You are here

Big Oil

Victory for climate activists in the Dutch Courts and in Exxon and Chevron boardrooms

By Elizabeth Perry - Work and Climate Change Report, May 27, 2021

May 26 will go down in history as a very bad day for the fossil fuel industry for three reasons: in the Netherlands, the courts issued a landmark decision that requires Royal Dutch Shell to cut its carbon emissions – including Scope 3 emissions – by 45% by 2030. Also on May 26, activist shareholders won separate victories at the corporate annual meetings of ExxonMobil and Chevron. Bill McKibben reflects on all three events in “Big Oil’s Bad Bad Day” in The New Yorker , and Jamie Henn wrote “A Landmark Day in the fight against fossil fuels” in Fossil Free Media.

The case of Royal Dutch Shell is summarized by Friends of the Earth Canada in their press release , which also links to an English-language version of the Court’s decision.

“On May 26, as a result of legal action brought by Friends of the Earth Netherlands (Milieudefensie) together with 17,000 co-plaintiffs and six other organisations the court in The Hague ruled that Shell must reduce its CO2 emissions by 45% within 10 years.

…..“This is a turning point in history. This case is unique because it is the first time a judge has ordered a large polluting company to comply with the Paris Climate Agreement. This ruling may also have major consequences for other big polluters,” says Roger Cox, lawyer for Friends of the Earth Netherlands.

The verdict requires Royal Dutch Shell to reduce its emissions by 45% by the end of 2030. Shell is also responsible for emission from customers and suppliers. There is a threat of human rights violations to the “right to life” and “undisturbed family life”.

German news organization Deutsche Welle offers an excellent, more thorough discussion in “Shell ordered to reduce CO2 emissions in watershed ruling”, which points out that the case was argued on human rights grounds – much like the precedent-setting Urgenda case and the recent German constitutional case. In those cases however, governments were called upon to defend the human right to a future safe from the dangers of climate change. The Shell case is the first time such an argument has been tried against a corporation – and is seen as a harbinger of future legal action.

Fossil Fuel Companies Took Billions in U.S. Coronavirus Relief Funds but Still Cut Nearly 60,000 Jobs

By Nicholas Kusnetz - Inside Climate News, April 2, 2021

When Congress looked to prop up a tanking economy and stanch its hemorrhaging of employment as the pandemic spread last year, the oil industry was among those that sought relief. Now, a new analysis shows that dozens of fossil fuel companies received billions of dollars in tax benefits in the coronavirus relief package, but slashed tens of thousands of jobs anyway.

While Congress ended up sending billions in direct loans to small and large businesses, a significant portion of CARES Act benefits came in the form of changes to the tax code. At least 77 fossil fuel companies took advantage of those to claim a total of $8.2 billion in benefits last year, even as they cut nearly 60,000 jobs, according to an analysis published Friday by BailoutWatch, a nonprofit supported by Rockefeller Philanthropy Advisors.

Chris Kuveke, a BailoutWatch analyst, said the data shows that the aid to the industry failed to deliver the benefits that Congress had intended.

“These companies did not use that money they received through the CARES Act to maintain payroll,” he said.

As oil prices collapsed last year, some energy companies began lobbying Congress and the federal government for various forms of relief. Occidental Petroleum, for example, enlisted its employees to send letters to members of Congress to ask that they “provide liquidity” to the energy industry, according to Bloomberg News.

Among the various forms of stimulus included in the final relief package were changes to the tax code that proved beneficial to the oil industry.

For example, companies for years were allowed to “carry back” their losses in one year to offset profits from previous years to get a retroactive tax refund. That allowance helped companies with volatile earnings, but it was eliminated by the 2017 tax cuts signed into law by President Donald Trump. The change was one of the few provisions of the tax overhaul that modestly increased the tax burden for corporations, even as the bill overall drastically reduced corporate taxes, said Thornton Matheson, a senior fellow at Urban-Brookings Tax Policy Center.

The CARES Act eliminated that change, and even expanded on the original provision, allowing companies to carry any losses incurred from 2018-2020 back five years, instead of the two years allowed before the 2017 tax bill. Matheson said the oil and gas industry was among a few likely to benefit most from that part of the CARES Act, because its earnings can swing wildly with commodity prices.

Thus the change allowed companies to stretch losses from 2018 back to 2013, when oil prices were above $100 a barrel and profits for some of them were sky high (prices fell sharply in late 2014, and have not fully recovered).

Marathon Petroleum, a major refiner, benefited the most, the analysis found, claiming $2.1 billion in tax benefits, according to the BailoutWatch analysis. The company cut nearly 2,000 jobs last year, not counting those in its retail business.

Marathon disputed the figure, saying that less than 30 percent of its $2.1 billion tax benefit was due to the CARES Act provisions. However, its annual securities filing said that based on the carryback “as provided by the CARES Act, we recorded an income tax receivable of $2.1 billion” to reflect the company’s estimate of the refund it expected to receive in its 2020 tax return.

Marathon spokesman Jamal T. Kheiry said some of the layoffs were associated with the idling of refineries, and added that the company was generous with employees who lost their jobs. “To help affected employees transition, we provided severance, bonus payments, extended healthcare benefits at employee rates, job placement assistance, counseling and other provisions,” he said.

NOV, a drilling company, cut nearly 8,000 workers, more than 20 percent of its employees, despite receiving a $591 million tax benefit. The company did not respond to a request for comment.

Occidental collected $195 million and cut 2,600 jobs.

Eric P. Moses, a spokesman for Occidental, said the job cuts were associated with its 2019 acquisition of Anadarko Petroleum “and completed prior to the COVID pandemic and Congress’ passage of the CARES Act.”

False climate solutions: Don't believe the hype

Fracking boom brings job and income loss to Appalachian communities

By Elizabeth Perry - Work and Climate Change Report, February 23, 2021

A February study examined the economic changes in 22 counties the authors call “Frackalachia” – home to the Utica and Marcellus shale gas industry. The report, Appalachia’s Natural Gas Counties: Contributing more to the U.S. economy and Getting less in return examines the period from 2008 to 2019, a time when the area went from producing a negligible portion of U.S. natural gas to producing 40%. The report summarizes the job forecasts provided by oil and gas industry economic impact studies, (over 450,000 new jobs for Ohio, Pennsylvania, and West Virginia), and shows the actual economic data from the U.S. Bureau of Economic Analysis – a 1.6% increase in jobs – at a time when the number of jobs across the U.S. grew by 9.9%. Detailed statistics demonstrate the differences amongst counties and states – with Ohio faring the worst and Pennsylvania faring the best. The report’s analysis shows that in the entire area represented by the 22 counties, the share of the national personal income fell by 6.3 percent, the share of jobs fell by 7.5 percent, and the share of the national population fell by 9.7 percent , while 90% of the wealth generated from fracking left the local communities.

The report was produced and published on February 10 by the Ohio River Valley Institute, a non-profit think tank based in Pennsylvania, founded in 2020 with the vision of “moving beyond an extractive economy toward shared prosperity, lasting job growth, clean energy, and civic engagement.” This report has been widely reported, including in “Appalachia’s fracking boom has done little for local economies: Study”(Environmental Health News , Feb. 12), which summarizes the report and adds context concerning the health effects of fracking, and the failed attempts to expand production to petrochemicals and plastics using ethane, a by-product of the fracked natural gas.

Appalachia's Natural Gas Counties: Contributing more to the U.S. economy and getting less in return

By Sean O'Leary - Ohio River Valley Institute, February 12, 2021

Economists debate whether there is such a thing as a “resource curse”.

Between 2008 and 2019, twenty-two old industrial and rural counties in Ohio, Pennsylvania, and West Virginia, which make up the Appalachian natural gas region, increased their contribution to US gross domestic product (GDP) by more than one-third. In 2008, the 22 counties were responsible for $2.46 of every $1,000 of national output. By 2019, the figure had climbed to $3.33. Their rate of GDP growth more than tripled that of the nation. However, during the same period, measures of local economic prosperity—the economic impacts of that growth—not only failed to keep pace with the increased share of output, they actually declined.

  • The 22 counties’ share of the nation’s personal income fell by 6.3%, from $2.62 for every $1,000 to just $2.46.
  • Their share of jobs fell by 7.6%, from 2.62 in every 1,000 to 2.46.
  • Their share of the nation’s population fell by 10.9%, from 3.26 for every 1,000 Americans to 2.9 for every thousand.

It is a case of economic growth without prosperity, the defining characteristic of the resource curse.

Most of the GDP increase in this group of counties was due to the Appalachian natural gas production boom, which was facilitated by the advent of a drilling technique called hydraulic fracturing, or “fracking” for short.

Read the text (PDF).

Appalachian Fracking Boom Was a Jobs Bust, Finds New Report

By Nick Cunningham - DeSmog, February 11, 2021

The decade-long fracking boom in Appalachia has not led to significant job growth, and despite the region’s extraordinary levels of natural gas production, the industry’s promise of prosperity has “turned into almost nothing,” according to a new report. 

The fracking boom has received broad support from politicians across the aisle in Appalachia due to dreams of enormous job creation, but a report released on February 10 from Pennsylvania-based economic and sustainability think tank, the Ohio River Valley Institute (ORVI), sheds new light on the reality of this hype.

The report looked at how 22 counties across West Virginia, Pennsylvania, and Ohio — accounting for 90 percent of the region’s natural gas production — fared during the fracking boom. It found that counties that saw the most drilling ended up with weaker job growth and declining populations compared to other parts of Appalachia and the nation as a whole.

Shale gas production from Appalachia exploded from minimal levels a little over a decade ago, to more than 32 billion cubic feet per day (Bcf/d) in 2019, or roughly 40 percent of the nation’s total output. During this time, between 2008 and 2019, GDP across these 22 counties grew three times faster than that of the nation as a whole. However, based on a variety of metrics for actual economic prosperity — such as job growth, population growth, and the region’s share of national income — the region fell further behind than the rest of the country. 

Between 2008 and 2019, the number of jobs across the U.S. expanded by 10 percent, according to the ORVI report, but in Ohio, Pennsylvania, and West Virginia, job growth only grew by 4 percent. More glaringly, the 22 gas-producing counties in those three states — ground-zero for the drilling boom — only experienced 1.7 percent job growth.

“What’s really disturbing is that these disappointing results came about at a time when the region’s natural gas industry was operating at full capacity. So it’s hard to imagine a scenario in which the results would be better,” said Sean O’Leary, the report’s author.

The report cited Belmont County, Ohio, as a particularly shocking case. Belmont County has received more than a third of all natural gas investment in the state, and accounts for more than a third of the state’s gas production. The industry also accounts for about 60 percent of the county’s economy. Because of the boom, the county’s GDP grew five times faster than the national rate. And yet, the county saw a 7 percent decline in jobs and a 2 percent decline in population over the past decade.

“This report documents that many Marcellus and Utica region fracking gas counties typically have lost both population and jobs from 2008 to 2019,” said John Hanger, former Pennsylvania secretary of Environmental Protection, commenting on the report. “This report explodes in a fireball of numbers the claims that the gas industry would bring prosperity to Pennsylvania, Ohio, or West Virginia. These are stubborn facts that indicate gas drilling has done the opposite in most of the top drilling counties.”

A Boom Without Job Growth

This lack of job growth was not what the industry promised. A 2010 study from the American Petroleum Institute predicted that Pennsylvania would see more than 211,000 jobs created by 2020 due to the fracking boom, while West Virginia would see an additional 43,000 jobs. Studies like these were widely cited by politicians as proof that the fracking boom was an economic imperative and must be supported.

But the Ohio River Valley Institute report reveals the disconnect between a drilling boom and rising GDP on the one hand, and worse local employment outcomes on the other. There are likely many reasons for this disconnect related to the long list of negative externalities associated with fracking: The boom-and-bust nature of extractive industries creates risks for other business sectors, such as extreme economic volatility, deterring new businesses or expansions of existing ones; meanwhile air, water, and noise pollution negatively impact the health and environment of residents living nearby.

“There can be no mistake that the closer people live to shale gas development, the higher their risk for poor health outcomes,” Alison Steele, Executive Director of the Southwest Pennsylvania Environmental Health Project, told DeSmog. “More than two dozen peer-reviewed epidemiological studies show a correlation between living near shale gas development and a host of health issues, such as worsening asthmas, heart failure hospitalizations, premature births, and babies born with low birth weights and birth defects.”

Moreover, oil and gas drilling is capital-intensive, not job-intensive. As the example of Belmont County shows, only about 12 percent of income generated by the gas industry can be attributable to wages and employment, while in other sectors, on average, more than half of income goes to workers.

In other words, it costs a lot of money to drill, but it doesn’t employ a lot of people, and much of the income is siphoned off to shareholders. To top it off, equipment and people are imported from outside the region — many of the jobs created went to workers brought in from places such as Texas and Oklahoma.

Despite the huge increase in shale gas production over the past decade, the vast majority of the 22 counties experiencing the drilling boom also experienced “economic stagnation or outright decline and depopulation,” the report said.

The American Petroleum Institute did not respond to a request for comment.

“[W]e could see long ago that the job numbers published and pushed out by the industry years ago were based in bluster, not our economic realities,” Veronica Coptis, Executive Director of Coalfield Justice, a non-profit based in southwest Pennsylvania, told DeSmog, commenting on the report. “At industry’s behest and encouragement, Pennsylvania promoted shale gas development aggressively in rural areas for more than a decade. And yet, the southwestern counties at the epicenter of fracking do not show any obvious improvement in well-being.”

Oil Industry Inflates Job Impact From Biden’s New Pause on Drilling on Federal Lands

By Nick Cunningham - DeSmog, January 27, 2021

On Wednesday, President Biden signed an executive order directing his Department of Interior to hit pause on entering new leases for oil and gas drilling on federal lands, the latest in a string of climate-related directives aimed at cutting greenhouse gas emissions.

On the campaign trail, then-candidate Joe Biden proposed a ban on new leases on public lands, a pledge the Trump campaign falsely claimed would “end fracking.” After Biden’s victory, a coalition of nearly 600 organizations from western states wrote a letter in December to the president-elect, urging him to follow through on his promise. The executive order begins that process.

About 25 percent of U.S. fossil fuel production came from federal lands over the past decade. Perhaps unsurprisingly, federal lands account for roughly 24 percent of U.S. greenhouse gas emissions, stemming from the production of oil, gas, and coal, along with the methane released during the extraction process, and the combustion of those fuels, according to the U.S. Geological Survey.

A big slice of that comes from coal, an industry that has been in decline for years. But drilling for oil and gas in the U.S. has increased dramatically in recent years, thanks in large part to fracking. While the oil industry quickly applauded the Biden administration for rejoining the Paris Climate Agreement, it was incensed that he would halt new drilling leases on federal lands.

Webinar: Fighting the Climate Crisis in a Pandemic

Let's Own Chevron: Can the Just Transition of the Fossil Fuel Industry Start Here?

By Ted Franklin - System Change not Climate Change, December 2020

The Bay Area is home to one of the largest fossil fuel companies in the world. In October 2020 Chevron overtook ExxonMobil to become the largest U.S. oil company as measured by market cap. On October 7, the total value of shareholders’ stock in Chevron reached $142 billion, surpassing Exxon’s $141.6 billion.

Headquartered in Dublin and operating Northern California’s largest refinery in Richmond, Chevron has already found itself in the crosshairs of Bay Area activists for its routine pollution of working-class neighborhoods and its contributions to climate change. The Richmond Progressive Alliance’s radical struggle against Chevron’s domination of Richmond’s city government has been a central story in Bay Area left environmentalism in recent decades..

Much bigger contests over the power of Chevron and its ilk lie directly ahead. Increasingly, it has become clear that a direct government takeover of our fossil fuel industries is a necessary step for at least three reasons:

  • 1. Reductions in oil, coal, and gas production must begin immediately to avoid catastrophic degradation of the planet. Chevron and every other fossil fuel company must begin the process of downsizing at a rapid pace. As long as the fossil fuel companies are being run to maximize profits, any downsizing will be accidental and haphazard. Management which puts people and planet first must take over to ensure that the necessary reductions take place.
  • 2. Public ownership is the only way to break the back of the fossil fuel industries’ death grip over climate policy. The fossil fuel capitalists will not go quietly away. They have enormous sunk costs in their existing infrastructure. They intend to exert enormous political power to resist any reduction in their profits and any attempt to make them “keep it in the ground.”
  • 3. A just transition for workers and communities requires social control of the rapidly evolving energy commons. Even if the carbon tax championed by Joe Biden’s Treasury pick, Janet Yellen,1 could achieve sufficient reductions in carbon emissions to avert climate disaster, it would do nothing to ensure that reductions in carbon emissions are achieved without misery to workers and communities.

What is to be done?

Read the text (PDF).

Bailed Out and Propped Up: US Fossil Fuel Pandemic Bailouts Climb Towards $15 Billion

By Dan L. Wagner, Christopher Kuveke, Alan Zibel, and Lukas Ross - Bailout Watch, Public Service, Friends of the Earth, November 2022

The fossil fuel industry received between $10.4 billion and $15.2 billion in direct economic relief from federal efforts under President Donald Trump.

During a year of massive economic losses caused by climate change-driven wildfires and hurricanes, the U.S. government has sent billions in pandemic-related economic aid to the fossil fuel companies most responsible for catastrophic climate damage.

An analysis by BailoutWatch, Public Citizen, and Friends of the Earth reveals the fossil fuel industry received between $10.4 billion and $15.2 billion in direct economic relief from federal efforts under President Donald Trump to sustain the economy through the pandemic.

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 $432 million in oil and gas bonds from private investors on the secondary market. The Fed earlier signaled its support for the broader bond market, including junk-rated debt, by buying Exchange-Traded Funds that included $735.4 million of fossil fuel bonds.

By demonstrating its willingness to take on fossil fuel debt — and risky debt from any part of the economy — the Fed drew private investors back into a shaky market. This fueled a lending boom of more than $93 billion 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.

The Fed’s bond purchases, along with the new issuances they spurred, amounted to indirect benefits totaling $94.7 billion. Together with direct benefits worth up to $15.2 billion, likely more, the 2020 fossil fuel bailouts add up to $110 billion.

Read the text (PDF).

Pages

The Fine Print I:

Disclaimer: The views expressed on this site are not the official position of the IWW (or even the IWW’s EUC) unless otherwise indicated and do not necessarily represent the views of anyone but the author’s, nor should it be assumed that any of these authors automatically support the IWW or endorse any of its positions.

Further: the inclusion of a link on our site (other than the link to the main IWW site) does not imply endorsement by or an alliance with the IWW. These sites have been chosen by our members due to their perceived relevance to the IWW EUC and are included here for informational purposes only. If you have any suggestions or comments on any of the links included (or not included) above, please contact us.

The Fine Print II:

Fair Use Notice: The material on this site is provided for educational and informational purposes. It may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. It is being made available in an effort to advance the understanding of scientific, environmental, economic, social justice and human rights issues etc.

It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have an interest in using the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. The information on this site does not constitute legal or technical advice.