Bailing out Big Oil

July 20, 2020

Bailout Watch:

Fossil fuel companies participated in the government’s Paycheck Protection Program to bail out small businesses at far higher rates than companies in other key sectors, a new BailoutWatch analysis has found. It’s another sign that coal, oil, and gas companies now pleading distress from the pandemic were already limping along.

About 11.3% of the companies in key fossil fuel industry groups, including drilling and mining, took the money, according to data released last week by the Small Business Administration. By comparison, only 2.7% of green energy companies and 5.8% of durable goods manufacturers got money through the program. (Durable goods are consumer products like cars and appliances that are expected to last for more than three years.)

Most companies that applied for the program ended up being approved. Only 4% of small businesses that sought relief did not receive it, according to the U.S. Census Bureau’s Small Business Pulse Survey. That suggests that fossil fuel companies were far likelier to seek bailouts than companies in the other sectors.

BailoutWatch previously identified more than 6,000 firms directly involved in the fossil fuel business as having received loans between $150,000 and $10 million each from the program. Dozens of them were charged with violating rules about pollution, worker safety, and government contracting.

later analysis found that fossil fuel companies were more likely to receive the biggest bailouts, yet they accomplished less to advance the program’s core goal of stemming unemployment.


The global oil and gas industry has crashed. In mid-June, BP – formerly British Petroleum – slashed the value of its assets by US$17.5bn and revealed plans to cut its workforce by 15%. It forecast the price of oil would be a third lower than expected for decades to come and said it may be forced to leave new fossil fuel discoveries in the ground.

It was later joined by Royal Dutch Shell, which announced its own US$22bn writedown, with its vast gas business – including major liquefied natural gas (LNG) developments in Australia – expected to take the heaviest toll.

Wood Mackenzie, a global energy research and consultancy group, says the fall in value is industry-wide, estimating US$1.6tn has been wiped from the sector this year, with more to come.

While oil and gas are not alone in struggling in the face of biggest economic slump in nearly a century, WoodMac says its carnage cannot solely be blamed on Covid-19. The economic reality of the climate crisis is also starting to bite.Trouble with gas: the Coalition is betting on the fossil fuel for recovery – but the sums don’t add upRead more

“It’s about fundamental change hitting the entire oil and gas sector,” WoodMac’s vice-president for corporate analysis, Luke Parker, said.

“Just a few years ago, few within the oil and gas industry would even countenance ideas of climate risk, peak demand, stranded assets, liquidation business models and so on. Today, companies are building strategies around these ideas.”

If that reflects the global picture, the story among Australia’s oil and gas businesses – which until recently have been enjoying booming growthselling LNG to Asia, and driving most of the increase in national greenhouse gas emissions – is less clear.

The idea of stranded assets due to climate change is not new. It suggests carbon-intensive projects potentially worth trillions risk becoming next-to worthless – stranded – if investors abandon them in favour of emissions-free technology, as required to meet the goals of the Paris climate agreement.

In Australia, the risk is recognised by the country’s major financial institutions and regulators, and has increasingly become a focus of shareholders. Earlier this year they gave resolutions calling for climate action and transparency at oil and gas companies Woodside Energy and Santos more than 50% and more than 40% support, respectively. Activist shareholders are not persuaded by suggestions support for gas is justified as it emits less than coal when burned, and point to studies suggesting it may release more emissions than previously thought.

3 Responses to “Bailing out Big Oil”

  1. Sir Charles Says:

    Governments are spending vastly more in support of fossil fuels than on low-carbon energy in rescue packages triggered by the coronavirus crisis, despite rhetoric from many countries in support of a “green recovery,” a new international research effort revealed. G20 countries have spent at least $151 billion in bailout funds to support fossil fuels, the report said.


    We find that since the Paris Agreement, G20 countries have acted directly counter to it by providing at least USD 77 billion a year in finance for oil, gas, and coal projects through their public finance institutions.

  2. Sir Charles Says:

    Fossil fuel companies have reaped millions of dollars in benefits from a stimulus package intended to help struggling Americans and the economy. Among these is Marathon Petroleum, the largest oil refiner in the country, which has a history of air pollution violations impacting low-income and Black and Brown communities.

    => Marathon Petroleum Takes Bailout Tax Breaks During Pandemic

  3. Sir Charles Says:

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