‘Disaster Capitalism at Its Worst’: Report Details Big Oil’s Efforts to Cash In on Coronavirus
“Polluters fought hard for kickbacks in the first coronavirus stimulus package and they are undoubtedly up to it again.”
(By: Andrea Germanos, Common Dreams) Recent lobby filings from major oil and gas paint a picture of “disaster capitalism at its worst.”
So declares a report (pdf) released Tuesday by Friends of the Earth (FOE) showing how Big Oil is working to make sure the legislative response to the coronavirus crisis is beneficial to the industry.
“Big Oil is wasting no time exploiting the coronavirus for profit,” FOE senior policy analyst Lukas Ross said in a statement.
For the report, the environmental advocacy group analyzed over 100 filings from the first three months of 2020 and found that at least 11 oil and gas companies and industry trade groups reported lobbying on tax issues in the first Covid-19 relief package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Tax cuts were big on the industry’s wish list. In addition to efforts by specific oil and gas companies, the report says that major industry associations—The American Petroleum Institute (API), the Independent Petroleum Association of America (IPAA), and The American Fuel and Petrochemical Manufacturers (AFPM)—indicated they lobbied “directly around tax issues” in the economic package.
And they were rewarded.
From the report:
At a cost of $13.39 billion to taxpayers, the CARES Act temporarily raises the interest deduction cap for 2019 and 2020 from 30% to 50% of income. Even more expensive, the CARES Act allows net operating losses from 2018, 2019, and 2020 to be deducted against income taxes paid over the last five years—at a cost to taxpayers of $88 billion over the next two years.
Those actions, says the report, “disproportionately benefit companies facing losses and companies with substantial debt burdens—which today describes oil and gas more than any other sector.”
Big Oil also lobbied for access to the $454 billion so-called “corporate slush fund” that was included as part of CARES Act. The report notes that fracking trade industry association IPAA specifically lobbied the Office of the Comptroller of the Currency (OCC) around the CARES Act. A federal agency tasked with regulating banks, the OCC is empowered to waive lending caps for banks.
The industry also lobbied to reduce or suspend the royalty payments fossil fuel companies are required to pay state and federal government for drilling on public lands. One company that engaged in that effort is Murphy Oil. The company “has lobbied directly for offshore royalty relief,” says the report.
The oil and gas companies also lobbied for the carbon sequestration tax credit known as 45Q, which has overwhelmingly gone to a small handful of companies. A report released last month following a U.S. Treasury Department Inspector General investigation also found fossil fuel companies improperly claimed nearly $1 billion in the tax credits.
FOE’s report shows fossil fuel companies lobbied to keep benefiting from that tax credit. Baker Hughes and Occidental Petroleum lobbied directly for it, while ExxonMobil paid accounting firm Ernest and Young to lobby on its behalf, says the report.
The new publication also outlines steps Congress should take in the next relief bill “to prevent a runaway bailout of the fossil fuel industry,” including for lawmakers to repeal the tax breaks Big Oil got in the CARES Act and to let the 45Q tax credit expire.
Congress should also pass new legislation from Rep. Nanette Barragán (D-Calif.) and Sen. Jeff Merkley (D-Ore.) entitled the Resources for Workforce Investments, not Drilling Act (ReWind Act) to block the fossil fuel industry from taking coronavirus relief funds, adds the report.
“At a time of crisis, we cannot afford to use our public resources to make bad investments in industries that are not only financially risky, but are destroying our planet,” Merkley said last week.
FOE’s Ross said that the fossil fuel industry can’t be allowed to cash in on the Covid-19 crisis.
“Polluters fought hard for kickbacks in the first coronavirus stimulus package and they are undoubtedly up to it again,” he said. “As Trump and the GOP continue their crusade to prop up Big Oil, we must stop the fossil fuel industry from snatching more taxpayer money.”