Don't Bail Out Fossil Fuels. Buy Them Out Instead | Opinion

The pandemic-induced global financial meltdown has rocked the fossil fuel industry, leaving American drilling and fracking companies begging for bailouts. Then things slid from crisis to catastrophe as crude prices temporarily plunged into negative territory, leading President Donald Trump to tweet this week that he would "never let the great U.S. Oil & Gas Industry down," signaling his renewed push to use taxpayers' money to throw fossil fuels a federal lifeline.

Despite Trump's bluster, the industry continues to flounder. So here's a better idea: Rather than bailing out the fossil fuel industry, let's buy it out instead.

This crisis has prompted some long overdue conversations about how much better society would be if things essential to life—health care, food and water—were managed in the public interest instead of dominated by corporate interests. Government agencies are using their legal authority, not to mention their moral duty, to demand ventilators and face masks. The matter of fossil fuels is similar, but flipped: The federal government should use its ample authority to stop creating the products driving the global climate crisis.

Simply put, here's how the buyout can work: The federal government purchases enough stock to take a majority stake in the largest American fossil fuel companies, and over the next decade winds down drilling and fracking operations while managing a rapid, just transition to clean, renewable energy. This would drastically reduce climate-warming emissions while creating hundreds of thousands of stable new jobs at a time when American workers need them most. As documented in our 2019 report "Building Climate Justice," the vast majority of these jobs are based in readily available technologies, including solar panel production and energy efficiency retrofitting.

Like other corporate behemoths, the oil and gas industries have been hammered by the COVID-19 pandemic. But their condition was grim beforehand; the Russia-Saudi price war has made drilling for oil and gas a money-loser, and the simple economic advantages of clean energy have made long-term investments in polluting fossil fuels inherently foolish. After a decade of disappointment, Wall Street refuses to throw the heavily indebted fracking industry any more lifelines.

The fossil fuel crisis presents an opportunity for real climate action—and at a bargain price. A 2017 analysis of full industry nationalization pinned the cost at a little more than $1 trillion. It would cost less than half as much to buy control of the same companies now.

Precedent for such bold government intervention in industry abounds. There are dozens of historical examples where private sector businesses were re-oriented to respond to public needs. The New Deal brought vital economic activities under greater public control, from home mortgages to electricity generation. In fact, electricity was finally brought to much of rural America thanks to public service mandates after the "free market" failed to do so.

Much more recently, in the wake of the 2008 Great Recession, major U.S. automakers faced a painful reckoning. The Obama administration stepped in with a rescue package designed to save Detroit, buying millions of shares in GM. It worked, but the administration refused to fully capitalize on its enormous leverage over the direction of the companies and eventually sold back its huge stake. We mustn't make that same mistake now.

Oil storage Houston
An oil storage facility is shown at the Vopak Terminal Deer Park on April 21 in Houston, Texas. Mark Felix/Getty

Many American fossil fuel companies are teetering on the brink of collapse, with tens of billions of dollars of industry debt set to mature over the next couple years. This leaves us with two choices. We could wait for the fracking bubble to fully burst, and let Washington politicians and industry lobbyists arrange a hasty "rescue" package, which will undoubtedly enrich CEOs and Wall Street investors but leave workers in the lurch. Or we could seize this moment to help address the existing financial crisis and at the same time make great strides in addressing the climate crisis as well.

Corporations that have profited from planetary destruction will hang on as long as they possibly can, relying on favors from the politicians they have bankrolled for decades. Instead of pleading with polluters to do the right thing on climate change, public control would shift the power away from Wall Street-backed profiteers, giving us our best chance to control the terms and pace of a worker-focused transition away from filthy fossil fuels.

Wenonah Hauter is the executive director of the national advocacy groups Food & Water Action and Food & Water Watch and author of the book Frackopoly: The Battle for the Future of Energy and the Environment.

The views expressed in this article are the writer's own.