Choosing Profits Over Planets

From the Mouths of Boobs

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 ~ "What good is it to save the planet if humanity suffers?"

So said CEO Rex Tillerson at Exxon's annual meeting yesterday. What really concerns him, of course, is less the suffering of humanity than the suffering of diminished profits. The right choice between the planet and profits? Yes! More money! Never mind that there is no business to be done on a dead planet. Or that you can't take it with you. Or that dispensing with the Earth, our only home, is somehow a reasonable option in service of unbounded cupidity. But then T. Rexx has some puzzling beliefs.

Another Kind of Oil Rig

I'm Shocked. Shocked!

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 ~ Ho hum. Another case of a rapacious global corporate cartel caught doing what comes naturally.

European officials are investigating BP, Shell and Statoil for fixing the price of oil. The US may do so as well.

[UK Energy officials] said manipulation of the oil price could have driven inflation and pointed out that the market is an important benchmark for many financial transactions.

High oil prices also feeds through to bigger bills for food, clothes and other essentials because it pushes up the cost of transport and manufacturing.

A high oil price will also fuel inflation, which erodes the value of people’s savings, and can stifle economic growth, by pushing up businesses’ costs.

The economic impact of artificially inflated oil prices is huge; $20T worth of oil is priced from the Brent crude index, a focus of investigators. As with the LIBOR rate fixing scandal, it turns out the largest players "report" prices which are then aggregated and used as the benchmark for everyone else. What stops them from playing games with those reports? Nothing, except apparently the danger of being caught due to an excess of greed.

Energy Lies—XIV

"More Domestic Oil Production For More Energy Here At Home"

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 ~ A favorite claim of the Drill Baby Drill crowd is that if we produced more domestic energy (specifically oil) we would produce more gasoline domestically, leading to lower prices at the pump.

There they go again. Like the myth of trickle down economics, they keep repeating the claim, but history shows it to be false.

There are reasons for that of course. A big one is that Big Oil doesn't actually keep that new production here at home:

Energy Lies—XIII

"The Administration continues to prevent, delay and obstruct development of [oil and gas] and puts off jobs for another day"

 ~ This allegation, by Erik Milito of the API, and many others like it, are zombies of political mendacity. They just won't die!

We've been hearing this since the start of the Obama Administration. It both ignores the larger truth, and has been consistently wrong for three years.

What occasioned the latest surge of reflexive outrage? The announcement of the proposed management plan to develop oil and gas on Alaska's North Slope. That's right—a management plan. Not an unfettered free-for-all of fossil drilling frenzy certainly, but not a moratorium either. According to US Interior Secretary Ken Salazar, "About 11.8 million acres would be available for leasing, including most land projected to contain oil reserves." According to Alaska Senator Murkowski, however, it is the "most restrictive management plan possible." Um, no. The most restrictive plan would be to, you know, actually "prevent, delay and obstruct" rather than what the Administration actually has done—open up the richest half of the entire National Petroleum Reserve.

Free Speech

Free in What Sense?

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 ~ There are just under 3 months until the November elections. Many are spending freely, but what are you hearing? Mostly a lot of hooey:

An analysis by the Annenberg Public Policy Center conducted for the Center for Responsive Politics found that from December 1, 2011 through June 1, 2012, 85% of the dollars spent on presidential ads by four top-spending third-party groups known as 501(c)(4)s were spent on ads containing at least one claim ruled deceptive by fact-checkers at FactCheck.org, PolitiFact.com, the Fact Checker at the Washington Post or the Associated Press.

These "top" 4 groups are the American Energy Alliance, Americans for Prosperity, the American Future Fund and Crossroads GPS. All are closely aligned with the most reactionary faction of the GOP and all are hostile to renewable energy. Despite persistent efforts to equate corporate and union spending, the numbers show clearly the dominance of corporate speech on our political debate. Big money is free to buy megaphones, but we are not free to learn who's doing the buying.

Energy Lies—XII

"Obama is Restricting Oil Drilling"

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 ~ If Obama and his Administration were working to restrict domestic oil production, how would we know?

We could listen to the usual mouthpieces from the API, partisan nincompoops in the GOP-run US House, the right-wing echo chamber, and the parrots of Gerardia, but how do they know? Where is the evidence? Where is the data?

It's not to be found in US oil production, which has gone up every year since Obama took office.

Nor can it be found in the primary measure of drilling activity, the Baker-Hughes rig count:

In the last 3 years the rig count has quadrupled, and is higher than it has been in at least 25 years. "Drill, baby, drill"? It's de facto policy.

How can so many in the GOP and among their allies tell such outrageous and blatantly false lies? (Hint: follow the money.) How can so many people so uncritically believe them? It was false a year ago and it's still false today. They sure hate Obama it seems, but we must look elsewhere for reasons.

Energy Lies—XI

"Renewable Energy Mandates Raise Electricity Rates"

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 ~ A common trope among defenders of fossil energy is that mandating renewable energy punishes ratepayers by forcing utilities to pass on increased generation costs.

But there's no truth to the charge:

Upon examining electricity rate data from the U.S. Energy Information Administration spanning the decade from 2000-2010, a Center for American Progress analysis found zero statistically-significant difference in how renewable electricity standards affect changes in rates.

Energy Lies—X

"Drilling More Will Keep Gas Prices Low"

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 ~ Consumption of gasoline in the US has been falling for years:

As a consequence, US oil refineries have increased exports:

No surprise here. As US domestic demand falls, prices would normally drop unless supply also decreased. Were supply to increase, prices would drop even more. Instead, supply is being diverted, and prices are going up.

The market for oil and refined products is global. With demand surging in developing economies, and the price there higher, a global commodity like gasoline is sent into the global market, not kept in the US to lower prices.

So think about that the next time you hear some politician, or API apologist pointing fingers about higher gas prices. It isn't evil environmentalists or intransigent bureaucrats, it's economics, stupid.

Energy Lies—IX

"Obama's Anti-American Energy Policy"

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 ~ Sure, it's bombastic in the ugly style of modern political campaigns, but to accuse the American President of being "outrageously anti-American" is tantamount to an accusation of treason. Newt Gingrich should be mortified for his intemperance, but, as his past amply shows, he is beyond shame.

So what has President Obama on energy policy done to provoke the vituperative Georgian so? Two things: not rushing approval of Keystone XL, and being too keen on electrifying our transportation sector.

Gingrich is not just disrespectful and obnoxious, he's also both wrong on the facts and, surprisingly for a self-styled historian, wrong on the nature of what is American.

Energy Lies—VIII

"Obama's Anti-Energy Policies"

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 ~ The US House Natural Resource Committee web site is a showcase for considerable energy wingnuttery, and offers up such a rich trove of balderdash it's hard to pick just one thing. The over-arching theme is the "Anti-Energy Policies" of the Obama Administration, exemplified by this chart:

An impressive amount of dissembling has been packed into this one simple chart.

Energy Lies—VII

"Oil Companies Need Subsidies for Incentive"

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Big Oil doesn't need subsidies at high prices

 ~ The API, lead lobbyist for Big Oil, has long claimed that subsidies and tax breaks for oil companies are absolutely necessary to provide incentive for exploration and production and to prevent industry job losses. Without them, workers would be laid-off, domestic oil production would plummet, prices would skyrocket, and our dangerous dependency on foreign sources would become dire.

Looks like they neglected to fully convince the former CEO of Shell Oil:

Large oil companies don’t need tax subsidies when oil prices are high, a former CEO of Shell Oil said Thursday.

“In the face of sustained high oil prices it was not an issue—for large companies—of needing the subsidies to entice us into looking for and producing more oil,” John Hofmeister told National Journal Daily.

Perhaps that's why he is the former CEO.

Energy Lies—VI

"Renewable Energy Standards Boost Electricity Rates"

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 ~ Do state mandates for renewable energy generation increase electricity rates?

Some of the usual suspects, like Grover Norquist of Americans for Tax Reform, labor to convince you they do. But the signature claim, that ratepayers fork over more in states with a RES, is a classic case of lying with statistics.

Let’s start with their first assertion:

Renewable energy standards, by design, are intended to drive up energy costs — requiring utilities to use more expensive and often less reliable sources of energy. Not surprisingly, such laws have hit ratepayers hard. States that have a binding RES now have electricity costs that are 39 percent higher than states that don’t have a binding RES.

That’s a scary number. But it’s also totally meaningless. The problem is that these states had higher rates before they ever put the RES in place.

States with high electricity rates before continue to have electricity rates. Also, rates are affected by many factors, not just the existence or details of a RES. In fact the 5 states with the most installed wind and solar power saw the least increase in electricity prices over the past 6 years.

Impacts are either overblown or outright false:

Energy Lies—V

Getting Their Pander Up

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 ~ An Exxon executive complains that Democrats are pandering to the deficit "Super Committee" when they urge rolling back oil and tax breaks. He's evidently unfamiliar with political pandering, one definition of which is to assert views "merely for the purpose of drawing support ...and [that] do not necessarily reflect one's personal values."

It is too much of a stretch, however, to say that these Senate Democrats are pushing this merely for political support and even less credible to suggest it doesn't match their personal values. Rather, a $2B annual reduction in largesse to Big Oil appears as an extremely modest step to address the current deficit hysteria:

Despite the oil companies’ insistence to the contrary, we know from analyses by the non-partisan Congressional Research Service and Joint Economic Committee that cutting $2 billion in annual oil subsidies and tax breaks for oil companies would not make oil and gasoline more expensive. The price of oil and gas is set on the world market, and federal subsidies play no role in prices consumers pay at the pump. To put it another way, if the five largest and wealthiest private oil companies were willing to live with $142 billion in profits this year, rather than their projected $144 billion, they would be paying their fair share in taxes without raising gasoline prices one penny.

What does real pandering look like? Newt Gingrich does show and tell:

Energy Lies—IV

"As President, I Will Lower Gas Prices"

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~ Michele Bachmann claims she could get gas under $2/gallon if elected President. Could she do it? How much influence does the President have on the price of gasoline?

The short answer: very little. The slightly longer answer: some, but not of a kind that would make much of a (positive) difference.

The price of gasoline is the sum of 6 components: the cost of crude oil, the cost of refining it, distribution, marketing, profits and taxes. It follows that lowering the price of gasoline must involve lowering one or more of these 6 components. So how could the President do that?

Energy Lies—III

"Obama is Responsible for $4 Gas Prices"

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~ The idea that any one person, even the President, is solely responsible for the price of gasoline is absurd on its face. The energy market is intensely complicated and its actors can't even predict prices, much less control them.

But that doesn't stop the Wingnut chorus (Donald Trump, Heritage Foundation, Sarah Palin, American Petroleum Institute and others to whom I refuse to link) from assigning blame to Obama for everything from the drilling moratorium in the Gulf of Mexico to that hardy perennial, onerous regulations. Others suggest a conspiracy to promote renewable energy (would that it were so!) or hatred of Big Oil (we'll punish them with higher profits!) or a vague, generalized contempt for America (not that those impugning the President would be guilty of such, mind you.)

It's useful to review the price of gasoline over time. While the Energy Information Administration is notoriously poor at prediction, they are very good at compiling records:

Average US price of regular unleaded gasoline, in dollars per gallon (Source: EIA)

Energy Lies—II

"Gulf of Mexico Oil Drilling Stymied by Regulation"

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~ Hardly a day goes by without some lobbyist or cash-captured Congressional corpocrat griping about the urgency and importance of greatly increased offshore oil drilling and the supposedly onerous and unnecessary regulatory burden under which the industry chafes. If only the Obama Administration would get out of the way, so the recurring complaint goes, the industry could boost production, increase royalty revenues to combat the deficit and create jobs:

Onerous regulations, endless layers of red tape, restricted access to critical supplies of domestic energy and a lack of direction from government are only a few of the many examples of artificial barriers that paralyze business and make it difficult for America to grow and prosper.

Is any of it true?

Not much. The criticism of lacking a coherent energy policy and direction hits home, especially in the haphazard and half-hearted support for renewables, but otherwise Big Oil and its shills are largely getting away with doing as they please, same as always. Yeah, they doth protest too much.

Energy Lies

"Obama is Blocking Oil Drilling"

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~ There's a lot of political horsepuckey stinking up discussions about energy nowadays. Rhetorical hyperbole is the norm for the election season, now fully underway, but energy is a critical subject. Much of it must be called for what it is—lies.

For example, over-heated indignation in some quarters of Congress asserts that US oil production is in decline, and it's—you know!—all President Obama's fault because he is "blocking" domestic oil drilling. And if Obama would just get the gummint out of the way, both more oil and its wondrous benefits to the economy, the American Way, etc. would flow forth. Good rabble-stirring rhetoric, but reality—not.

US domestic oil production is indeed declining. It has been since 1970 when we reached Hubbert's Peak domestically. It's been almost all downhill since, exactly as predicted, and the result to be expected any time one systematically depletes a finite resource.

The overall 40-year-and-counting decline in US oil production cannot, obviously, be blamed on Obama. Nor can it be blamed on any president of either political party; it is geology and technology, not policy or politics that is responsible for the decline in domestic oil drilling and production.