May 5, 2020 - Politics & Policy

Oil lobby jumps into Arctic drilling finance battle

Illustration of a growing crack heading towards oil barrels

Illustration: Aïda Amer/Axios

The powerful American Petroleum Institute and GOP senators are attacking big banks’ financial restrictions on Arctic oil drilling — and mulling ways to go beyond just verbal pushback.

What they’re saying: “We don’t think it’s appropriate for banks to discriminate against fossil-fuel communities,” API president Mike Sommers tells Axios.

  • “We’re working with the administration and others to ensure that does not occur," he said.

Why it matters: The growing number of banks vowing not to stake Arctic projects is another hurdle in front of White House plans to enable drilling in the Arctic National Wildlife Refuge.

  • More broadly, Arctic development is already facing strong headwinds due to low prices, low demand, and industry opportunities in less controversial regions.

Where it stands: The administration may try to use coronavirus relief policies as leverage to compel major U.S. banks to drop recent restrictions they’ve placed on Arctic oil and gas financing, per Sommers and President Trump himself.

  • “A number of these banks are seeking to participate in the programs that are part of the COVID response,” Sommers said. “And you’d think the administration would have significant leverage over these banks during this crisis.”

Meanwhile, Politico reports that GOP lawmakers plan to launch a "pressure campaign" against the banks.

  • It's not clear what realistic options they have in a divided Congress, but Alaska Sen. Dan Sullivan offers this threat via Politico: "You think this is a cost-free action? Let's see about that."

Catch up quick: In just the last few months, five out of six of America’s biggest banks have announced new restrictions, Bloomberg reports.

  • The moves — the latest coming from Morgan Stanley in late April — are part of the banks’ broader pledges to support action on climate change and clean energy. 
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