover of a pandemic. While billions have flowed to polluting extractive industries under these policies, previous analysis by Accountable.US found that renewable energy received a paltry $188 million. Previous studies have shown that ‘federal investment in green jobs yields three to four times as many jobs per dollar as in fossil fuels’ according to reporting by Bloomberg.
While Interior is still refusing to disclose offshore royalty cuts and lease suspensions, onshore oil and gas revenues have plummeted, dropping nearly $214 million or 70% since the beginning of the year. With state and local governments budgets already reeling from the pandemic, the drastic decline in shared revenue from oil and gas drilling on public lands is going to have devastating impacts. Similarly, offshore revenue is in a steep decline, with a $357 million or 73% decline since the beginning of the year.
Not only is this revenue critical for state and local budgets to mitigate the impacts of industrial development but both onshore and offshore oil and gas revenues fund the public lands and national parks programs in the Great American Outdoors Act being touted by the administration. The Interior has yet to clarify how declining revenue due to royalty cuts and lease suspensions would impact these critical funds or commit to backfilling state and local budgets.