The coronavirus crisis laid bare the fossil fuel industry’s longstanding reliance on government support in the form of federal subsidies, tax incentives, and bailouts. As the pandemic unfolded, companies involved in coal, oil, and gas sought favorable access to each program, from the Federal Reserve’s vast bond-buying effort to smaller loans designed to keep struggling “main street” businesses afloat.
During the pandemic’s first year, the government — under the leadership of former President Donald Trump — unleashed an unprecedented wave of stimulus programs that favored fossil fuels. The fossil fuel bailouts began on April 21, 2020, when Trump tweeted that he had instructed the Energy Department and Treasury “to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future.”
As economic rescue plans took shape, mainly under the $2.2 trillion stimulus package dubbed the CARES Act, fossil fuel companies and their advocates in Congress successfully lobbied for changes to a key lending program whose original design would have excluded many fossil fuel companies from participating. In its bond-buying program, the Fed favored oil and gas despite long-term problems in the industry that led to junk-ratings and hundreds of bankruptcies in the decade before COVID.
The CARES Act also included a tax-law change championed by fossil fuels that gives them more leeway to eliminate tax obligations by offsetting profits with losses incurred in previous years. This small, opaque maneuver afforded the industry a windfall totaling well over $7 billion. The tax changes technically could have benefited any corporate filer. But their impact on fossil fuels was massive because so many companies had posted recent losses.
As the biggest producers of greenhouse gas emissions that worsen the climate crisis, fossil fuel companies have steadily lost favor among the growing segment of investors. Fossil fuel stock prices have declined during a bull market of historic proportions. As the pandemic eroded demand for fossil fuels, further squeezing companies’ cash flows, many have sought to cut costs, laying off workers while steadfastly defending executive bonuses, share buybacks, and shareholder dividends that consume a growing portion of their cash without creating any social value.
Little value resulted from the Trump Administration’s campaign to artificially prop up fossil fuels via handouts and industry-friendly policies. The industry remains wedded to the status quo, maintaining its influential political apparatus while opposing clean energy initiatives. Allies in Congress are equally committed to propping up the fossil fuel sector, no matter the costs.
The Trump oil and gas bailouts afforded the fossil fuel industry more than $17 billion in direct benefits through tax-law changes, subsidized and forgivable loans, and reductions in the fees they pay to drill on public lands. Including the Fed’s purchases from investors of already-issued bonds, and the more than $100 billion in borrowing supported by the Fed’s economy-wide backstop, fossil fuels enjoyed nearly $120 billion in direct and indirect benefits.
BailoutWatch was established in mid-2020 to monitor government intervention that serves to support the fossil fuel industry and postpone its inevitable decline.