Republicans Not So Sure About This Free Market Thing When It Comes to Oil

Illustration for article titled Republicans Not So Sure About This Free Market Thing When It Comes to Oil
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One of Republicans’ arguments against any form of climate action has been that government should let the market take its course. This ignores the massive subsidies incumbent fossil fuels enjoy, including the fact they’re destroying the planet without having to pay for it.

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But reality is catching up with fossil fuels. Oil prices are in the pits due to the coronavirus-fueled demand drop. A growing number of banks and investment firms have also decided to pull their financial support from the riskiest fossil fuel investments in the Arctic and elsewhere. The logic is pretty straightforward: All signs point to funding oil exploration as a pretty terrible allocation of financial resources.

The invisible hand is guiding banking titans out of the Arctic oil loan business, and the coronavirus demand collapse only further underscores the risks of investing in new oil exploration. The market, it appears, has spoken.

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But Republicans don’t like what they’re hearing. In a letter sent last week to the Trump administration, 36 Republican members of Congress who have received nearly $30 million in oil and gas donations, spearheaded by Senator Dan Sullivan ($691,824 in oil and gas donations), decried banks’ decisions to cut fossil fuel funding and begged the administration to protect their preferred sector.

“Thank you for your fervent support of the United States energy sector,” the letter obsequiously begins. After slobbering all over Trump for his “energy dominance” platform, the letter gets to the heart of the matter (emphasis added):

“We write with critical concern as major American financial institutions continue unfairly to pick energy winners and losers in order to placate the environmental fringe....We urge you and your Administration to use every administrative and regulatory tool at your disposal to prevent America’s financial institutions from discriminating against America’s energy sector while they simultaneously enjoy the benefits of federal government programs.”

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Folks, I nearly fainted reading the “winners and losers” line. The Republican argument for the past two-plus decades is that the market should, in fact, pick winners and losers. Remember Solyndra? Republicans tripped over themselves to yell about how the solar panel company defaulting on its loan was proof the government shouldn’t “pick winners and losers,” and that the U.S. should just let the free market take its course. (The loan program that lent to Solyndra turned a profit by the way.)

The free market lovefest has always been a cheap attempt to wave the American flag, hiding the crony capitalism behind the scenes. Most of the letter’s signatories owe their political lives to the fossil fuel industry, which has made it rain on their campaigns. Hypocrisy is nothing new in politics, but it’s nonetheless stunning to see many of the same people who have used the “winners and losers” line to whine in bad faith about federal government programs vs. the free market now turn it completely around.

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Here are just some of the many instances the letter signatories deploying the line verbatim to argue against government investments of any form:

  • In 2012, Rep. Fred Upton ($1,148,561 in lifetime oil and gas donations) introduced the so-called “No More Solyndras” Act (lol), noting “as the case of Solyndra proves, government should not be in the business of picking winners and losers.”
  • Senator John Cornyn ($4,109,371 in lifetime oil and gas donations and the top 2020 industry largesse recipient so far) says on his campaign website “Senator Cornyn believes the industry must not pick winners and losers.”
  • Senator Bill Cassidy ($1,562,025 in lifetime oil and gas donations and fifth-highest recipient of 2020 oil and gas money) derided the idea that the “government should pick the winners and losers and the politically well-connected benefit” during his 2014 Senate race.
  • Senator Ted Cruz ($3,626,788 from oil and gas industry donations) wrote an op-ed for the Des Moines Register during his failed presidential bid saying his “view on energy is simple.” That includes noting “Washington shouldn’t be picking winners and losers.” (Side note: Maybe Ted can talk to his wife, who works at Goldman Sachs, to see if she can get the bank to reverse course.)
  • The entire Wyoming Congressional delegation of Senator John Barrasso ($564,325 in oil and gas donations), Senator Mike Enzi ($531,583), and Rep. Liz Cheney ($412,475) sent a letter to Trump about coal subsidies for West Virginia. The press release on Enzi’s website is filed under the headline “Federal government should not pick winners and losers in coal market.” This is a truly rare and fine vintage of fossil-fuel-on-fossil-fuel hypocrisy. Savor it.
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I could go on, but you get the drift. These are politicians who have all put forward bad faith, bogus arguments for the free market and against government intervention. Now that the free market is turning against what for many is a top campaign donor, they’re suddenly hooting and hollering about how bad the market is and begging for intervention.

The truth is any investment the federal government makes in fossil fuels or disciplining banks for not funding them is a losing one. Big Oil companies are some of the weakest-performing stocks in the S&P 500. The coronavirus drop in demand has exposed the U.S. fracking industry as an unstable house of cards. Even oil companies aren’t expecting demand to come back, underscoring why we should start winding down production from a pure economic standpoint here and now. Beyond the immediate money, there is also simply no way oil and gas exploration (to say nothing of coal) is compatible with a habitable planet. A smart government would use now as a chance to start untangling the web of fossil fuels and the economy and support workers in the transition to phase out oil, gas, and coal.

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I know, I know: That’s picking workers as winners. Wild thought.

Managing editor, Earther

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cmallen
C.M. Allen

“The government shouldn’t pick winners and losers. The market should decide who wins or loses...except when we’re not the winners.” — Republicans