Oil companies in Texas benefited from substantial financial aid through the federal government’s COVID-19 relief programs. Figures from the Small Business Administration were recently made public following a court order. These figures reveal that 29 out of the 100 largest loans sent to businesses in Texas went to companies in the energy sector. Only businesses in the food and restaurant sectors received more aid.
Businesses received loans through the Paycheck Protection Program (PPP), which was designed to help small and medium-sized companies retain workers during the crisis. Critics say large oil and gas companies don’t require the support because they could raise funds from investors on capital markets. But industry spokespeople argue the energy sector needed the aid due to the unprecedented nature of the economic downturn.
“Besides the service sector, I’m not sure there’s any industry impacted more than oil and gas. Companies have just been devastated by the demand destruction caused by COVID-19,” commented Ed Longanecker, president of the Texas Independent Producers & Royalty Owners Association. “We’re projecting a net loss of 55,000 jobs in the Texas oil and gas sector this year (2020).”
Major recipients of funds from the PPP included Enervest, a Houston-based oil and gas producer, which received $10 million. Gulf Island Fabrication, a manufacturer of ships and heavy equipment for the energy sector, also received $10 million.