The Role of Energy and Large banks in the Modern Economy

Oil and gas producers have faced significant challenges in the wake of the recent and horrifying developments in Ukraine, which have impacted consumers at the gas pump and the macroeconomy. The U.S. economy is also on a transition path that will eventually lead to greater utilization of renewable energy sources.

FREMONT, CA: Recent tragic events in Ukraine have generated huge hurdles for the oil and gas industry, impacting customers at the gas pump and the macroeconomy. Simultaneously, the U.S. economy is undergoing a change that will, over time, lead to a greater reliance on renewable energy sources. Large banks play a crucial role in maintaining the current energy infrastructure and overseeing the transition to a less carbon-intensive energy sector.

Bank Funding of the Energy Sector

Large U.S. banks typically extend huge sums of credit to the energy industry. By consulting the Shared National Credit Report, economic policy and advocacy organizations can gain insight into the amount of finance granted to energy companies. The Shared National Credit (SNC) report provides an annual analysis of significant loans that are shared, or "syndicated," by three or more lenders. These are the types of huge, widely held bank loans used to finance major, capital-intensive sectors like the energy industry.

Transition to a less carbon-intensive economy financing

Most energy company finance has expanded the nation's capacity for carbon-based, traditional energy sources such as oil and gas. However, many of these traditional energy corporations and other companies are actively investigating prospects for more renewable, less carbon-intensive energy sources that will fuel the economy in the foreseeable future. Members of the Forum are committed to an "all of the above" plan that finances the nation's transition to a cleaner and more renewable energy future while also ensuring that the nation's current energy demands are serviced effectively and efficiently. Economic policy and advocacy organization members routinely disclose and report on their diverse and different renewable energy investments in relevant publications. These investments are high-value opportunities meant to stimulate innovation to support the economy's long-term demand for greener energy sources.

Recent upsetting events in Ukraine have highlighted the necessity of balancing efforts to meet existing energy demands with the support for innovation leading to a future with fewer carbon emissions. Large banks provide substantial sums of funding to the energy industry through direct lending and underwriting securities issuance in capital markets to satisfy the industry's current demands while also financing the industry's future needs. Together with a sensible and supportive regulatory framework, these two initiatives will continue to assist this important business as the economy faces the long-term transition to a less carbon-intensive economy.