Extreme Temperature Diary- Sunday April 5th, 2021/ Main Topic: A Case Of Mega Greed…Fossil Fuel Companies Took Billions in U.S. Coronavirus Relief Funds but Still Cut Nearly 60,000 Jobs

The main purpose of this ongoing blog will be to track planetary extreme or record temperatures related to climate change. Any reports I see of ETs will be listed below the main topic of the day. I’ll refer to extreme or record temperatures as ETs (not extraterrestrials)😉

Main Topic: A Case Of Mega Greed…Fossil Fuel Companies Took Billions in U.S. Coronavirus Relief Funds but Still Cut Nearly 60,000 Jobs

Dear Diary. For most of my adult life I have heard the expression of “capatalist piggies feeding at the trough.” Knowing how investment capitalism operates via hungry greed this type of behavior is to be expected. What disappoints me about today’s main topic is the lack of safeguards put in place by our government dolling out cash to limit corrupt payments such as those to the petroleum industry during the pandemic’s peak. We all know that petroleum is on the way out as a main fuel source, but this chemical will be very profitable and get utilized for years to come, so why the big need for relief funds?

For more details on this debacle here is about half of a recent Inside Climate News article:

A new analysis shows how oil and mining businesses used tax changes in the CARES Act to improve cash flow and reward shareholders rather than maintain employment.

By Nicholas Kusnetz April 2, 2021An aerial view shows Marathon Petroleum Corp's Los Angeles Refinery, the state's largest producer of gasoline, on April 22, 2020 in Carson, California. Credit: David McNew/Getty Images

An aerial view shows Marathon Petroleum Corp’s Los Angeles Refinery, the state’s largest producer of gasoline, on April 22, 2020 in Carson, California. Credit: David McNew/Getty Images

When Congress looked to prop up a tanking economy and stanch its hemorrhaging of employment as the pandemic spread last year, the oil industry was among those that sought relief. Now, a new analysis shows that dozens of fossil fuel companies received billions of dollars in tax benefits in the coronavirus relief package, but slashed tens of thousands of jobs anyway.

While Congress ended up sending billions in direct loans to small and large businesses, a significant portion of CARES Act benefits came in the form of changes to the tax code. At least 77 fossil fuel companies took advantage of those to claim a total of $8.2 billion in benefits last year, even as they cut nearly 60,000 jobs, according to an analysis published Friday by BailoutWatch, a nonprofit supported by Rockefeller Philanthropy Advisors.

Chris Kuveke, a BailoutWatch analyst, said the data shows that the aid to the industry failed to deliver the benefits that Congress had intended.

“These companies did not use that money they received through the CARES Act to maintain payroll,” he said.

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As oil prices collapsed last year, some energy companies began lobbying Congress and the federal government for various forms of relief. Occidental Petroleum, for example, enlisted its employees to send letters to members of Congress to ask that they “provide liquidity” to the energy industry, according to Bloomberg News.

Among the various forms of stimulus included in the final relief package were changes to the tax code that proved beneficial to the oil industry.

For example, companies for years were allowed to “carry back” their losses in one year to offset profits from previous years to get a retroactive tax refund. That allowance helped companies with volatile earnings, but it was eliminated by the 2017 tax cuts signed into law by President Donald Trump. The change was one of the few provisions of the tax overhaul that modestly increased the tax burden for corporations, even as the bill overall drastically reduced corporate taxes, said Thornton Matheson, a senior fellow at Urban-Brookings Tax Policy Center.

The CARES Act eliminated that change, and even expanded on the original provision, allowing companies to carry any losses incurred from 2018-2020 back five years, instead of the two years allowed before the 2017 tax bill. Matheson said the oil and gas industry was among a few likely to benefit most from that part of the CARES Act, because its earnings can swing wildly with commodity prices.

Thus the change allowed companies to stretch losses from 2018 back to 2013, when oil prices were above $100 a barrel and profits for some of them were sky high (prices fell sharply in late 2014, and have not fully recovered).

Marathon Petroleum, a major refiner, benefited the most, the analysis found, claiming $2.1 billion in tax benefits, according to the BailoutWatch analysis. The company cut nearly 2,000 jobs last year, not counting those in its retail business.

Marathon disputed the figure, saying that less than 30 percent of its $2.1 billion tax benefit was due to the CARES Act provisions. However, its annual securities filing said that based on the carryback “as provided by the CARES Act, we recorded an income tax receivable of $2.1 billion” to reflect the company’s estimate of the refund it expected to receive in its 2020 tax return.

Marathon spokesman Jamal T. Kheiry said some of the layoffs were associated with the idling of refineries, and added that the company was generous with employees who lost their jobs. “To help affected employees transition, we provided severance, bonus payments, extended healthcare benefits at employee rates, job placement assistance, counseling and other provisions,” he said.

NOV, a drilling company, cut nearly 8,000 workers, more than 20 percent of its employees, despite receiving a $591 million tax benefit. The company did not respond to a request for comment.

Occidental collected $195 million and cut 2,600 jobs.

Eric P. Moses, a spokesman for Occidental, said the job cuts were associated with its 2019 acquisition of Anadarko Petroleum “and completed prior to the COVID pandemic and Congress’ passage of the CARES Act.”

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In March 2020, Occidental announced it would cut some employee salaries, with the highest reductions going to top executives, according to Reuters. Two months later, Reuters reported the company was asking employees to take voluntary buyouts.

In total, BailoutWatch estimated in November that fossil fuel companies had received $10.4 to $15.2 billion in direct benefits from various CARES Act programs, and that total reflected only the $5.5 billion in tax benefits that were reported at that point.

The oil and gas industry faced an historic fiscal crisis last year, as oil prices collapsed and global travel ground to a halt. In response, the U.S. oil and gas sector cut more than 100,000 jobs as of November last year, a 16 percent decline, according to BW Research Partnership.

For more read:

Nicholas Kusnetz

Reporter, New York City

Nicholas Kusnetz is a reporter for InsideClimate News. Before joining ICN, he worked at the Center for Public Integrity and ProPublica. His work has won numerous awards, including from the American Association for the Advancement of Science and the Society of American Business Editors and Writers, and has appeared in more than a dozen publications, including The Washington Post, Businessweek, The Nation, Fast Company and The New York Times.

You can reach Nicholas at nicholas.kusnetz@insideclimatenews.org and securely at nicholas.kusnetz@protonmail.com.

It will be interesting to see how much money (if hopefully not any) gets doled out to the petroleum industry from the enormous $2 trillion infrastructure bill. I’ll let you, my readers, know about that as soon as my radar spies that information.

Related:

And here are those “ET” notes from Monday:

Here is more climate and weather news from Monday:

(As usual, this will be a fluid post in which more information gets added during the day as it crosses my radar, crediting all who have put it on-line. Items will be archived on this site for posterity. In most instances click on the pictures of each tweet to see each article. The most noteworthy items will be listed first.)

Now here are some of today’s articles and notes on the horrid COVID-19 pandemic:

(If you like these posts and my work please contribute via the PayPal widget, which has recently been added to this site. Thanks in advance for any support.) 

Guy Walton “The Climate Guy”

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