On Wednesday afternoon, Mike Sommers, the CEO of the American Petroleum Institute (API) repeated Big Oil’s favorite new lie: we don’t want a bailout.
“This industry is not interested in an industry specific bailout,” said Sommers on a webinar about the current state of energy markets.
It’s a lie that he’s repeated to anyone who will listen over the past couple months. Here was Sommers back in March telling reporters that the oil and gas industry didn’t want a bailout: “We are not in discussions with anyone in the administration at this time on any type of program for the industry.” Here he is in April relaying to Axios a witty one-liner a fellow Oil CEO told him: “You can't ask for capitalism on the way up and then socialism on the way down.”
Clever one, Mike.
"Big Oil has already nabbed $1.9 billion in giveaways thanks to corporate tax cuts from the last stimulus. Polluters also haven't been shy about demanding even laxer standards for stimulus lending—and the Trump administration has so far granted their wishes." —Lukas Ross, Friends of the EarthThe truth is that despite Sommer’s best efforts to spin a fairytale about oil companies tightening their belts and lifting themselves up by their bootstraps, corporate socialism is exactly what API wants. In fact, the fossil fuel industry, and the American Petroleum Institute in particular, have been at the forefront of corporate efforts to profit off the coronavirus pandemic and government relief efforts.
“Oil lobbyists are spewing blatant lies, and we have the receipts,” said Lukas Ross at Friends of the Earth regarding Sommer’s latest comments. “Big Oil has already nabbed $1.9 billion in giveaways thanks to corporate tax cuts from the last stimulus. Polluters also haven’t been shy about demanding even laxer standards for stimulus lending—and the Trump administration has so far granted their wishes.”
The record is clear. Back in March, API sent a letter to the Environmental Protection Agency asking them to lift a long list of regulations designed to protect public health and the environment. The EPA went ahead and granted this polluter wishlist from top to bottom, taking a buzzsaw to the few remaining regulations that the Trump Administration hadn’t already done away with.
The team over at Drilled News has documented dozens upon dozens of rules, laws, and regulations that were gutted to benefit the industry. The fun hasn’t stopped at the federal level: the industry has also used its tentacles to twist state regulations to their benefit, using the pandemic to push forward everything from pipeline permits to aggressive anti-protest laws.
But it wasn’t enough for Big Oil to just get regulatory relief, they wanted cold, hard cash.
API and other industry front groups knew that the American people wouldn’t stand for blatant handouts to the industry, so they had to get clever. Instead of asking for direct relief, the industry first worked to manipulate the tax provisions in the CARES Act to specifically benefit oil and gas companies.
API now denies that they pushed for these changes to the CARES Act, but their lobbying disclosure forms tell a different story. Friends of the Earth published a report looking at 130 lobby filings from the first quarter of 2020 and found significant lobbying for tax cuts, royalty relief, and stimulus aid, all using Covid-19 as a pretext.
All that lobbying resulted in over $1.9 billion going to oil and gas companies, what Jesse Coleman, a researcher at Documented, has called the “stealth bailout.” Corporations like Marathon, the largest oil refining company in the country, got over $411 million in the shady tax breaks. Occidental Petroleum, whose debt has been cut to junk status because of its risky shale bets, is likely to get $195 million. The scheme was exactly what the industry wanted: all the cash, with none of the public scrutiny.
Dear API: If you lobby for tax breaks your members disproportionately utilize — that's asking for a bailout.
If you beg @EPA for deregulation — that's asking for a bailout.
If you condemn 40 lawmakers asking for no bailouts — that's asking for a bailout. https://t.co/ilvC1imdIE
— Collin Rees (@collinrees) May 27, 2020
In fact, the scam worked so well that the industry decided it would go after an even larger pot of money: the hundreds of billions of dollars the Fed is providing through its Mainstreet Lending Program. This time, the robbery is even more blatant. Trump Energy Secretary Dan Brouillette even went on live TV to brag about how he was helping change the Fed’s lending rules to expressly benefit oil and gas companies.
“We now know that Trump administration officials 'worked very closely with the Federal Reserve' to make these changes so taxpayer-backed loans would be available to oil and gas firms,” tweeted Bharat Ramamurti, a member of the Congressional Oversight Commission, at the time. “How do we know? The Energy Secretary went on TV and said so.”
Why did Big Oil need the Energy Secretary to step in and change the rules of the program? Because so many oil and gas companies were in such a financial mess coming into the coronavirus crisis that they wouldn’t have otherwise qualified. In fact, the whole sector is such a dumpster fire that no banker in their right mind would lend these companies money, let alone money that is meant to help with an economic recovery. The industry needs government intervention, otherwise it’s toast.
Which brings us back to why API is working overtime to deny the industry is getting the bailout they’re so obviously getting. The political and economic power of the fossil fuel industry relies in large part on its mythic role in the American economy. It’s the “lifeblood” of our economic system! It creates millions of jobs! It’s Making America Great Again!
"The coronavirus didn’t destroy the oil and gas sector, it just revealed what a wreck it already was."
Admitting the reality, that the only way the industry can continue to survive is with direct government aid, destroys this illusion. It tears the curtain back on the Wizards of Oil and reveals them for what they are: shrunken, angry, old versions of themselves, desperately trying to cling to power as the world passes them by.
As many others have written, the coronavirus didn’t destroy the oil and gas sector, it just revealed what a wreck it already was. Oil and gas companies came into this crisis saddled with debt after years of trying to drill themselves into profitability. Back in the 1980s, oil and gas companies represented 28% of the S&P 500. They now account for just 4.4%. As CNBC’s uber-capitalist Jim Kramer recently said, the industry is in its “death knell” phase and investors should beware.
We need to make sure those investors don’t continue to include the American public. Letting Big Oil hijack the coronavirus recovery effort doesn’t just steal money away from families and communities who need the support, it also keeps us chained to an industry that is determined to take us and the economy down with it.
"Letting Big Oil hijack the coronavirus recovery effort doesn’t just steal money away from families and communities who need the support, it also keeps us chained to an industry that is determined to take us and the economy down with it."
We also know that even as we deal with the horrors of COVID19, we have to keep one eye on the ongoing crisis of climate change. Every dollar the Fed puts into fossil fuels only heightens the risk of a catastrophic climate collapse.
Big Oil may have won the early rounds of this bailout, but the fight is far from over. We know that no matter what API’s CEO Mike Sommers says to the press, he’s going to be continuing to lobby for more and more handouts. It’s our job to stop him. The Fed and Wall Street are going to be moving trillions of dollars over the coming months: we need to make sure that money goes to people in need, not an industry that's destroying our future.
That means demanding real, meaningful oversight of government stimulus programs. Pushing our elected officials to sign onto the ReWIND Act that would prevent money from going to Big Oil. Keeping a close watch on the Fed lending programs and calling out political interference. Continuing to support our frontline allies as they resist the new fossil fuel projects the industry is trying to push forward during the pandemic.
And it means calling out the industry for their lies. Because they want a bailout more than anything. It’s the only thing that’s keeping them alive.