A US oil company cut nearly 2,000 jobs – and reaped $2.1bn in pandemic benefits.

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source: https://www.theguardian.com/marathon-petroleum-job-cuts-pandemic-benefits

One morning in September, phrase of layoffs started to spread fast thru Marathon Petroleum’s refinery within the small business community of Garyville, Louisiana.

Seven months into the pandemic, employees at the oil refining plant thought they could be spared the destiny in their colleagues at different centers, who had already been jettisoned into a daunting task marketplace.

“Through the morning, we had been seeing humans get the telephone call and not come back,” said one renovation engineer, who lost his task after nearly a decade on the facility. “Everybody was on pins and needles watching for the decision.”

Last year, Marathon laid off 1,920 workers across america notwithstanding taking $2.1bn in federal tax blessings supposed to cushion the pandemic’s blow to the financial system, consistent with a report from BailoutWatch. The employee interviewed for this tale, who asked to remain anonymous for fear of problem locating a process, remains unemployed. He and his spouse had plans to start a circle of relatives, that are now on hold. And he is competing with more than 18,000 oil, gasoline and manufacturing people in Louisiana who misplaced jobs last yr.

“I’m a born and raised Louisianan. So I’m very lots trying to stay in the location,” he said.

Over a year after Congress permitted the Cares Act to provide emergency economic comfort in reaction to Covid-19, the oil and gas industry has emerged as a primary recipient of stimulus finances, no matter heavy task cuts. Marathon Petroleum received greater tax benefits underneath the rules than another US oil company, in line with BailoutWatch, whilst also cutting approximately 9% of its group of workers, including forty five Garyville workers.

The employer spent thousands and thousands lobbying in Washington, which includes on specific Cares Act provisions. Marathon is also defending local authorities tax breaks it gets as part of a controversial Louisiana subsidy program and intended to create jobs. According to SEC filings tested via BailoutWatch, Marathon came to receive more or less $1.1m in federal dollars for each task the agency eliminated.

The Garyville refinery – located alongside the Mississippi River among New Orleans and Baton Rouge – is the 0.33 largest in the u . S . A .. It can system 578,000 barrels of oil a day into fuel, asphalt, propane and other materials. It has long obtained local tax subsidies, some of which have stirred current controversy in a parish recognized for heavy industry and a excessive hazard of air pollution.

By the time Marathon made its fall layoffs, it had already quietly announced that it might declare a $1.1bn tax refund, thanks to Cares Act provisions which gave corporations tax blessings based totally on net operating losses.

“Understanding the benefits that Marathon acquired to presumably stimulate them into preserving full employment, it’s irritating to have nevertheless been chopped,” the laid-off worker stated.

He expressed regret that the corporation had invested tons of its coins glide in recent years in an “competitive stock buyback application” in place of protecting workers at some point of economic downturns.

During the pandemic, oil businesses have obtained billions of greenbacks in taxpayer cash from multiple packages, “with out a strings connected”, said Jesse Coleman, a senior researcher at Documented Investigations.

“Executives receiving this bailout did not anything to cope with the industry’s fundamental unsustainability. Instead, these organizations decimated their workforce with layoffs while maximizing profits for executives and shareholders,” Coleman said.

Marathon in an email defended its federal pandemic tax breaks. Spokesman Jamal Kheiry said the Cares provision “helps groups difficult-hit by way of the pandemic’s great outcomes on the economy”.

Kheiry referred to that the agency lost $9.8bn after taxes closing yr and faced uncertainty over demand for fuel and different refined products, which were wanted less in the course of the pandemic. Marathon idled its refineries in Gallup, New Mexico, and in Martinez, California, he brought.

“We also made the very difficult selection to lessen our personnel, such as discounts related to the idlings,” he stated. “To help affected employees transition, we furnished severance, bonus bills, extended healthcare advantages at employee fees, job placement assistance, counseling and different provisions.”

The public dollars Marathon took were made possible via Congress’ adjustments to federal tax law, which allowed businesses to deduct preceding years’ financial losses from taxes that the agency already paid. That method that the extra Marathon lost in 2020 – as well as in losses unrelated to the pandemic in 2019 and 2018 – the more they have been refunded from preceding years’ tax bills.

BailoutWatch determined that the fossil fuel enterprise changed into much more likely than different sectors to benefit from the tax changes in the Cares Act because of their financial losses in 2019 and 2018, when refining margins had been already in decline during the ones much less worthwhile years. The watchdog institution additionally determined that fossil gas agencies lobbied closely for those modifications during the drafting of the rules. Marathon spent $2.6m on lobbying in Washington in 2020, inclusive of to boom Cares Act tax deductions.

In all, the document located that seventy seven oil and gas groups received $eight.24bn from the Cares Act tax refunds even as laying off nearly 60,000 personnel. Marathon’s federal tax breaks are in addition to nation and local tax incentives that the organization gets in Louisiana.

Jan Moller, director of the tax policy-centered Louisiana Budget Project, said Louisiana law gives foremost advantages for the industry. “The component that makes Louisiana unique is we've the maximum beneficiant tax exemption scheme within the u . S . A . For industrial or production businesses,” he said.

The Industrial Tax Exemption Program (ITEP) exempts corporations from paying certain parish assets taxes in alternate for investments that create or hold jobs.

“That’s where Louisiana communities turn out to be losing an lousy lot of sales,” Moller stated. “A international corporation is available in and spends, you already know, $2bn to build an oil refinery or chemical plant … and that they don’t need to pay 80 to a hundred% of belongings taxes on that funding for 10 years. And by the point 10 years is up, a number of that investment has depreciated.”

Until recent modifications, those exemptions had been easily renewed. As past due as 2017, forty years after the Garyville refinery became built, Marathon become exempt from paying taxes on 88% of its property due to ITEP.

Because of 2016 rule modifications to the tax exemption program signed via the Democratic governor, John Bel Edwards, in an govt order, Marathon Petroleum’s tax invoice to St John the Baptist Parish improved dramatically this year.

Marathon paid $57m in 2020 belongings taxes, up from $16m in 2019. Their taxes constitute approximately 59% of the parish’s property tax base. However, Marathon nonetheless has an expected $711m worth of assets exempted in St John, which saves the business enterprise approximately $12m in neighborhood taxes each 12 months, in line with records from Louisiana Economic Development, which oversees the tax exemption application.

These taxes could otherwise be cut up among St John colleges, regulation enforcement, and parish government. The exemptions have incentivized 3 thousand temporary production jobs and one permanent process, according to the statistics.

Together Louisiana, a statewide network of congregations and civic corporations that has fought to overhaul the exemptions, located that the state allocated $23bn in subsidies to businesses which in flip reduce internet employment by means of 26,082 jobs over about a long time.

In 2020, Marathon was additionally accused of fraudulently making use of for $43m in ITEP exemptions. After an internal research by way of the country, the company dropped its utility.

Broderick Bagert, an organizer with Together Louisiana, said the governor’s 2016 adjustments to ITEP require groups to both hold modern ranges of employment or create new jobs with a purpose to qualify for the exemptions, however enforcement of these regulations has been lax.

“The exercise of awarding tremendous, you know, hundreds of millions of dollars in subsidies to agencies that aren't most effective not creating jobs, however that are actively cutting jobs, is persevering with,” Bagert stated.

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