The Fed Invested Public Money in Fossil Fuel Firms Driving Environmental Racism
In April, the price of oil fell so far so fast that oil futures contracts went negative. Oil prices have recovered somewhat, but not enough to ever return the industry to its prior state. Analysts predict the U.S. has reached peak oil production and will never again “return to the record 13 million barrels of oil per day reached in November 2019.” ExxonMobil, which has been a part of the Dow Jones Industrial Average market index for 92 years, was removed last week and replaced with the software firm Salesforce. But while financial analysts sound the alarm about this dying industry, the Federal Reserve has been buying up the debt of fossil fuel companies through a pandemic emergency program. We the public, together with the Fed, now own over $315 million in bonds of fossil fuel firms, including those with a track record of environmental racism.
Among the many Fed rescue programs is the Secondary Market Corporate Credit Facility (SMCCF), which buys corporate debt of companies. The program is supporting fossil fuel corporations in notably disproportionate numbers: More than 10 percent of the Fed’s bond purchases are fossil fuel companies, even though fossil fuel firms only employ 2 percent of all workers employed by firms in the S&P 1500 stock market index.
These bonds are effectively a public investment because the Fed is leveraging $25 billion from the CARES Act as a down payment for the SMCCF’s bond purchases. Together with the Fed, the public now holds the corporate bonds of ExxonMobil, Chevron, BP, Phillips 66 and Noble Energy. And it seems likely the Fed will be holding these fossil fuel bonds until they mature — up to five years into the future for some of them — based on comments Fed Chair Jerome Powell made to Congress.
https://truthout.org/articles/the-fed-invested-public-money-in-fossil-fuel-firms-driving-environmental-racism/