Oil companies should be denied a bailout

Billions of dollars was wiped from the balance sheets of major oil companies, the price of a barrel of oil plummeted to historic lows in April this year. Image: Terry McGraw/Pixabay

Oil corporations have been environmentally destructive for decades. They have funded a tsunami of misinformation about climate change, actively undermining the public’s trust of science and state institutions. Their product is now technically worthless. So why should public money be used to rescue a harmful industry?

Before we examine this, let us put aside the objection that workers employed by the oil corporations will lose their jobs. The executives who own and manage these companies have never been concerned with the welfare of their workers.

There has been an avalanche of commentary regarding the speed and seriousness of the global oil industry’s collapse. Much of the discussion has focused on the unprecedented scale of the decline, and the remarkable speed with which this has happened. The current pandemic compelled the economy to grind to a halt. This has severely reduced the demand for oil consumption.

Billions of dollars was wiped from the balance sheets of major oil companies, the price of a barrel of oil plummeted to historic lows, and hundreds of smaller oil producers declined into bankruptcy. This was just in the month of April. The price of oil dropped to negative 37 dollars – oil suppliers were paying others to take oil out of their hands.

The glut of oil on the market meant that oil producers had to pay to store all that excess oil – usually in supertankers dotting the oceans. Each supertanker, capable of storing millions of barrels of oil, and costing oil suppliers US$200,000 a day, were left idling on the world’s oceans. This is the latest emblem of the wild irrationality of the capitalist economic model.

The fragility and irrationality of the global oil industry has been exposed and magnified by the COVID-19 crisis – the oil companies were already in trouble prior to the pandemic, but the speedy collapse of the entire industry only illustrated its structural weaknesses. Throughout the 20th century, the oil energy industry was marked by volatility, experiencing periodic boom-bust cycles.

This particular collapse is unique in its suddenness, but is only a concentrated expression of the ongoing and recurrent instability that has characterised the global oil industry. While the oil price has never before declined into negative territory, oil price fluctuations have been numerous and have contributed to geopolitical tensions.

The acquisition of oil resources by the imperialist powers has erupted into warfare throughout the course of the 20th century. However, resource wars are not just a matter of historical interest. The oil-rich nation of Libya, for example, is still undergoing chaotic and internecine fighting, as a result of the imperialist-driven intervention into that nation in 2011. The oil factor, while not the only reason, constituted an important motivation for the European states, backed by the United States, to intervene.

The consequences of the oil industry decline have been amply documented in the corporate media.

Another major reason why the oil corporations should be denied a bailout is that they have been lying to the public about the causes and impact of industrial-induced climate change. The oil companies, through various subsidiaries, have funded a network of fake climate groups, “AstroTurf” (fake grassroots) citizens groups and industry-friendly scientists to attack and undermine the scientific evidence for climate change.

Fossil-fuel companies, such as ExxonMobil, have been promoting a false “equivalence” debate on the issue of climate change, perversely exploiting the laudable notion of free and open debate to promote deliberate misinformation. Spending millions on propping up fake climate groups, the big oil corporations have spread distrust of scientific institutions among the public, and have funnelled support to climate change-denying politicians to influence the policy-making process.

This network of dark money, funding climate change denial, is not just a side issue in matters of economic and political decision-making. The denial of climate change by this billionaire-driven counter movement has sabotaged action on climate change, promoted the growth of ultra conservative and science-denying political parties, and contributed to policies favouring the oil sector.

The US government has enthusiastically turned on “the spirit of money” to fund bailouts of declining and crisis-ridden industries. With the use of government money to rescue failing industries, there has been a revival of an old idea – nationalising the fossil fuel companies. Stigmatised as a “socialistic” measure, the nationalisation of faltering companies has long been a measure adopted by US and right-wing governments.

In fact, it is precisely at times of economic crisis that governments have implemented nationalisation to stave off complete financial collapse, thus rescuing the private sector. Rather than bailing out the corporate polluters, government funds can be used to rescue the workers, who have been bearing the brunt of the oil industry’s collapse. Providing yet more bailouts to the oil conglomerates would only serve to prop up a failed business model.

A Green New Deal, as suggested by numerous climate activist groups, would move away from fossil fuels, boost renewable energy technologies, and transition to new jobs and industries. With the oil industry increasingly becoming an unreliable source of employment, as well as promoting a polluting product, it is time to rebuild the economy, not for the profits of shareholders, but to prioritise people’s needs and address the climate emergency.

While the pandemic has exacerbated economic problems, the economic order prior to the pandemic was already broken. The global oil industry was part of creating the capitalist crisis. We cannot afford to return to what was “normal”.

If you like our work, become a supporter

Green Left is a vital social-change project and aims to make all content available online, without paywalls. With no corporate sponsors or advertising, we rely on support and donations from readers like you.

For just $5 per month get the Green Left digital edition in your inbox each week. For $10 per month get the above and the print edition delivered to your door. You can also add a donation to your support by choosing the solidarity option of $20 per month.

Freecall now on 1800 634 206 or follow the support link below to make a secure supporter payment or donation online.