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US Oil Company Cut Nearly 2,000 Jobs, Raised $ 2.1 Billion In Profits In A Pandemic | Louisiana




One morning in September, rumors of layoffs began to spread quickly at the Marathon Petroleums refinery in the small industrial community of Garyville, Louisiana.

Seven months after the start of the pandemic, workers at the oil refining plant believed they would be spared the fate of their colleagues at other facilities, who had already been dumped in an intimidating job market.

Throughout the morning, we saw people receiving the phone call and not coming back, said a maintenance engineer, who lost his job after nearly a decade in the facility. Everyone was on pins and needles waiting for the call.

Last year, Marathon laid off 1,920 workers across the United States despite granting $ 2.1 billion in federal tax breaks intended to cushion the pandemic’s blow on the economy, according to a report by BailoutWatch. The worker interviewed for this report, who asked to remain anonymous for fear of having difficulty finding a job, is still unemployed. He and his wife had plans to start a family, which are now on hold. And it competes with more than 18,000 oil, gas and manufacturing workers in Louisiana who lost their jobs last year.

Im a born and raised Louisianan. So I try a lot to stay in the area, he says.

More than a year after Congress approved the Cares Act to provide emergency economic aid in response to Covid-19, the oil and gas industry has emerged as a major beneficiary of stimulus funds, despite heavy cuts to ‘jobs. Marathon Petroleum has enjoyed more tax breaks under the legislation than any other US oil company, according to BailoutWatch, while cutting about 9% of its workforce, including 45 workers in Garyville.

The company has spent millions of dollars lobbying Washington, including on specific provisions of the Cares Act. Marathon is also defending the local government tax breaks it receives as part of a controversial Louisiana grant program intended to create jobs. According to SEC records reviewed by BailoutWatch, Marathon received approximately $ 1.1 million federal for every job cut by the company.

The Garyville refinery located along the Mississippi River between New Orleans and Baton Rouge is the third largest in the country. It can transform 578,000 barrels of oil per day into gasoline, asphalt, propane and other substances. It has long benefited from local tax subsidies, some of which have sparked recent controversy in a parish known for its heavy industry and high risk of air pollution.

By the time Marathon proceeded with his fall layoffs, he had already quietly announced that he would seek a $ 1.1 billion tax refund, thanks to the provisions of the Cares Act that gave businesses tax-based benefits. on net operating losses.

Understanding the benefits Marathon has received to presumably stimulate them to maintain full employment, it is frustrating to have been cut yet again, the laid-off worker said.

He regretted that the company had invested much of its cash in recent years in an aggressive stock buyback program rather than protecting workers in times of economic downturn.

During the pandemic, oil companies received billions of dollars in taxpayer dollars from several programs with no strings attached, said Jesse Coleman, senior researcher at Documented Investigations.

These companies decimated their workforce with layoffs while maximizing profits for executives and shareholdersJesse Coleman

The executives receiving this bailout did nothing to address the fundamental unsustainability of the sector. Instead, these companies have decimated their workforce with layoffs while maximizing profits for executives and shareholders, Coleman said.

Marathon in an email defended its federal tax breaks in the event of a pandemic. Spokesman Jamal Kheiry said the Cares provision is helping businesses hit hard by the significant effects of the pandemic on the economy.

Kheiry noted that the company lost $ 9.8 billion after taxes last year and faced uncertainty over demand for gasoline and other refined products, which were less needed during the pandemic. Marathon has idled its refineries in Gallup, New Mexico, and Martinez, Calif., He added.

We also made the very difficult decision to downsize, including the reductions associated with idling, he said. To help affected employees make the transition, we have provided severance, bonuses, extended health care benefits at employee rates, job placement assistance, counseling and other arrangements.

The public funds raised by Marathon were made possible by changes by Congress to federal tax law, which allowed businesses to deduct financial losses from previous years from taxes they had already paid. This means that the more Marathon lost in 2020 as well as non-pandemic losses in 2019 and 2018, the more they were refunded from tax payments from previous years.

BailoutWatch found that the fossil fuel industry was more likely than other sectors to benefit from the Cares Law tax changes due to their financial losses in 2019 and 2018, when refining margins were already falling over the course of those less profitable years. The watchdog group also found that fossil fuel companies lobbied heavily for these changes when drafting the legislation. Marathon spent $ 2.6 million lobbying in Washington in 2020, including increasing Cares Act tax deductions.

In total, the report found that 77 oil and gas companies received $ 8.24 billion in Cares Act tax refunds while laying off nearly 60,000 employees. Federal tax breaks from Marathons are in addition to state and local tax incentives the business receives in Louisiana.

Jan Moller, director of Louisiana’s fiscal policy-focused budget project, said Louisiana’s law offers major benefits for the industry. What makes Louisiana unique is that we have the most generous tax exemption regime in the country for industrial or manufacturing companies, he said.

The Industrial Tax Exemption Program (ITEP) exempts businesses from paying certain parish property taxes in return for investments that create or maintain jobs.

This is where communities in Louisiana end up losing a huge amount of income, Moller said. A global company comes in and spends, you know, $ 2 billion to build an oil refinery or a chemical plant and they don’t have to pay 80-100% property taxes on that investment for 10 years. And after 10 years, much of that investment depreciated.

Until recent changes, these exemptions were easily renewed. Until 2017, 40 years after the construction of the Garyville refinery, Marathon was exempt from taxes on 88% of its property thanks to ITEP.

Due to changes to the tax exemption program rules in 2016 by Democratic Governor John Bel Edwards in an executive order, Marathon Petroleums’ tax bill to St John the Baptist Parish has increased significantly this year.

Marathon paid $ 57 million in property taxes in 2020, up from $ 16 million in 2019. Their taxes represent about 59% of the parish property tax base. However, Marathon still has an estimated $ 711 million worth of exempt property in St John, saving the company about $ 12 million in local taxes each year, according to Louisiana Economic data. Development, which oversees the tax exemption program.

These taxes would otherwise be distributed among St John’s schools, law enforcement and parish government. The exemptions have prompted three thousand temporary construction jobs and one permanent job, the data shows.

Together, Louisiana, a statewide network of congregations and civic organizations that fought to overhaul the exemptions, found that the state had allocated $ 23 billion in grants to businesses, this which reduced net employment by 26,082 jobs over about two decades.

In 2020, Marathon was also accused of fraudulently requesting $ 43 million in ITEP exemptions. After an internal state investigation, the company dropped its claim.

Broderick Bagert, an organizer for Together Louisiana, said governors’ changes to the ITEP in 2016 require companies to maintain current employment levels or create new jobs in order to qualify for the exemptions, but the application of these rules was lax.

The practice of giving out gigantic, you know, hundreds of millions of dollars in grants to companies that not only don’t create jobs, but actively kill them, continues, Bagert said.

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