OCI is producing weekly news and resources updates for allies as part of our response to the COVID-19 crisis. These supplement the monthly OilWire editions that we produce with the Global Gas and Oil Network. Subscribe here to get the monthly OilWire bulletin.
OilWire update: 24 April 2020
Cheapest place to store oil becomes … the ground
As was all the buzz in the news this week, something unprecedented happened to the U.S. benchmark oil price: it plummeted to negative territory for a day. Despite the OPEC+ deal to begin cutting supply, oil storage on both land and sea is filling up rapidly. Quite simply, some traders had to pay to have oil taken off their hands, while companies scrambled to avoid sudden, unplanned shut ins of production. In effect, oil companies could have saved themselves some money by listening to climate campaigners before this crisis started – and permanently keeping oil in a place that is free of charge: the ground.
Budget crises, inequality grow in countries highly dependent on oil revenue
The New York Times surveys the effects of the overlapping oil and coronavirus crises across a collection of countries highly dependent on oil revenues. Iraq warns that by May it will run out of money to pay for public sector workers’ salaries, pensions, subsidies, and other government operations, Venezuela’s economy is expected to shrink by 15 percent, and Nigeria has asked for USD 7 billion in emergency funds from international lenders.
Ecuador is facing one of the worst outbreaks of coronavirus in the world at the same time that oil revenue has disappeared and a debt crisis deepens. The Indigenous Waorani people in Ecuador, leaders in resisting the incursion of oil and other extractive industries into the Amazon, are scrambling to prevent the virus from devastating their community.
The current unmanaged decline of oil is exacerbating global inequalities, underscoring the need for wealthy, less oil-dependent, better-resourced producers to move first in an equitable managed phase-out of the industry.
UN Secretary General calls for a green recovery that makes polluters pay
In his Earth Day message, UN Sec. Gen. António Guterres called on governments to use COVID-19 recovery measures “to invest in the future, not the past, and flow to sustainable sectors and projects that help the environment and the climate,” adding that, “Fossil fuel subsidies must end, and polluters must start paying for their pollution.”
U.S. oil and gas producers lobby Federal Reserve for ‘backdoor’ bailout
Reuters revealed that the lobbying arm of independent U.S. oil and gas producers is lobbying the U.S. Federal Reserve to loosen lending rules so that debt-laden shale companies can access funds from the Fed’s Main Street Lending Program. As the Stop the Money Pipeline campaign responded, this is an attempt “to take the money, use it to pay pre-existing debts, and run.”
Friends of the Earth U.S. warned of the potential for this type of “backdoor” bailout in a briefing last week. Eleven U.S. Senators joined the industry’s lobbying effort this week, asking the Fed to eliminate the credit requirements for companies whose debt was recently downgraded to “junk.”
Alberta squanders public pensions on high-risk oil and gas investments
Research released by Progress Alberta finds that, since 2016, the Alberta Investment Management Corporation (AIMCo) has invested CAD 1.1 billion of public pension dollars in high-risk oil and gas companies, all of which have seen their share prices collapse. Some of the same companies the pension manager has invested in are big donors to the provincial government.
EMAIL: Tell JPMorgan Chase’s biggest shareholders: Vote climate denier Lee Raymond off the board.
PETITION: Tell Liberty Mutual: Drop the Keystone XL and Trans Mountain pipelines – rule out insuring Line 3 and the entire tar sands sector.
SHARE: This Earth Day video from economist Robert Reich and Inequality Media has a strong message about the need to stop digging and burning more oil, gas, and coal – not bail out Big Oil:
Your Earth Day reminder that we must not go back to normal after this crisis ends.
We should not try to prop up oil prices. We should not bail out oil companies. We should accelerate our shift to solar, wind, and other non-fossil fuels. pic.twitter.com/ErS4u6NTyg
— Robert Reich (@RBReich) April 22, 2020
Citigroup, Morgan Stanley are latest big banks to disavow Arctic drilling
On Monday, Citigroup released an updated energy policy that rules out financing for “oil and gas exploration, development and production in the Arctic Circle.” Yesterday, Morgan Stanley followed suit in its updated environmental policy. They join Goldman Sachs, JPMorgan Chase, and more than a dozen global banks in taking this step, leaving Bank of America as the only remaining major U.S. bank that has not taken this step. These exclusions only address the tip of the iceberg when it comes to the banks’ still massive lending to the oil and gas sector.
Norway’s Supreme Court agrees to hear case to stop Arctic drilling
Greenpeace and Nature & Youth in Norway got good news this week when Norway’s 19 Supreme Court justices agreed to hear their lawsuit against the country’s oil licensing. They argue that the government’s licensing of Arctic drilling violates Norwegians’ constitutional right to a healthy environment for future generations. Only one in ten petitions to the court are typically granted a hearing.
Briefing: Governments Have a Choice: Resilient societies or fossil fuel bailouts?
This new briefing from OCI outlines energy-related “do’s and don’ts” to guide decision-makers when choosing policy pathways for recovery efforts, arguing that a managed and equitable phase-out of oil and gas production is key for a just, resilient recovery.
Report: How UK banks are funding the climate crisis
This new report focuses on UK banks Barclays and HSBC as two of the “worst offenders” in Europe when it comes to financing fossil fuels. In the current context, “Any public money allocated to companies, including banks, must come with a condition that their plans will reduce emissions in line with the Paris Agreement,” the report argues.
Roundup: Which governments are bailing out big polluters?
Climate Home News published a roundup on Monday of the “various types of support to polluting sectors introduced by the world’s largest economies” as the economic fallout from the pandemic continues, focusing on the oil and gas, aviation, and coal sectors.
New study confirms skyrocketing methane emissions from the Permian Basin
A study published this week in Science Advances finds that methane emissions from the world’s largest oil expansion site, the U.S. Permian Basin, are more than two times higher than federal estimates and, according to a study co-author, “the largest source ever observed in an oil and gas field.” The study estimates that 3.7 percent of all the methane produced from wells in the Permian basin is emitted, unburned, into the atmosphere.
European groups to Croatian EU presidency: No fossil fuel bailouts in a just recovery
On Earth Day, more than 100 civil society organisations from around 25 European countries urged the Croatian government, which holds the EU Council presidency, to combat the coronavirus in ways that will lead to a just and sustainable society. The letter calls on EU leaders to “resist the pressure of the fossil fuel industry, multinationals and various private interests to use public money to bail them out,” and instead increase ambition in advancing a European Green Deal.
The Urgent Message of Negative Oil Prices
In The New Republic, Kate Aronoff makes a clear case for why COVID-19 recovery packages must include just transition support for the workers and communities bound up in the fossil fuel sector: Even if “the end is nigh” for oil, “without a plan, it’ll be chaos.”
Big Insurance Is Climate’s Quiet Killer
In this Rolling Stone op-ed, Elana Sulakshana of Rainforest Action Network and Tamara Toles O’Laughlin of 350.org illuminate how insurance companies are “acting as central players in facilitating fossil fuel expansion.” Case in point: Liberty Mutual, a top target of the U.S.-based Stop the Money Pipeline campaign, is providing the insurance TC Energy needs to start constructing the Keystone XL tar sands pipeline.
Fossil fuel giants put workers and communities in Mozambique at risk of COVID-19
In Foreign Policy News, Kate DeAngelis of Friends of the Earth U.S. shines a light on how oil major Total’s reckless choice to continue construction on a major LNG project in Mozambique created the country’s largest COVID-19 outbreak. She calls on the U.S. Export-Import Bank, a key financer of the project, to “use its leverage to demand that all work ceases on this and other projects like it, until the health and safety of the workers and local communities can be assured.”
In California, Gov. Newsom leads on public health, except when it comes to oil
In this op-ed, environmental justice organizer Ashley Hernandez and public health researcher Rosanna Esperanza call on California’s governor to “double down on the public health leadership he is showing around COVID-19 and protect the communities most vulnerable to this pandemic due to the oil industry.” Instead, earlier this month, Governor Newsom reversed his previous moratorium on new fracking permits, granting 24 new permits that will exacerbate fossil fuel pollution.
New signs of the infeasibility of fracking in Vaca Muerta
This new commentary (in Spanish) from Observatorio Petrolero Sur in Argentina examines how this week’s historic plunge in oil markets “reveals how risky it is to believe that a project like Vaca Muerta and the exploitation of fossil fuels can be salvation from the country’s economic crisis” (translated from Spanish).
A U.S. oil bailout = lots of new zombies
Financial Times columnist and Harvard economist Megan Greene warns that a U.S. bailout of the oil industry would create a new wave of “zombie companies that can’t earn the cost of staying in business, kept afloat with taxpayer dollars.” The business model of U.S. exploration and production companies was “broken before oil prices fell,” she writes.