Are We Past the Peak of Big Oil’s Power?
The coronavirus crisis has both obscured and illuminated one of the most seismic developments on our planet in many decades: I think it’s now clear that the power of the fossil-fuel industry has decisively passed its zenith. It’s not a spent force by any means, but, even in the past few weeks, events have shown it to be waning where for a century and a half it has waxed.
Remember the basic outlines of the story: although the industry knew about climate change in the nineteen-eighties, it chose to lie and deny. That prevented early action to slow the globe’s rising temperatures, and it allowed fossil-fuel companies to make record profits throughout the nineties and early two-thousands—record profits year after year.
But, about a decade ago, three things happened. First, activists who were tired of losing to the oil lobby in Congress decided to attack the industry’s ability to expand, mustering opposition to such things as pipelines and fracking wells. A growing movement—led increasingly by front-line communities, indigenous groups, and young people—has fought almost every project. The movement also laid siege to the industry’s financial underpinnings, mounting what has become a massive divestment campaign. (On Friday, Cornell University became the second Ivy League school, after Brown, to join, in part, what is now a fourteen-trillion-dollar effort.) And, finally, engineers cracked the code on renewables, dramatically reducing the price of solar and wind power. All those trends are converging: in the past month, we’ve seen Joe Biden promise that, if he’s elected, the Keystone XL pipeline will finally die; we’ve seen shareholders at the U.S.’s largest bank come very close to forcing its officers to test loans against the stipulations outlined in the Paris climate accord; and we’ve seen the price of solar power in the sunniest spots in the world approach a penny per kilowatt-hour. Taken together, these victories mean, I think, that we’ve passed some invisible point, and that the flow of influence is now moving away from the carbon-based fuels that have dominated power production since the start of the industrial revolution. It means that the balance of power has shifted to the point where we can finally have a serious conversation.
It doesn’t mean that, henceforth, progress will be smooth: the fossil-fuel industry retains a legacy grip on the infrastructure of everything from cookstoves to cars—and a legacy grip on politics, as well. Even now, lawmakers are moving to arrange for industry bailouts as part of the covid-19 relief efforts, to reduce federal-land-royalty payments, and more (see the interview below). And it doesn’t mean that environmentalists will be able to push the pace of decarbonization fast enough to catch up with climate change—for that to happen, the slow fade of fossil fuels would need to turn into a rapid rout.
But it does mean that we have a chance. Because, as the economic prospects of the fossil-fuel industry weaken, so, inevitably, does its political clout. This means that, say, parliaments looking for ways out of economic morasses might well now choose to place a tax on carbon (which consumers are unlikely even to notice, given the current price of oil); and an industry hollowed out by this past decade of losses might, finally, have a hard time resisting it. At this point, in the cost curve for solar panels, even a modest price on carbon, as The Economist said this week, “could give renewables a decisive advantage—one which would become permanent as wider deployment made them cheaper still. There may never have been a time when carbon prices could achieve so much so quickly.” By itself, a price on carbon wouldn’t get the job done anywhere near fast enough. As the analyst Dave Roberts points out, in an excellent roundup of climate policies, a tax “would be helpful—and if it turns out to be possible, go for it—but it is neither necessary nor central to comprehensive climate policy.” That’s because you also need serious subsidies for building out infrastructure for wind and solar power, and strong measures to keep carbon in the ground. The Spanish government, for one, recently announced plans to end all new exploration for coal, gas, and oil within its borders. Powerful pushes toward conservation (here’s a Canadian plan for “deep retrofits” of the nation’s buildings, to make them far more efficient) and changes in life style, such as shifting diets or not taking as many trips on planes, are also paramount. But the political power of the fossil-fuel industry has always been the single biggest obstacle to making real change, and that’s what seems now to be weakening.
Decisive shifts are always easier to pick up in hindsight. But I think it’s fairly clear: the Sisyphean task of pushing the fossil-fuel industry uphill has turned into the Newtonian one of encouraging its speedy descent down the other side.
Passing the Mic
Zorka Milin is a senior legal adviser with Global Witness, an organization that for twenty-five years has uncovered links between natural-resource-related conflict, corruption, and human-rights abuses around the world. The group published a report earlier this month on how a single oil company—Occidental Petroleum—stands to benefit from financial support from the Federal Reserve, illustrating what I described above: the stickiness of the industry’s legacy political power.
Could you explain how Occidental positioned itself for a bailout?
Occidental Petroleum isn’t the most well-known U.S. oil producer, but it plays in the big leagues of political spending. Last year, Occidental spent $8.67 million on lobbying—the fourth-highest amount among U.S. oil-and-gas firms, behind only the behemoths Koch Industries, ExxonMobil, and Chevron. The company’s employees and pac are also big campaign donors, contributing more than a million dollars during the 2020 election cycle. Since the pandemic crashed the oil market, the company and its trade association have lobbied hard for access to federal funds.
Occidental already expects to receive a tax refund (a.k.a., a handout) of nearly two hundred million dollars from the cares Act. And, earlier this month, at President Trump’s direction, the Federal Reserve relaxed the criteria for its small- and mid-sized-business loan program, to make Occidental, and other oil companies, eligible for loans of up to two hundred million dollars. Four of the senators who pushed for these changes to the Fed program—Ted Cruz, Lisa Murkowski, Jim Inhofe, and John Barrasso—all took money from Occidental’s pac. What is more, the same senators are urging the Fed to change the eligibility rules for its bond-buyback programs, which, according to an analysis by the Rainforest Action Network, could affect only one company’s eligibility: Occidental’s.
What does this tell us about the lingering effect of lobbying money on federal energy policy?
Money from the fossil-fuel industry is distorting policy decisions to use public money to bail out a dying industry. This story is much bigger than Occidental. Analysis by Friends of the Earth shows that many other oil companies have aggressively—and successfully—lobbied for help from the government during the pandemic. While it’s been within the law, it is galling to see these companies take advantage of an unprecedented public-health crisis for their own self-interest. It will be impossible to solve the climate crisis without addressing the industry’s undue political influence. Ultimately, meaningful limits on corporate money in politics will require overturning the misguided Citizens United decision. But one change we can make right now is to eliminate secret corporate lobbying for bailouts, as Senator Warren and others recently proposed.
If you were handing out coronavirus-response money, where would you be focussing?
Instead of corporate fossil-fuel interests, I would prioritize the needs of workers and communities that are hardest hit by the crisis. Take, for example, Occidental—its tax refund of a hundred and ninety-five million dollars amounts to nineteen thousand and five hundred dollars for each of its U.S. workers. Yet workers won’t be seeing this money directly. For Occidental’s workers, there is no job security, because none of the coronavirus-funding programs for companies like Occidental require them to keep workers on payroll, unlike the Payroll Protection Program, for small businesses. Indeed, Occidental has already instituted a round of pay cuts, and recently rolled out job buyouts. The ReWIND Act, spearheaded by Representative Nanette Barragán and Senator Jeff Merkley, among others, would put a stop to oil-and-gas bailouts. Congress should pass it.
Right now, our economy needs fiscal support to get going again, but handing money to companies in failing industries that drive climate change is the worst possible way to provide that support. Instead, we should use this money to begin a just and fair transition away from fossil fuels—retraining workers for the industries of the future and protecting the most marginalized communities on the front lines of the climate crisis.
Building on the momentum of announcements like the one from the Spanish government, analysts at Oil Change International laid out a detailed and persuasive case for why governments need to manage the ongoing decline of the fossil-fuel industry, both to insure that it’s speedy enough to hold warming to the lowest possible levels and to guarantee that workers and communities can make a “just recovery” from the current economic turmoil.
When we think about electric-transportation options, a shiny new Tesla is often what we have in mind. But, in fact, it’s the market for e-bikes that’s exploding, because they’re affordable and because they “flatten hills” compared with pedal power. Perhaps the same will happen for e-scooters, too, as cities return to life but people choose to shun public transportation. “Now more than ever, people are demanding open-air, single occupancy transportation,” one hopeful executive said.
Of historical interest: researchers have found the receipts, literally, that show how Shell helped bankroll a key climate denier.
Of immediate interest: as we build out renewables to tackle the climate crisis, by far the smartest way to do it would be with as much ownership as possible by ordinary people, not hereditary princes or multinational corporations. The Rosa Luxemburg Foundation has published a useful white paper pointing out that the wind shouldn’t really be controlled by private interests, and that recognizing this fact could make for a fairer and faster transition.
Media Matters for America has launched a new report showing that, in March and April, certain insurance companies were among the major advertisers on Fox News—that is, it pointed out the irony of companies that theoretically care about risk backing the network’s cavalier attitudes toward both climate change and covid-19. Meanwhile, new research found an overlap between funders of climate denial, such as the Koch Institute, and those attacking stay-at-home orders during the pandemic.
Greenpeace and other campaigners scored a big win when Google announced that it will no longer be building customized A.I. systems for oil companies seeking to maximize extraction from its reserves. Microsoft and Amazon have similar programs; the pressure on them has now increased.
Ugly pictures are emerging from China, where air pollution—having dropped remarkably during the coronavirus lockdown—is now exceeding year-ago levels in many places. The fear among many analysts is that the government, the legitimacy of which has been challenged by the crisis, will opt for a “dirty recovery,” in order to return to normal more quickly.
Interesting polling data: apparently, the pandemic has not driven the climate crisis out of people’s minds. A new Yale University and George Mason University survey finds that only six per cent of respondents are “very sure” that global warming isn’t happening. This is a little surprising, because researchers previously have speculated that there’s a “finite pool of worry” in the human mind. Maybe—or maybe watching one physical crisis play out makes it easier to recognize the larger threat.
Biggest yet: Siemens Gamesa launched a wind turbine for offshore use with rotor blades that carve a swath through the air as high as the Golden Gate Bridge. An increasing problem: finding ships big enough to install them.
It’s been a little quieter than usual, and so easier to hear the birds warming up. This web site has been collecting recordings of the “dawn chorus” from around the planet. You can listen in and also make some recordings of your own to contribute to the project.
This article originally appeared in The New Yorker on May 28, 2020