When the COVID-19 pandemic broke out, the Trump administration was quick to announce that the oil and gas industry would need direct support from the government during the crisis.
Big oil’s allies in congress followed through on this promise: fossil fuel companies received billions of dollars of government aid through pandemic relief programs, reaping the rewards of their decades-long campaign to secure political support on Capitol Hill. Here are the four programs authorized by the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act that sent the most aid to fossil fuel companies:
I. The Fed’s Backstop of the Corporate Bond Market
When the corporate bond market froze in response to COVID-19 panic in March 2020, the Federal Reserve pledged to provide liquidity to the market by purchasing corporate debt. In other words, the Fed promised to buy corporate bonds, thus ensuring that the bond market would un-freeze and that corporations would be able raise debt through bond issuance. As of February 2021, the total outstanding amount of corporate bonds purchased by the Fed was $14 billion.
As the bond market started seeing the effects of this program, the fossil fuel industry began issuing record amounts of debt. By August 2020, Exxon and Chevron alone had issued more than $20 billion in debt through the bond market. By November 2020, the industry had raised more than $93.5 billion through bond issuance. This number continues to rise as big oil companies issue more and more debt, adding billions to their balance sheets despite mass layoffs of oil workers around the country.
II. The Main Street Lending Program
The Main Street Lending Program (MSLP) was designed to support small and mid-sized businesses facing temporary cash flow issues during the pandemic. The program provided low-interest loans with generous repayment schedules, and ultimately supported loans to 1,830 borrowers. Although the program was initially conceived as a way to support America’s Main Street and protect jobs, it ultimately sent billions of dollars in low-interest loans to oil and gas companies, several of which laid off workers during the pandemic. The fossil fuel industry received more than $2.2 billion in MSLP loans, and boasted some of the largest individual loans issued through the program.
III. Tax breaks
Several provisions in the 2020 CARES Act allowed fossil fuel companies to report millions in tax refunds and write-offs during the pandemic. As of November 2020, payroll tax deferrals, expanded write-offs for debt interest payments, and accelerated refunds allowed oil and gas companies to receive more than $5.5 billion in tax benefits.
IV. The Paycheck Protection Program
The Small Business Administration’s Paycheck Protection Program (PPP) was designed to help small businesses keep workers employed during the pandemic. Over 8 million loans have been distributed through the program, at least 25,931 of which went to oil and gas companies. According to Public Citizen’s analysis, at least $4.3 billion in PPP loans went to oil and gas companies.
To read more about how fossil fuel companies profited off of government stimulus programs, check out our report on how big oil was propped up by pandemic relief.