On April 30, the Federal Reserve expanded its Main Street Lending Program to allow small and mid-size oil companies to access emergency COVID-19 funds. As a result, oil and gas companies have received over $113 million in COVID-19 relief meant for small businesses.
The Federal Reserve originally created the Main Street Lending Program to support small and mid-size businesses that were in sound financial positions before the pandemic. But thanks to these new changes, larger oil companies with more profits and employees can now tap into the “small business” loans.
Furthermore, companies originally couldn’t use these loans to pay down or refinance existing loans. Now, they can, permitting heavily indebted oil companies facing bankruptcy to obtain COVID-19 relief. While these changes are not specifically aimed at aiding the oil industry, these changes mirror exactly what the industry has been asking for recently.
Put simply: Fossil fuel executives can extend the life of their indebted, outdated, and dangerous companies with COVID-19 relief funds. By allowing nearly bankrupt fossil fuel companies access to these loans, the Federal Reserve is delaying the inevitable transition to a clean energy economy and perpetuating the United States’ unabated use of harmful fossil fuels. We should not fund a public health hazard during a public health crisis.
We should not fund a public health hazard during a public health crisis.
Many fossil fuel-intensive industries reside and pollute next to low-income communities and communities of color. These vulnerable communities have seen increased rates of respiratory and cardiovascular issues, which decrease the body’s ability to fight COVID-19. A recent study found that a person living in a county with high levels of particulate matter is 15 percent more likely to die of COVID-19 than someone living in a county with less pollution.
Despite the connection between fossil fuels, air pollution, and COVID-19, President Trump is committed to bailing out the oil industry. It is up to us to ensure that the fossil fuel industry does not receive any more COVID-19 relief.
FCNL is calling for the following actions to be taken:
- The Federal Reserve should revert its lending practices to its original status. The fossil fuel industry should not receive any more relief. Companies linked to the oil and gas industry have already received almost $2 billion in tax benefits from COVID-19 relief legislation.
- Secretary of Interior David Bernhardt should not grant royalty relief to the oil and gas industry. In early April, members of Congress asked Secretary Bernhardt to grant royalty relief for oil and gas extractions on public lands. Royalty payments are crucial for states and fund the Land and Water Conservation Fund (LWCF), which seeks to protect wilderness around the country.
- Congress should oppose any additional funding to fill the Strategic Petroleum Reserve (SPR). The SPR is a federally-owned oil reserve to be used if oil supply chains were interrupted. Members of Congress from both parties and the administration have proposed legislation that would appropriate billions to unnecessarily fill the SPR. Luckily, this provision was cut from the first CARES Act signed in March. But we can’t let it be added to another COVID-19 relief package.
The new Federal Reserve lending requirements are bad. But unfortunately, with fossil fuel companies pushing for more relief, the situation can get even worse. We should think of ways to sustainably recover from the COVID-19 pandemic rather than bolster our dependency on fossil fuels. Congress must make a commitment to our environment, our workers, and our health—not to polluting industries.