April 30, 2020 – Note: The Federal Reserve today unveiled an expanded “Main Street” business lending program that could allow failing, highly indebted oil and gas companies to borrow money at low rates. In doing so, the Fed heeded a call by U.S. Sen. Ted Cruz (R-Texas) as well as fracking companies to make it easier for oil and gas companies to refinance their debts. The Fed’s new program rules drop an earlier restriction on refinances.
The Fed should not be in the business of bailing out companies that were in terminal decline and suffering largely from their own misadventures well before the coronavirus pandemic. The fracking industry is notoriously overleveraged, and fracking gas is not even profitable.
Rescuing fossil fuel production is absolutely the wrong direction for public health amid a global pandemic. Fossil fuel combustion produces air pollution that kills hundreds of thousands of Americans and millions more globally each year. The same pollution also substantially increases COVID-19 mortality. This is all without considering the cascade of public health and economic crises we face due to fossil-fuel-induced climate chaos.
The U.S. should be working to phase out fossil fuels as swiftly as possible, not rescuing a toxic and reckless industry that is already in a terminal, albeit too slow, decline. The transition away from fossil fuels will require massive investments that will create millions of jobs. U.S. recovery spending that doesn’t directly target public health and blameless companies and workers should be aimed squarely at accelerating this transition, not stalling it.
The real concern in the oil and gas industry is that workers are losing jobs, as they are in so many other sectors. The response here should be to rescue the workers and provide relief to state and local governments straining to meet the many challenges of this pandemic at the same time as their revenues decline sharply. It should not be to rescue reckless, polluting, humanity-endangering and often dishonest companies that were in plenty of trouble of their own making well before this pandemic began.
David Arkush, Managing Director, Public Citizen’s Climate Program