Big Oil

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.

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).

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.”

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.

Big Oil’s Biden-era PR strategy:

1) Act like you’re part of the solution by supporting “frameworks” like Paris and long term targets like 2050

2) Fight meaningful action — like rejecting KXL and ending drilling on public lands — by repeating lies about jobs and the economy

— Jamie Henn (@jamieclimate) January 25, 2021

By various - Oil Change International, December 13, 2020

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).

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).

By various - Climate Emergency Mobilisation Task Force, September 19, 2020

Antonia Juhasz interviewed by Amy Goodman- Democracy Now, September 2, 2020

AMY GOODMAN: Longtime Massachusetts senator and Green New Deal champion Ed Markey won his primary against challenger Congressmember Joe Kennedy III Tuesday, marking a victory for progressives and the first time a Kennedy has lost an election in the state of Massachusetts. Senator Markey secured 54% of the vote in a primary race seen by many as a showdown between the Democratic establishment and its new and growing progressive wing. House Speaker Nancy Pelosi endorsed Kennedy, while Markey had the support of New York Congressmember Alexandria Ocasio-Cortez and the youth-led Sunrise Movement. The Sunrise Movement tweeted in response to the victory, quote, “After winning elections across the country, you think we’re gonna stop now? They wish. We will protest outside the halls of Congress while our allies on the inside negotiate the Green New Deal,” they said.

This comes as Democratic presidential candidate Joe Biden said he would not ban fracking during a speech in Pittsburgh. A group of 145 organizations, including Sunrise Movement and Greenpeace, have released a letter calling on Biden to ban fossil fuel interests from his campaign and administration, if he wins. The letter reads, quote, “To advance environmental justice, you must stand up to fossil fuel CEOs, stop the expansion of oil, gas and coal production, and rapidly transition us away from fossil fuels,” unquote.

This comes as the global oil industry is in crisis with falling demand and crashing prices exacerbated by the coronavirus pandemic. Despite this, fossil fuel companies continue to pump out an excess of oil, much of it stored on tankers in the ocean. In May, as 390 million barrels of oil and gas sat in storage on the world’s oceans, Greenpeace activists sailed out along the San Francisco Bay, unfurling a banner saying “Oil Is Over! The Future Is Up to You.”

GREENPEACE ACTIVIST: I’m here in San Francisco Bay, where floating oil storage tankers are now idling, storing oil that no one wants and where we have nowhere to put.

AMY GOODMAN: Despite this, Congress has poured billions of dollars of COVID relief funds into bailing out the fossil fuel industry.

We go now to Boulder, Colorado, where we’re joined by Antonia Juhasz, an oil and energy reporter, a Bertha fellow in investigative journalism. And her recent cover story for Sierra magazine is “The End of Oil Is Near,” along with another report, “Bailout: Billions of Dollars of Federal COVID-19 Relief Money Flow to the Oil Industry.” She’s the author of several books, most recently, Black Tide: The Devastating Impact of the Gulf Oil Spill.

By David Tong, et. al. - Oil Change International, September 2020

As oil and gas companies claim to be part of the solution of the climate crisis, the reality couldn’t be more different. Our new discussion paper analyzes the current climate commitments of eight of the largest integrated oil and fossil gas companies, and reveals that none come close to aligning their actions with the urgent 1.5°C global warming limit as outlined by the Paris Agreement.

This discussion paper measures oil and gas company climate plans against ten minimum criteria, focusing on the ambition, integrity, and ability necessary to implement a just transition and achieve a 1.5°C aligned managed decline of oil and fossil gas. Focusing on the oil majors, BP, Chevron, Eni, Equinor, ExxonMobil, Repsol, Shell, and Total, we find that only one company has committed to cutting oil and gas production over the next decade, and even that pledge (BP’s stated commitment to cut production by 40% by 2030) excludes around a third of the oil and gas it invests in extracting via its major share in oil giant Rosneft. Below is a summary table of these criteria included in the discussion paper.

Read the text (PDF).