For oil and gas CEOs, even failure pays off
For oil and gas CEOs, even failure pays off
Fossil fuel execs walked from bankruptcy with $200 million in payouts while leaving workers and environmental disasters behind, a new report by Public Citizen finds.
Emily Sanders is the Center for Climate Integrity’s editorial lead. Catch up with her on Twitter here.
This week, Minnesota was engulfed in fire and smoke. Welcomed by extreme drought, the Greenwood Fire swept through the forests of northern Minnesota, giving off so much heat that it created “fire clouds” hovering tens of thousands of feet into the atmosphere.
We know these disasters are getting worse because of the climate crisis caused by fossil fuels and exacerbated by the oil and gas industry’s decades of disinformation. It’s fitting, then, that Minnesota is suing three titans of climate deception — Koch Industries, ExxonMobil and the American Petroleum Institute — for lying to Minnesotans about the climate catastrophes they knew their products would cause. The Big Oil defendants already lost one battle to have the case heard in federal court, but have appealed that ruling. On Wednesday 17 attorneys general and a coalition of academics and climate groups, including the Center for Climate Integrity, were among those that filed friend-of-the-court (amicus) briefs with the Eighth Circuit Court of Appeals in support of Minnesota’s quest for accountability.
Another one of the groups to file an amicus brief in support of Minnesota was Public Citizen, a nonprofit consumer advocacy organization that has helped shine a light on the oil and gas industry's misconduct. Earlier this month, Public Citizen and Documented released a report that examined the 25 largest bankruptcy cases by U.S. oil and gas corporations over two years. What they found: fossil fuel executives received massive payouts while laying off workers and leaving billions of dollars in environmental cleanup to taxpayers.
Between 2018 and 2020, 76 fossil fuel executives filing bankruptcy collectively took nearly $200 million in cash bonuses, retention payments and severance checks — an average of $2.6 million each, and up to $14.5 million for the biggest payout — while more than 10,500 workers lost their jobs, the report found. The average salary for an oil rig worker is $50,000 - $60,000.
Stephanie Thomas, Public Citizen’s Houston-area researcher and community organizer, says the organization’s findings make clear that the greed of oil and gas executives — not the transition to clean energy or lawsuits seeking accountability, as the industry often argues — is what’s putting workers and taxpayers’ finances at risk.
“These findings show that bankruptcy hurts workers not because of the transition that’s happening, but because executives are more concerned about their salaries than the interests of shareholders and workers,” Thomas said.
Thomas, who has been living outside Houston since the devastating storm that pummeled Harris County in February, says many Houston residents still can’t find work after being laid off from the industry. “The communities living right next to the oil and gas wells or refineries don’t have a golden parachute to rely on,” she said. “Our findings send the message that these communities are sacrifice zones for the pocket books of executives.”
The companies analyzed in the report purchased bonds that cover less than 20 percent of their own estimates of their environmental liabilities, which are a small fraction of the $10.3 billion in cleanup costs they actually owe.
While the report only looks into lesser-known oil and gas companies, like Diamond Offshore Drilling, Chesapeake Energy, and Unit Corp, the findings have implications for major climate polluters too. When oil giants’ assets are no longer profitable, they’re sold to smaller “shell” companies or private equity firms who declare bankruptcy, pay off their CEOs, and abandon their polluted wells and oil fields for taxpayers to clean up. And the cycle continues.
These findings come amid increasing pressure for the U.S. government to end subsidies for the unstable industry. “The fossil fuel industry often claims that it owes its success to the free market,” reads the report’s conclusion. “In reality, the industry has long benefited from comprehensive support from U.S. taxpayers… In the coming months, the Biden administration and Congress will have a rare opportunity to rethink this rigged system, through legislation and potential rulemaking.”
While the administration decides whether or not to stop sending lifeboats (yachts?) to the captains of a sinking ship, findings like these make it all the more clear that the fossil fuel industry must be held accountable in court — the only place that can and will finally force the industry to pay their fair share of the enormous damages they’ve caused, and left communities on the hook for.
“If one person can walk away from a bankruptcy ten million dollars richer, it seems to me that the industry has resources to pay for their pollution,” Thomas said. “They need to pay for the harm that’s been caused.”
ICYMI News Roundup