One morning in September, word quickly spread of layoffs at the Marathon Petroleum refinery in the small industrial community of Garyville, Louisiana.
Seven months after the pandemic, workers at the oil refinery thought they would be spared the fate of their colleagues in other facilities that had already been thrown into a daunting job market.
“During the morning we saw people get the call and not come back,” said a maintenance technician who lost his job after almost a decade at the plant. “Everyone was sitting on pins and waiting for the call.”
According to a report by BailoutWatch, Marathon laid off 1,920 workers in the U.S. last year despite taking up $ 2.1 billion in federal tax breaks designed to cushion the blow the pandemic had on the economy. The worker interviewed for this story, who wants to remain anonymous for fear of finding a job, is still unemployed. He and his wife had plans to start a family that have now been put on hold. And he’s competing with more than 18,000 oil, gas and manufacturing workers in Louisiana who lost their jobs last year.
“I am a born and raised Louisianan. So I’m trying very hard to stay in the area, ”he said.
Over a year after Congress passed the Cares Act to provide emergency economic aid in response to Covid-19, the oil and gas industry has become a major recipient of economic funds despite massive job cuts. Marathon Petroleum received more tax breaks under the law than any other U.S. oil company, according to BailoutWatch, while shedding about 9% of its workforce, including 45 workers in Garyville.
The company spent millions lobbying in Washington, including specific provisions of the Cares Act. Marathon is also defending the local government tax breaks it receives under a controversial Louisiana subsidy program to help create jobs. According to SEC filings investigated by BailoutWatch, Marathon received approximately $ 1.1 million for every job the company cut.
The refinery in Garyville – located on the Mississippi between New Orleans and Baton Rouge – is the third largest in the country. It can process 578,000 barrels of oil into gasoline, asphalt, propane and other substances every day. It has long received local tax subsidies, some of which have recently caused controversy in a community known for heavy industry and high risk of air pollution.
When Marathon made its layoffs in the fall, it had tacitly announced that it would receive a $ 1.1 billion tax refund.
“When you understand the benefits Marathon received, presumably to encourage them to keep full employment, it’s frustrating to still be cut,” said the laid-off worker.
He expressed regret that the company had invested much of its cash flow in an “aggressive share buyback program” over the past few years rather than protecting workers during the economic downturn.
During the pandemic, oil companies received billions in tax dollars from multiple programs, “unconditionally,” said Jesse Coleman, a senior researcher with Documented Investigations.
These companies have decimated their workforce through layoffs while maximizing profits for executives and shareholders at Jesse Coleman
“Executives who received this bailout have done nothing about the fundamental unsustainability of the industry. Instead, these companies have decimated their workforce through layoffs while maximizing profits for executives and shareholders, ”said Coleman.
Marathon defended its federal pandemic tax relief in an email. Spokesman Jamal Kheiry said the Cares provision “will help companies hit hard by the significant economic impact of the pandemic”.
Kheiry noted that the company lost $ 9.8 billion after tax last year and faced uncertainty about demand for gasoline and other refined products that were less needed during the pandemic. Marathon has shut down its refineries in Gallup, New Mexico and Martinez, California, he added.
“We also made the very difficult decision to downsize our workforce, including downsizing related to idle time,” he said. “To help affected employees with the transition, we have provided severance payments, bonus payments, extended health services at employee rates, support with job placement, advice and other measures.”
The public money that Marathon raised was made possible by Congress changes to the federal tax law that allowed companies to deduct previous years’ financial losses from taxes already paid. That is, the more Marathon lost in 2020 – and also in 2019 and 2018 in pandemic-independent losses – 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 tax changes in the Cares Act due to its financial losses in 2019 and 2018, when refining margins were already declining in those less profitable years. The watchdog group also noted that fossil fuel companies were heavily advocating these changes while the law was being drafted. Marathon spent $ 2.6 million lobbying in Washington in 2020, including increasing tax deductions under the Cares Act.
Overall, the report found that 77 oil and gas companies received $ 8.24 billion in tax refunds under the Cares Act while laying off nearly 60,000 employees. Marathon’s state tax breaks are in addition to the state and local tax incentives the Louisiana company receives.
Jan Moller, director of the Louisiana Budget Project, which focuses on tax policy, said Louisiana law offers great benefits to the industry. “What is unique about Louisiana is that we have the most generous tax-exempt system in the country for any industrial or manufacturing company,” he said.
The Industrial Tax Exemption Program (ITEP) exempts businesses from paying certain community property taxes in exchange for investments that create or maintain jobs.
“There, the Louisiana communities end up losing a lot of revenue,” Moller said. “A Global corporation comes in and spends $ 2 billion to build an oil refinery or chemical plant … and they don’t have to pay 80% to 100% of property taxes on that investment for 10 years. And when 10 years are up, a large part of this investment is written off. “
Until recently, these exemptions were slightly extended. In 2017, 40 years after the Garyville Refinery was built, ITEP exempted Marathon from paying taxes on 88% of its property.
Marathon Petroleum’s tax bill for St. John the Baptist Parish rose dramatically that year as a result of the 2016 rule changes to the tax exemption program signed by Democratic Governor John Bel Edwards in an executive order.
Marathon paid $ 57 million in property taxes in 2020, up from $ 16 million in 2019. Their taxes make up approximately 59% of the community’s property tax base. However, Marathon still has an estimated $ 711 million worth of tax-exempt property in St. John, saving the company about $ 12 million in local taxes each year, according to Louisiana Economic Development, which oversees the tax exemption program.
These taxes would otherwise be shared between St. John Schools, law enforcement, and the local government. The exceptions, according to the data, have created incentives for three thousand temporary construction jobs and one permanent position.
Louisiana, a nationwide network of communities and civic organizations that campaigned to revise the exemptions, collectively noted that the state had granted $ 23 billion in subsidies to businesses.
In 2020, Marathon was also accused of fraudulently requesting $ 43 million in ITEP exemptions. After an internal investigation by the state, the company closed its application.
Broderick Bagert, a Together Louisiana organizer, said the governor’s changes to ITEP in 2016 require companies to either maintain current employment levels or create new jobs in order to qualify for the exemptions, but enforcement of those rules has been lax.
“The practice, gigantic, you know, of giving hundreds of millions of dollars in subsidies to companies that are not only not creating jobs but actively shedding jobs continues,” said Bagert.