March 30, 2020 [Earth Maven – Published on March 28, 2020] – Instead of bailing out fossil fuel companies by incentivizing business-as-usual, we can begin to stimulate a new energy economy.
Oil prices crashed and the Trump administration wants to bail out the oil industry. President Trump instructed the Secretary of Energy to buy “at a very good price, large quantities of crude oil for storage in the U.S. Strategic Petroleum Reserve (SPR),” he announced during his press conference on March 13. His stated reasons are two-fold: to purportedly save American taxpayers “billions and billions of dollars” and to help out the oil industry to achieve energy independence.
The Department of Energy announced that Trump directed the agency to fill the Strategic Petroleum Reserve (SPR) to the “maximum capacity.” That means buying 77 million barrels of domestically produced crude oil.
“DOE is moving quickly to support U.S. oil producers facing potentially catastrophic losses from the impacts of COVID-19 and the intentional disruption to world oil markets by foreign actors,” said U.S. Energy Secretary Dan Brouillette.
Treasury Secretary Steven Mnuchin said he recommends Trump ask Congress for up to $20 billion so the SPR will be full for the next decade. “Let’s go out and buy,” he said during a Fox Business Network interview. “Fill up the reserve.”
Canada Bails Out the Oil Sands Industry
One of the reasons for the crash in oil prices is a price war between Russia and Saudi Arabia. Canada is likely to be “the first big victim” of that price war, Bloomberg reported. The National Observer reported that the outlook for new projects within Alberta’s tar sands industry is “bleak.” Canada’s federal government is preparing a “multi-billion-dollar bailout package” for its oil and gas sector, according to the Globe and Mail. The overall package could be $10.54 billion.
One Canadian province announced bailout plans for the oil and gas industry. The Alberta government announced a $160.75 million stimulus for the province’s oil and gas companies for six months. Part of the relief package includes extending mineral agreements expiring in 2020 by one year to provide “increased certainty for industry by allowing additional time to raise capital and plan future activities.”
A Bailout is a Bad Idea for the World’s Biggest Polluters
Bailing out the world’s biggest polluters is a bad idea. In North America, most of the greenhouse gas emissions come from burning fossil fuels for energy use. In the U.S. in 2017, carbon dioxide emissions from burning fossil fuels for energy were equal to about 76 percent of the country’s total anthropogenic GHG emissions and about 93 percent of its total anthropogenic carbon dioxide emissions. In Canada, over 81 percent of emissions come from energy.
The problems the U.S. oil and gas industry face “are largely self-inflicted,” Basav Sen, Director of the Climate Policy Project at the Institute for Policy Studies wrote in an opinion piece for Market Watch. The country is the world’s largest oil and gas producer, and he pointed out that “much of this oil and gas production binge has been fueled by debt, based on promises of future profit that haven’t materialized.” Investing in renewable energy and energy efficiency is a better use of stimulus funds, according to Sen.
We should swap a bailout for forcing the oil and gas industry to become more environmentally responsible. Or as Tamara Toles O’Laughlin, 350.org North America Director, put it, “Instead of bailing out fossil fuel billionaires, we need to make them pay for their destructive business models and invest in care and repair.”
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