First, we analyze a piece on how G&O companies are going bankrupt right after paying execs multi-million dollar bonuses. Then, how G&O and other corporations get COVID bailouts & pay huge bonuses. RIP John Lewis.
John Lewis, RIP. We lost a great one. His legacy of courage and commitment to civil rights and justice will be his legacy. From the NYTs
He announced on Dec. 29 that he had Stage 4 pancreatic cancer and vowed to fight it with the same passion with which he had battled racial injustice. “I have been in some kind of fight — for freedom, equality, basic human rights — for nearly my entire life,” he said.
On the front lines of the bloody campaign to end Jim Crow laws, with blows to his body and a fractured skull to prove it, Mr. Lewis was a valiant stalwart of the civil rights movement and the last surviving speaker at the historic March on Washington for Jobs and Freedom in 1963.
More than a half-century later, after the killing in May of George Floyd, a Black man in police custody in Minneapolis, Mr. Lewis welcomed the resulting global demonstrations against systemic racism and the police killings of Black people. He saw those demonstrations, the largest protest movement in American history, as a continuation of his life’s work, though his illness had left him to watch from the sideline.New York Times
It is an ongoing Retake refrain: under capitalism, corporations are able to feed their voracious greed with subsidies, tax-benefits, and now COVID bailouts, while exploiting employees, gouging customers, and paying huge salaries to execs. Now, two recent pieces from the NYTimes describe how just days before declaring bankruptcy, they pay out millions in bonuses to the execs who drove them to bankruptcy. And the gas and oil industry leaves behind scores of orphan wells spewing highly toxic methane into the atmosphere. Guess who gets to clean this up? After we look at this bailout, we offer our News In Brief with links to three articles amplifying on our analysis of the gas and oil bailout. We close with two videos, one-minute from AOC on the corporate bailout, and then an informative analysis of Congress’s real motivation behind the stimulus package.
Shocking Image: US Compassion In Action
Tuesday, July 21, 6:30-8 pm, Our Next Zoominar:
Redistricting in NM,
Another Dream Deferred
Panelists will be Dick Mason, NM League of Women Voters; Kathleen Burke, Fair Districts New Mexico; and Senators Gerry Ortiz y Pino and Mark Moores. For decades advocates have been trying to pass legislation to create a state constitutional amendment to establish an independent redistricting commission, only to run into a brick wall every year. What’s up with that? It would seem that in 2019 and 2020, we had the perfect opportunity to get it done: Democrats in charge of everything. Find out why that may not be the chemistry needed to get this done. Find out how gerrymandering has diminished the political power of communities of color. Find out who is pulling the strings to prevent an independent redistricting commission.
You must pre-register to attend. Click here to register.
Retake on KSFR, 101.1 FM at 8:30 am, Saturday, July 18 (TODAY). If you’d like a preview of Tuesday’s Zoominar on Redistricting in New Mexico, listen to our interview with Dick Mason and Kathleen Burke on KSFR or watch the Retake Conversation to view the full 47-minute show.
Gas & Oil Industry:
Not a Trustworthy Partner
Governor Michelle Lujan Grisham once famously declared that “I work for you,” when addressing a New Mexico Oil & Gas Association breakfast. She went on to describe the industry as an important partner of the state. I am wondering if she is having second thoughts. Yes, for now NM is highly dependent on gas and oil revenue, but partners do not leave you high and dry once they’ve finished extracting every last dollar out of you…unless your partner is the gas & oil industry.
The New York Times’ “Fracking Firms Fail, Rewarding Executives and Raising Climate Fears” by Hiroko Tabuchi describes how, in increasing numbers, gas and oil corporations pay out millions in executive bonuses days before declaring bankruptcy. Not a very “partner-like” arrangement. From the NYTimes:
“Whiting Petroleum, a major shale driller in North Dakota that sought bankruptcy protection in April, approved almost $15 million in cash bonuses for its top executives six days before its bankruptcy filing. Chesapeake Energy, a shale pioneer, declared bankruptcy last month, just weeks after it paid $25 million in bonuses to a group of executives. And Diamond Offshore Drilling secured a $9.7 million tax refund under the Covid-19 stimulus bill Congress passed in March, before filing to reorganize in bankruptcy court the next month. Then it won approval from a bankruptcy judge to pay its executives the same amount, as cash incentives.”New York Times: “Fracking Firms Fail, Rewarding Executives and Raising Climate Fears”
Tabuchi goes on to describe how this is only the tip of the iceberg. She points to a report from analytics company Rystad Energy, projecting that in the next five years upwards of 250 more gas and oil companies could file for bankruptcy.
Scores or even hundreds of G&O companies going bankrupt would certainly lead to an even greater decline in NM revenue generated by the industry. But that is only the beginning of New Mexico’s exposure. Tabuchi points out that “the federal government estimates that there are already more than three million abandoned oil and gas wells across the United States, two million of which are unplugged, releasing the methane equivalent of the annual emissions from more than 1.5 million cars.” Emphasis mine.
“They’re sitting there and they’re leaking. And they’re much leakier than a well that’s still in production and being monitored, although those leak, too,” said Robert Schuwerk, executive director for North America at Carbon Tracker. “And companies haven’t been setting aside the money, because they’d rather spend the money on drilling a new well.”New York Times: “Fracking Firms Fail, Rewarding Executives and Raising Climate Fears”
To read the entire NY Times report, click here.
Trustworthy partners do not pay out huge bonuses, milk you for all the revenue they can, and then depart, leaving you with the responsibility of plugging the wells they’d used to generate their profits and pay their obscene bonuses. But G&O partners do. And in NM, those “partners” are not shy about asking our legislators to peer through some very rose-tainted lenses. During the July 15-17 Legislative Finance Committee Interim Hearing, a gas and oil analyst company, Enverus, presented such a rosy future for drilling in NM. From their presentation.
“Crude oil prices staged an impressive recovery in May and June after deep production cuts and a partial recovery in demand for motor fuels. After a painful shock to the system, rebalancing is currently underway.Enverus
－ BUT …..The recovery in demand remains tenuous, though, and anemic refining margins and the recent rise in new COVID-19 cases do raise concerns.
－ We nevertheless remain cautiously optimistic that the rebalancing will continue, with much needed inventory draws coming over the second quarter of 2020, extending into 2021.”
And if that is not rosy enough for you, they quickly added this:
“The natural gas market remains very bearish, with prices averaging under $2/MMBtu in 2020. Demand losses due to COVID-19 have been higher than the production declines so far.Enverus
－ However, current production levels are not enough to meet the upcoming peak-demand winter months.
Therefore, Enverus expects prices to increase north of $3.50/MMBtu as soon as this winter 2020-21 in order to incentivize drilling activity. Based on break even prices, production growth will come from the Marcellus/Utica, Haynesville, and Permian.
Let’s start with the fact that on its website, Enverus proclaims one of its aims is to help gas and oil companies “Maximize production and ROI with actionable intelligence at your fingertips.” Noticeably absent is anything about protecting states from being ravaged by the industry.
Nevertheless, the Enverus report was designed to reassure NM legislators that the state’s gas & oil revenue spout will continue indefinitely. What was left unsaid was that gas & oil will remain here until it is no longer profitable and then, as described by the Times, these companies will pack up, pay their execs handsomely for their exquisite fleecing of our land, declare bankruptcy, and leave NM taxpayers to pay for plugging the wells. Unless…
In truth, there are two ways we could avoid paying the entire cost of remediation. The first, as proposed by Representatives Ben Ray Lujan and Xochitl Torres Small and endorsed by the Sierra Club, is to seek federal funds to pay the cost. That way, rather than NM taxpayers paying all the cost, that cost can be a distributed among all US taxpayers.
“Democrat U.S. Reps. Xochitl Torres Small and Ben Ray Lujan (D-NM) of New Mexico were joined by Republicans Reps. Mike Kelly and Glen Thompson of Pennsylvania in sending a letter to House leadership calling for federal funds to be set aside to plug wells abandoned by operators in future COVID-19 economic relief packages.”Carlsbad Current Argus
And from the Sierra Club.
“To bolster our transition to a 100% clean energy economy, stimulus investments could help many of the 600,000 unemployed clean energy workers get their jobs back, while over 190,000 unemployed oil and gas workers could be employed each year to close orphaned oil and gas wells.”Sierra Club: “Millions of Good Jobs: A Plan for Economic Renewal”
So our House leadership and one of the most influential environmental advocates in the nation are asking for the Congress to pay to clean up the mess made by the gas & oil industry. Consider this, US taxpayers first subsidize the gas and oil industry for decades, then offer billions to gas & oil by way of COVID relief, then allow bankruptcy laws to help them escape their moral obligation to clean up after themselves so that, instead they can pay millions to the execs responsible for this. Capitalism at work.
Instead of offering billions in bailouts, how about passing legislation making sure the gas and oil industry pays for plugging orphan wells BEFORE they pay out these executive bonuses?
Well, this is precisely what the NM State Land Office (SLO) has in mind. They will be pressing to pass legislation in 2021 insisting on significant increases in bonding levels for gas and oil leases. Bonds are securities placed by drilling operators that then can be used to pay for the cost of plugging wells. Currently, bond levels are entirely inadequate to cover the cost of plugging wells.
Retake will continue our dialog with SLO staff to find out more about this legislation and will report out soon. But for now, recognize that NM is lucky to have Stephanie Garcia Richard as our Land Commissioner. She is a fierce advocate for protecting NM land, air and water and is not afraid to advance ideas unpopular with New Mexico Oil & Gas Association. She needs advocates behind her and Retake counts itself as one of her strongest supporters. Stay tuned.
News In Brief: Three pieces that amplify on the report on the gas and oil bailout. First, a piece showing that it isn’t only gas and oil who will be paying out bonuses after receiving COVID bailouts and then cashing out via bankruptcy. Then two pieces on how COVID relief is being funneled to the gas and oil industry.
- From the New York Times: “On Eve of Bankruptcy, U.S. Firms Shower Execs With Bonuses“
- From The Guardian: “US fossil fuel giants set for a coronavirus bailout bonanza“
- From Vox: “Coronavirus stimulus money will be wasted on fossil fuels“
We Need More AOCs in Congress. Passionate One-Minute Reminder What Can Happen If We Elect a Few More AOCs
AOC blasts Congress for putting relief to billionaires and corporations before providing protective gear for first responders. I am hoping her next move is to challenge Schumer for his Senate seat in 2022. This is what a justice advocate sounds like.
Real News Report On How Washington Bent Over Backwards to Offer Trillions in Corporate Relief, While Offering Pennies to Workers
This is an excellent report breaking down US Congress priorities.
Paul & Roxanne
Disturbing. Makes me feel hopeless – big money always wins.
Hey, I’ve got an idea! Let’s switch to all nuclear power, and then we can plug the exhausted oil and gas wells with spent fuel rods and plutonium waste!
Thanks, Paul. for this article. The states let the oil and gas companies get away with this all the time and the taxpayers have to foot the bill. We need to go hard at our NM legislators to hold these companies accountable. How about having these high paid executives personally guarantee the plugging and abandonment costs or, better yet, make them have a bond for each individual well, not just a blanket bond, equal to those costs with 5 years of inflation figured in.
PS Thanks for doing the upcoming Redistricting webinar. I’ll be attending.
Good morning. Excellent blog posts this morning.
I’d like to add that this is what corporations do – they pay huge bonuses to top execs, exploit their lower tier employees, avoid paying taxes, and destroy the environment. Don’t see this changing voluntarily.
My best friend is a former Wall Street banker. She couldn’t stomach the financial sector and moved on to more socially beneficial work. Recently, she told me that capitalism has to be regulated. You cannot trust people to do the right thing voluntarily. The article you referenced on CEO bonuses is the exact same thing they did when taxpayers bailed them out of the 2008 Recession.
These people need to be reigned in, and that can only happen when elected officials are accountable to voters, and not to lobbyists. It’s actually pretty straightforward, but we don’t seem to have the political will to stop this and end these practices.
Applause to Retake for working with others to remake our state legislature. It has to start there, and citizens have to stay on top of what actually happens in the sessions. Thanks for your hard work to make NM a better place for future generations.
On the methane leak story, the sad part is that methane leaks can be found and stopped while saving money. New technology and innovative solutions have made the Leak Detection and Repair (LDAR) challenge far more reliable, safer, and dramatically more cost-effective.
We need every energy executive to understand the problem and the existence of these solutions: https://viper-drones.com/leak-detection-why-every-energy-executive-should-know-this/