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Treasury Department Photo: Florian Hirzinger, Wikimedia CC
On Friday, the Treasury Department proposed a rule that states that “decisions by banks to not serve a specific customer should be based on individual risks, rather than a categorical exclusion.” according to The Hill. The rule is aimed at what the Energy Secretary has argued is “redlining” or discriminating against projects to drill for oil and gas in Alaska. The Trump administration argues it is about fair access to financing, but environmental groups claim that the rule is intended to force banks to make uneconomic loans. The proposal specifically points to the fact that banks said they “had decided to cease providing financial services to one or more major energy industry categories, including coal mining, coal-fired electricity generation, and/or oil exploration in the Arctic region.”
Why This Matters: This kind of government mandate overriding the free market smacks of, well, socialism or cronyism or both. And while oil ad gas companies are now hurting, they’ve reaped billions from our dependence on fossil fuels. It’s preposterous to think that they deserve protection as if they were the victims of discrimination. And of course, the Trump administration appears to be trying to jam the rule through before January 20th.
Forcing Political Correctness of the Trump Variety
The proposed rule is not only aimed at fossil fuel companies. It also states that “organizations involved in politically controversial but lawful businesses – whether family planning organizations, energy companies, or otherwise — are entitled to fair access to financial services under the law,” pointing to bank decisions not to finance private prisons, gun manufacturers and family planning services. An attorney for the Sierra Club stated that the Treasury Department isn’t “actually committed to free-market principles on their own. They’re committed to free-market principles so long as they serve their favored industries,” The Hill reported. This whole ridiculous idea was hatched in an Oval Office meeting earlier this year when the President said he would look into it after Alaska Senator Dan Sullivan (R-Alaska) accused banks of “starting to discriminate against American energy companies” and trying to “discriminate against investment in my state in Alaska.” The Treasury Department later promised in a letter to Alaska members of Congress that they would look into the issue. In response to an e-mail from The Hill, the Treasury Department said that the agency could enforce the rule in a number of ways including civil fines but that it does not have the authority to make these actions a crime.
Wind power has overtaken coal as a proportion of Texas’s power for the first time and promises to continue growing. In 2020, wind power made up almost a quarter of Texas’s total power, compared to just 18% from coal.
Why This Matters: Texas is the nation’s largest producer of both wind energy and fossil fuel energy.
The sale of oil and gas drilling rights in the Arctic National Wildlife Refuge (ANWR) was supposed to bring in upwards of $1 billion, but in the end, the first of the auctions mandated by Congress at the urging of President Trump brought in only $14M.
Why This Matters: Banks won’t underwrite Arctic drilling, so it is unclear those ANWR leases will be drilled ever.
When 2020 began, even with oil prices relatively strong, many industry analysts were predicting it was the beginning of the end for oil and gas. And then the pandemic hit and the Saudis and Russians decided to take advantage of the downturn. With supplies still high and demand declining, the industry may never be the same again.
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