Categories
Business government

FTC Rule Barring Oil Manipulation

I’m sure the final rule will have a lot less oomph, and plenty of loopholes.

Under pressure from federal lawmakers concerned about high energy prices, the U.S. Federal Trade Commission proposed a rule prohibiting petroleum-market manipulation, giving the agency authority to levy fines of up to $1 million per violation a day.

The proposed rule — which would cover both spot and futures markets — is designed to increase oversight of the crude-oil, natural-gas, gasoline and other product markets as directed by Congress late last year.

As oil prices surged to nearly $150 a barrel in July, many lawmakers increased pressure on the FTC to promulgate the antimanipulation rule, feeling existing oversight was too weak and laxly regulated. Lawmakers are concerned that excessive speculation — and possible manipulation — in the oil markets helped drive prices to record levels, and are seeking ways to enforce tougher market oversight. Congress is considering legislation designed to rein in speculative trading deemed to be distorting the market.

[From FTC Proposes Rule Barring Oil Manipulation – WSJ.com]

Brass Rust

Potential fines are discussed:

If the agency enacts the rule as it is currently written, it could subject violators with penalties of up to $1 million per violation per day. The FTC said it aimed to conclude the rule-making process by the end of the year. It drew immediate praise from some lawmakers who have been pushing for more stringent oversight of the markets.

This is some serious cheese for violators. As an example, Exxon Mobil’s profit in 20071 was in the vicinity of $4,633,200 per hour, or $111,196,800 per day. A million dollar fine would reduce Exxon Mobil’s daily profit to a paltry $110,196,800 a day! Won’t somebody think of the children! Of course, I’m not sure Exxon Mobil would be covered by these rules anyway, I’m sure nobody at Exxon Mobil is involved in speculation of oil futures, right? but sounds like there will be a lot more discussion before anything gets enacted in any case.

Given that the proposed rule covers the futures market — also the domain of the Commodity Futures Trading Commission — it is likely to upgrade a regulatory turf battle between agencies and spur activity by the CFTC.

Lots of discussion and posturing, and lots of profits to be snatched in the meantime. By the end of the year, Obama will be elected, and the glory years of oil companies might start to sputter.2

Footnotes:
  1. so far 2008 is much higher, so adjust all these numbers by numbers that your calculator can’t even handle []
  2. let us fervently pray so, anyway, though there is no guarantee that Obama will have the intestinal fortitude to tell the oil industry and Wall Street to reign their greed in []
Categories
politics

McCain and His Fake Energy Plan

Never Fear
[Never Fear! Fuelman is Here!]

Buried in an article about Obama’s call for releasing oil from the Strategic Oil Reserves is a succinct summary of McCain’s nonsensical energy plan.

Obama emphasized on Monday that using reserves is a temporary fix and that drilling is not “a particularly meaningful short-term or long-term solution.” McCain has said that drilling would have a “psychological” benefit for consumers; his proposal to suspend the 18-cent-a-gallon federal gas tax was ignored by lawmakers on Capitol Hill and criticized by economists, who said it would not lead to a noticeable change in prices.

On the stump, McCain talks frequently about electric power, a subject that energy experts say will do little to affect gas prices. His plan to build 45 nuclear power plants, which he will highlight with a visit to a Michigan plant Tuesday, would take decades.

[From Obama Urges Opening Up Oil Reserves – washingtonpost.com]

Gas costs update

gas price breakdown

Psychological benefit? Really? I’m not sure consumers would worry less about high gasoline prices knowing that oil corporations have the ability to drill for oil sometime in the future. And nuclear plants to be completed long after Senator McCain is deceased will help lower gas prices how exactly? Any specifics about where these plants are going to be located? In a convenient location that nobody would complain about, I’m sure. Show me these 45 new locations on a map, please.

(H/T a letter in Altercation by Ben Miller)
Gas At Last
[Gas At Last – Alaskan Service Station]

Categories
politics

Corruption, a Chevy and McCain

Yes, a champion of campaign finance reform, indeed.

Alice Rocchio is an office manager at the New York headquarters of the Hess Corp., drives a 1993 Chevy Cavalier and lives in an apartment in Queens, N.Y., with her husband, Pasquale, an Amtrak foreman.

Despite what appears to be a middle-class lifestyle, the couple has written $61,600 in checks to John McCain’s presidential campaign and the Republican National Committee, most of it within days of McCain’s decision to endorse offshore oil drilling.

At a June fundraiser, the Rocchios joined top executives at Hess Corp. — Chairman and Chief Executive Officer John Hess, his wife, Susan, his mother, Norma Hess, and six other officials in giving a total of $313,500 to a joint McCain-RNC fundraising committee, Federal Election Commission records show.

The donations, first traced by Campaign Money Watch last week, were part of $1.2 million in oil industry contributions to McCain’s Victory ’08 Committee, 73 percent coming after McCain reversed his long-held opposition to offshore oil drilling.

[From McClatchy Washington Bureau | 08/06/2008 | Did New York couple give $61,600 to McCain, GOP?]

Even though this couple just bought (in Feb, 2008) a 1993 Chevy (estimated to be around $3,000, if in good shape), they could afford to donate $61,600 to McCain and the RNC. Hmmmm, smells a little fishy to me.

Of the $57,000 the Rocchios donated in June, $4,600 went to McCain’s general election “compliance committee,” to pay for campaign lawyers and auditors, and $52,400 went to the RNC, which devotes nearly all of its money to supporting McCain’s presidential bid

The Washington Post has more on the same topic:

The bundle of $2,300 and $4,600 checks that poured into Sen. John McCain’s presidential campaign on March 12 came from an unlikely group of California donors: a mechanic from D&D Auto Repair in Whittier, the manager of Rite Aid Pharmacy No. 5727, the 30-something owners of the Twilight Hookah Lounge in Fullerton.

[From Bundler Collects From Unlikely Donors – washingtonpost.com]

The bundler in this territory is Harry Sargeant III, owner of an oil-trading corporation that recently procured a $1,000,000,000 Defense Department contract. Unrelated, I am sure.

Some of the most prolific givers in Sargeant’s network live in modest homes in Southern California’s Inland Empire. Most had never given a political contribution before being contacted by Sargeant or his associates. Most said they have never voiced much interest in politics. And in several instances, they had never registered to vote. And yet, records show, some families have ponied up as much as $18,400 for various candidates between December and March.

Both Sargeant and the donors were vague when asked to explain how Sargeant persuaded them to give away so much money.

“I have a lot of Arab business partners. I do a lot of business in the Middle East. I’ve got a lot of friends,” Sargeant said in a telephone interview yesterday. “I ask my friends to support candidates that I think are worthy of supporting. They usually come through for me.”

Sargeant’s business relationships, and the work they perform together, occur away from the public eye. His firm, International Oil Trading Co. (IOTC), holds several lucrative contracts with the Defense Department to carry fuel to the U.S. military in Iraq.

Not everyone is a fan:

The work has not been without controversy. Last month, Rep. Henry A. Waxman (D-Calif.) initiated a review of IOTC’s contract to determine whether it was overcharging the military for jet fuel, and to learn how the company, which did not submit the lowest bid, landed the contract to supply the fuel. The Pentagon has said that IOTC won the contract because it was the only company with a “letter of authorization” from the Jordanian government to move the fuel across its territory to Iraq.

and the folks who contributed seem a little removed from the political process. For instance:

Ibrahim Marabeh, who is listed in public records as a Rite Aid manager, at first denied that he wrote any political checks. He then said he was asked by “a local person. But I would like not to talk about it anymore.” Neither he nor his wife is registered to vote

or

At the Twilight Hookah Lounge, owned by Nadia and Shawn Abdalla, patrons smoke tobacco flavored with honey and fruit from a menu that includes the strawberry-flavored Sex on the Beach and the strong, orange-flavored Fuzzy Navel.

The Abdallas, who are not registered to vote, said in an interview that they recalled writing a check to an organization in Miami, because a person with that organization was a friend of their mother’s. They said they could not remember his name.

or a Taco Bell supervisor:

Nader, 39, and Sahar Alhawash, 28, of Colton, Calif, who at one point ran the Avon Village Liquor store, donated a total of $18,400 to Giuliani, Clinton and McCain between December and March. About 80 people in the country made such large contributions to all three, and most were wealthy business executives, such as Donald Trump. The Alhawashes declined to comment about the donations. Abdullah Abdullah, a supervisor at several Taco Bell restaurants in the Riverside area, and his wife have donated $9,200 to McCain.

Reached at work, Abdullah said he knows little about the campaign. “I have no idea. I’ll be honest with you,” he said. “I’m involved in the restaurant business. My brother Faisal recommended John McCain. Whenever he makes a recommendation, we do it.”

Faisal Abdullah, 49, said he helped organize all of the contributions from members of his family. When he was asked who solicited the contributions from him, he said: “Why does it matter who? I’m telling you we made the contribution. We funneled it through the channel in Florida because that’s the contact we had. I was responsible for collecting it.”

Right, these people have so much extra cash laying around that they can afford to contribute the maximum amount to political candidates whose name they barely can remember. I’d speculate there is some money laundering going on. How much does the contributor keep? Ten percent? Twenty percent?

Categories
politics

McCain and Oil Industry Lobbyists

McCain and his oil buddy money gushers join the corrupt party

Campaign contributions from oil industry executives to Sen. John McCain rose dramatically in the last half of June, after the senator from Arizona made a high-profile split with environmentalists and reversed his opposition to the federal ban on offshore drilling.

Oil and gas industry executives and employees donated $1.1 million to McCain last month — three-quarters of which came after his June 16 speech calling for an end to the ban — compared with $116,000 in March, $283,000 in April and $208,000 in May.

[From Industry Gushed Money After Reversal on Drilling – washingtonpost.com]

McCain is willing to flip-flop on any position, just sprinkle a little cash money on his campaign…

Categories
environment

Cheney’s Office Thwarts Climate Rules

These bums need to be run out of office sooner than 2009, else our planet will be destroyed. Environmental policy should not be set by oil corporations.

Bush administration officials agreed that greenhouse gases could endanger the public and should be regulated under clean-air laws, but later reversed course amid opposition from Vice President Dick Cheney’s office and the oil industry, a congressional report said.

The report, by the U.S. House Select Committee on Energy Independence and Global Warming, offers a look at the breadth of Bush administration support for regulations before such plans abruptly stopped. The report draws heavily on an interview with a former Environmental Protection Agency official who had told Congress that Mr. Cheney’s office tried to censor federal testimony on the danger of global warming. It is also based on confidential interviews with EPA staff and documents subpoenaed from the EPA.

“This is the dysfunctions and motivations of the Bush administration laid bare,” Chairman Ed Markey (D., Mass.) said in a statement.

[From Cheney’s Office Accused Of Thwarting Climate Rules – WSJ.com]

[Non-subscribers use this link to read the entire article]

Categories
environment politics

White House Blocks EPA Emissions Draft

Withered and Died

The White House, on its way out to the dustbin of history,1 wants to gut the Clean Air Act before the end of the year. Lovely.

WASHINGTON — The White House is trying to prevent the Environmental Protection Agency from publishing a document that could become the legal roadmap for regulating greenhouse-gas emissions in the U.S., said people close to the matter.

The fight over the document is the latest development in a long-running conflict between the EPA and the White House over climate-change policy. It will likely intensify ongoing Congressional investigations into the Bush administration’s involvement in the agency’s policymaking.

The draft document, which has been viewed by The Wall Street Journal, outlines how the government, under the Clean Air Act, could regulate greenhouse-gas emissions from mobile sources such as cars, trucks, trains, planes and boats, and from stationary sources such as power stations, chemical plants and refineries. The document is based on a multimillion-dollar study conducted over two years.

The White House’s Office of Management and Budget has asked the EPA to delete sections of the document that say such emissions endanger public welfare, say how those gases could be regulated, and show an analysis of the cost of regulating greenhouse gases in the U.S. and other countries.

[From White House Blocks EPA Emissions Draft – WSJ.com]

Non WSJ subscribers use this Digg-enabled link to full article which includes some colorful charts.

Cheney wants to ensure his oil buddies won’t have to alter any of their polluting practices until after the Rapture:

“Clearly [White House officials] don’t want to leave behind a blueprint that suggests that the Clean Air Act could offer a potential pathway in a cost-effective way to reduce greenhouse-gas emissions,” said one of the people close to the matter who supports the EPA document’s analysis. “Leaving a blueprint behind could leave the next administration a document they could work from, and that’s not in their interest,” the person said.

If the agency establishes a policy direction in this phase of the rule-making but later changes direction in the proposed rule, it could create opportunities for legal challenges under the Administrative Procedures Act, said Peter Robertson, a former deputy administrator at the EPA and a partner at the Pillsbury law firm specializing in environmental public policy.

“There wouldn’t be a reason for OMB to monkey with this document if it weren’t going to be an important step in the process now and later on,” Mr. Robertson said.

Footnotes:
  1. and that’s being very kind []
Categories
Business environment

Justices Cut Damages Award in Exxon Valdez Spill

Gears Grind Slow

Nice to have the profits to be able to afford teams of highly compensated corporate attorneys to work on the case for almost 20 years (spill occurred in 1989).

The commercial fishermen, Native Alaskans, landowners, businesses and local governments involved in the lawsuit have each received about $15,000 so far ”for having their lives and livelihood destroyed and haven’t received a dime of emotional-distress damages,” their Supreme Court lawyer, Jeffrey Fisher, said when the court heard arguments in February.

First-quarter profits at Exxon Mobil Corp. were $10.9 billion. The company’s 2007 profit was $40.6 billion.

[From Justices Cut Damages Award in Exxon Valdez Spill – NYTimes.com]

The Supreme Court reduced damages from $2,500,000,000 way down to $500,000,000. Exxon Mobil’s legal fees for this matter were probably another $400,000,000 or so, meaning somebody’s having a party tonight with nearly $2 billion dollars. Assholes.

Estimated by Amerian Law Daily as $400,000,000:

Those expenses are nothing when compared to the bills Exxon has been paying during the last two decades to firms like O’Melveny & Myers, its primary outside counsel on the litigation. In 1990 alone, according to a feature story in The American Lawyer following the jury verdict, Exxon reportedly paid $60 million in defense fees. O’Neill estimates that Exxon has likely spent about $400 million defending the case during the last two decades, citing numbers that one of his team’s lawyers saw during litigation that was related to the case. Exxon spokesman Tony Cudmore declined to confirm that figure. “We have not released a figure for legal costs,” he says. “I can tell you they have been significant, but I am not able to provide a number.”

Plaintiffs attorneys are crying tonight, as are all the residents of Alaska.

Categories
environment politics

Oil Boondoggle

pump primer frostpocket 1995

Continuing on a theme, David Fuller of Peotone, Illinois writes in to Altercation to say:

Turns out that the oil companies currently hold 10,000 drilling permits right now, and have leases to 68 million acres of land that is going undrilled — no need to “open up ANWR or the Gulf Coast right now” as Newt Gingrich would have everyone believe. (Drilling permits are apparently what happens right before the drill bit hits the ground — so oil companies are confident that oil is there.) Check out this June 2008 report [PDF] from the Committee on Natural Resources.

Among the most interesting points:

  • Drilling on federal lands has steadily increased since the 1990s
  • Drilling permits have gone from 3,802 five years ago to 7,561 in 2007
  • Oil and gas companies have shown that they cannot keep pace with the rate of drilling permits (so opening the Gulf and ANWR would help how, exactly?)
  • Although permits have gone up, the price of gas has ALSO gone up, refuting the idea that more drilling will automatically reduce prices
  • The Bureau of Land Management has issued 28,776 permits to drill on public land; yet, only 18,954 wells were actually drilled (a difference of 9822)
  • Of the 47.5 million acres of on-shore federal lands that are currently being leased by oil and gas companies, only about 13 million acres are actually in production
  • Offshore, only 10.5 million of the 44 million leased acres are currently producing oil or gas
  • According to the Minerals Management Service, of all the oil and gas believed to exist on the Outer Continental Shelf, 82% of the natural gas and 79% of the oil is located in areas that are currently open for leasing
  • Nearly 91 million acres are currently open to leasing in the Arctic region of Alaska, including onshore and offshore lands. Oil and gas companies have leased only 11.8 million of the 91 million acres.
  • The report goes on to say that just drilling in these 68 million acres (this excludes the Alaska acreage, because much of it is still unleased by the oil companies even though it is available to lease) of untapped areas without drilling anywhere else would likely produce six times the amount of oil in ANWR. Yes, that’s right: SIX TIMES what ANWR is estimated to be able to produce at peak production. And if they’d bother to lease the Alaska areas that are available, that number would undoubtedly go much higher.

    There’s much more in the report, but suffice to say, the next time one of us hears the claim that we need to drill in ANWR or off the coast of Florida to reduce our oil dependence and affect pricing, we should (confidently!) ask why in the world we aren’t making use of the 10,000 permits already issued and the 68 million acres of unused, currently leased land to drill on first, and why the additional drilling we’ve already done since the 90s hasn’t reduced prices at all.

    Shock Doctrine, indeed — don’t fall for it. Educate folks on this, so our politicians can confidently vote “No” to the Gingrich nonsense with the knowledge that the American people have been sufficiently educated about this issue to know better than the lines we’re being fed by the oil companies and those shilling for them.

    [From Media Matters – Slacker Friday]

So why isn’t this sort of analysis being made in the corporate media? I’ve read some stories explaining that if new oil leases are sold, in the Great Lakes, and off the coast of Florida, and of course, in Alaska, the new leases won’t start producing meaningful oil for 20-30 years, but why isn’t that fact contrasted to the existence of 10,000 permits already in place that aren’t producing meaningful oil either? Crazy. He who asks the questions sets the agenda, presumedly, and Bush/McCain/Gingrich were the first out of the gate leveraging complaints re: high consumer gas prices against Big Oil’s future drilling rights. A shame that there isn’t push-back on the topic, except in obscure corners of the web (echoed in even more obscure corners of the web, such as this humble webzine).

Categories
environment politics

McCain’s Driller Instinct

Wrong Bus
[Wrong Bus, Juneau, Alaska.]

Paul Krugman piles on to McCain’s stupid energy policy pronouncements.

In his Monday speech on energy, Mr. McCain tried to touch all the bases. He talked about conservation. He denounced the evils of speculation: “While a few reckless speculators are counting their paper profits, most Americans are coming up on the short end.” A weird aspect of the current energy debate, incidentally, is the fact that many of the same market-worshipping conservatives who first denied that there was a dot-com bubble, then denied that there was a housing bubble, are utterly convinced that nasty speculators are responsible for high oil prices.

The item that made news, however, was Mr. McCain’s call for more offshore drilling. On Tuesday, he made this more explicit, calling for exploration and development of the currently protected outer continental shelf. This was a reversal of his previous position, and it went a long way toward aligning his energy policy with that of the Bush administration.

That’s not a good thing.

As many reports have noted, the McCain/Bush policy on offshore drilling doesn’t make sense as a response to $4-a-gallon gas: the White House’s own Energy Information Administration says that exploiting the outer shelf wouldn’t yield noticeable amounts of oil until the 2020s, and even at peak production its impact on oil prices would be “insignificant.”

But what I haven’t seen emphasized is the broader picture: Mr. McCain has now aligned himself with an administration that, even aside from its blame-the-environmental-movement tendencies, has established an extensive track record as the gang that couldn’t think straight about energy policy.

Remember, they didn’t just insist that the Iraqis would welcome us as liberators; on the eve of the Iraq war, administration officials were also adamant that regime change in Iraq would add millions of barrels a day to the world oil supply, driving oil prices way down. (In fact, Iraq’s oil output took five years just to recover to preinvasion levels.)

[From Paul Krugman – Driller Instinct – Op-Ed – NYTimes.com]

Krugman also points out the energy companies aren’t so keen to drill in the frozen tundra of Alaska in any case.

Categories
environment

Big Pander to Big Oil

I like to eat paste

An interesting study in contrasts. The reliably corporate-friendly New York Times editorial board comes out strongly against the idea that $4 a gallon gasoline price is easily reduced by drilling for oil off of the coasts of the Atlantic and Pacific states, and in Alaska. In other words, the case for increased domestic drilling must be pretty weak. The truth is that even if all suspected domestic untapped oil reserves were jumped upon tomorrow, actual oil wouldn’t start flowing for many years (2030, or later). So any politician who proclaims drilling is the short-term answer is either a liar or deluded, or in the case of George Bush, both.

It was almost inevitable that a combination of $4-a-gallon gas, public anxiety and politicians eager to win votes or repair legacies would produce political pandering on an epic scale. So it has, the latest instance being President Bush’s decision to ask Congress to end the federal ban on offshore oil and gas drilling along much of America’s continental shelf.

This is worse than a dumb idea. It is cruelly misleading. It will make only a modest difference, at best, to prices at the pump, and even then the benefits will be years away. It greatly exaggerates America’s leverage over world oil prices. It is based on dubious statistics. It diverts the public from the tough decisions that need to be made about conservation.

There is no doubt that a lot of people have been discomfited and genuinely hurt by $4-a-gallon gas. But their suffering will not be relieved by drilling in restricted areas off the coasts of New Jersey or Virginia or California. The Energy Information Administration says that even if both coasts were opened, prices would not begin to drop until 2030. The only real beneficiaries will be the oil companies that are trying to lock up every last acre of public land before their friends in power — Mr. Bush and Vice President Dick Cheney — exit the political stage.

The whole scheme is based on a series of fictions that range from the egregious to the merely annoying. Democratic majority leader, Senator Harry Reid, noted the worst of these on Wednesday: That a country that consumes one-quarter of the world’s oil supply but owns only 3 percent of its reserves can drill its way out of any problem — whether it be high prices at the pump or dependence on oil exported by unstable countries in Persian Gulf. This fiction has been resisted by Barack Obama but foolishly embraced by John McCain, who seemed to be making some sense on energy questions until he jumped aboard the lift-the-ban bandwagon on Tuesday.

A lesser fiction, perpetrated by the oil companies and, to some extent, by misleading government figures, is that huge deposits of oil and gas on federal land have been closed off and industry has had one hand tied behind its back by environmentalists, Democrats and the offshore protections in place for 25 years.

The numbers suggest otherwise. Of the 36 billion barrels of oil believed to lie on federal land, mainly in the Rocky Mountain West and Alaska, almost two-thirds are accessible or will be after various land-use and environmental reviews. And of the 89 billion barrels of recoverable oil believed to lie offshore, the federal Mineral Management Service says fourth-fifths is open to industry, mostly in the Gulf of Mexico and Alaskan waters.

Clearly, the oil companies are not starved for resources. Further, they do not seem to be doing nearly as much as they could with the land to which they’ve already laid claim. Separate studies by the House Committee on Natural Resources and the Wilderness Society, a conservation group, show that roughly three-quarters of the 90 million-plus acres of federal land being leased by the oil companies onshore and off are not being used to produce energy. That is 68 million acres altogether, among them potentially highly productive leases in the Gulf of Mexico and Alaska.

With that in mind, four influential House Democrats — Edward Markey, Nick Rahall, Rahm Emanuel and Maurice Hinchey — have introduced “use it or lose it” bills that would force the companies to begin exploiting the leases they have before getting any more. Companion bills have been introduced in the Senate, where suspicions also run high that industry’s main objective is to stockpile millions of additional acres of public land before the Bush administration leaves town.

This cannot be allowed to happen. The Congressional moratoriums on offshore drilling were put in place in 1981 and reaffirmed by subsequent Congresses to protect coastal economies that depend on clean water and clean coastlines. This was also the essential purpose of supplemental executive orders, the first of which was issued by Mr. Bush’s father in 1990 after the disastrous Exxon Valdez oil spill the year before.

Given the huge resources available to the energy industry, there is no reason to undo these protections now.

[From Editorial – The Big Pander to Big Oil – Editorial – NYTimes.com]

and in contrast, the also corporate-friendly, but slightly more Republican, Chicago Tribune reporter Mark Silva writes an entire article basically repeating George Bush’s assertion that the answer to $4 gallon is just to start drilling, with barely a mention that drilling’s payoff, such as it is, won’t occur until 20-30 years later.

Just a few months ago, President George W. Bush said he “hadn’t heard” that gas might reach $4 per gallon.

But now that the $4-and-climbing price of summer gas has become a flash point for deep public anxiety in a presidential election year, the departing Republican president wants everyone to hear what his party hopes to do about it. That includes offshore oil drilling, an approach long off-limits for fear of environmental disasters and alienating a huge bloc of voters.

The pinch of rising gas prices is such a politically powerful symbol of an economy on the wrong track that the Republican Party’s presumptive nominee, Sen. John McCain of Arizona, has shifted course to embrace offshore drilling, long politically taboo in coastal states.

Even in environmentally minded Florida, Republican Gov. Charlie Crist, a McCain ally, is willing to “take a look” at drilling in the Gulf of Mexico as an answer to America’s energy woes.

[From Bush leads calls to drill off U.S. shore — chicagotribune.com]

Now, it is possible, albeit unlikely, that Mr. Silva wrote a few more words about the long payoff for increased drilling, and his editors redacted this explanation. I doubt it though.

Categories
News-esque

Blood, Oil, and Iraq

Blood, Big Oil, and Iraq met in a back room in Houston somewhere, and agreed that no-bid contracts to drain Iraq of its oil would be a good thing for American taxpayers to fund. I’m sure the Iraqis are thrilled.

BAGHDAD — Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.

Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.

The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.

There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq’s Oil Ministry.

[From Deals With Iraq Are Set to Bring Oil Giants Back – NYTimes.com]

The Big Oil companies didn’t even make an attempt to seem equitable. There is also suspicion in the non-Arab world that George Bush and Dick Cheney went to war in Iraq precisely to secure the oil wealth these contracts seek to extract.

The first oil contracts for the majors in Iraq are exceptional for the oil industry.

They include a provision that could allow the companies to reap large profits at today’s prices: the ministry and companies are negotiating payment in oil rather than cash.

“These are not actually service contracts,” Ms. Benali said. “They were designed to circumvent the legislative stalemate” and bring Western companies with experience managing large projects into Iraq before the passage of the oil law.

A clause in the draft contracts would allow the companies to match bids from competing companies to retain the work once it is opened to bidding, according to the Iraq country manager for a major oil company who did not consent to be cited publicly discussing the terms.

Blood for Oil, in other words.

Categories
government News-esque

Oil Industry and Congress

Do Not Oil Probe Shaft
[Do Not Oil Probe Shaft]

Oil Industry and Congress: Bitter friends and fast enemies, err, something like that. Both sides of the aisle have an interest in appearing to do something about the ginormous oil industry profits, and subsequent high gas prices for consumers. Fortunately, they managed to avoid actually making any changes.

A package of measures targeting oil-company profits and market speculators failed to reach a vote in the Senate Tuesday, as Republicans blocked Congress’s first effort to address a record surge in oil prices.

Congress and the oil and financial industries are locked in an escalating public confrontation over where to fix blame for oil’s run-up. But industry lobbyists are also huddling privately with lawmakers to horse-trade over measures that could attack the oil issue and work to industry’s advantage.

One way the oil industry could be a winner in the end is through an easing of restrictions on domestic drilling. Republicans have long pushed for more domestic drilling as one response to high oil prices — although it could take years for any new U.S. oil find to have an impact on global prices. Industry lobbyists hope exploration will prove newly palatable to Democrats who are under pressure from voters as well as lobbyists from airline, trucking and manufacturing industries.

[From Lawmakers, Industry Clash And Cooperate as Oil Plans Take Shape – WSJ.com]

The NYT had a slightly different angle on the story, concentrating on the $17,000,000,000 worth of tax breaks the poor, poor oil companies require to conduct business. Without the subsidies, Big Oil would go bankrupt in a minute or two. Luckily for Big Oil, Congress is happy continuing the dole.

A Democratic proposal to impose heavier taxes on big oil companies stalled in the Senate on Tuesday as Republicans and Democrats offered different ideas on how to deal with soaring energy costs.

A bill that would have rolled back some $17 billion in tax breaks on Big Oil and pressured the companies to invest in new energy sources by hitting them with a windfall-profits tax if they did not failed to get enough votes to move forward. Fifty-one senators voted to bring the measure up for consideration, but that was nine short of the number needed under Senate rules. Forty-three senators, most of them Republicans, voted “no.”

The oil-tax proposal was one of two energy-related bills that failed to advance. The other was a proposal to amend the Internal Revenue Code by providing “incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes,” as the measure to promote new energy sources was officially described. The vote to take up that legislation was 50-44, or 10 “yes” votes fewer than necessary.

The votes were against a backdrop of $4-a-gallon gasoline and oil prices that have gone over $139 a barrel just at the start of the summer vacation season.

[From 2 Energy Bills, Including Windfall Tax, Stall in Senate – NYTimes.com]

Because the bill was so important, everyone didn’t bother to show up to vote:

Senate Democratic leaders were reportedly resigned to defeat on the oil-tax bill and did not ask Senators Hillary Rodham Clinton of New York and Barack Obama of Illinois, who just completed their months-long competition for the presidential nomination, to show up for the vote. The other four absentees were John McCain of Arizona, the presumptive Republican nominee for president; Lindsey Graham, Republican of South Carolina, and Edward M. Kennedy of Massachusetts and Robert C. Byrd of West Virginia, Democrats who have been ill.

Six Republicans voted “yes” on the oil-tax bill. They were Norm Coleman of Minnesota, Charles E. Grassley of Iowa, John W. Warner of Virginia, Gordon Smith of Oregon and Susan M. Collins and Olympia J. Snowe, both of Maine. Only two Democrats voted “no,” Mary Landrieu of Louisiana and Harry Reid of Nevada. Mr. Reid, the majority leader, may have voted “no” in a parliamentary move to preserve his right to bring up the proposal again.

Back to the Wall Street Journal, which notes both parties heavily depend upon lobbyists to help legislators make informed decisions. Well, informed in the sense of campaign contributions and three hour luncheons.

As the various proposals fly, lawmakers are choosing sides based partly on whether oil or finance companies contribute most to their home states.

Democratic Rep. John Dingell of Michigan, chairman of the House Energy and Commerce Committee, has investigators looking into the role of big Wall Street brokerage houses in oil trading. Other Democrats have focused their attacks on oil companies.

Oil- and finance-industry lobbyists have blanketed Washington with advertising deflecting blame for the crisis. In a letter to Senate Energy and Natural Resources Committee member Sen. Maria Cantwell (D., Wash.), Exxon Mobil Corp. blamed financial speculators for more than half the price of a barrel of crude.

The American Petroleum Institute is running newspaper ads depicting a crying baby, to imply that oil-company taxes will hurt consumers most. The API also is touting its study by Robert Shapiro, a former undersecretary of commerce for economic affairs under President Bill Clinton, showing that Middle America holds most “Big Oil” shares. The trade group declined to comment.

Outside of camera range, lawmakers are turning to industry lobbyists for guidance on problems rooted in the opaque economics of commodities markets.

[snip]

Congressional staffers in both parties acknowledged the cooperation. “You do not want to do Band-Aid strategies,” said a House staffer. “We’re trying to talk to everyone we need to.”

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environment politics

White House and Amtrak veto

Train I Dont Rides (sic)
[Train I Don’t Rides (sic)]

Bush and his oil buddies want to eliminate train service, or reduce its functionality, because otherwise, if trains are reliable, clean, run on time, yadda yadda, people won’t drive three hours to go somewhere, and oil companies won’t have record-breaking profits, quarter after quarter. Simple, right? Never mind that more cars means more pollution, more energy use, more congestion, more forests destroyed (for roads), and a whole litany of effects. Screw that: the Bush-ites are only interested in encouraging gasoline/auto consumption.

The White House is threatening to veto legislation that would fund Amtrak for the next five years.

The Bush administration says House members didn’t include language in the bill making the railroad more accountable for its decisions.

The legislation would authorize more than $14 billion dollars and set up a program of federal matching grants that states could use to set up or expand rail service.

But the White House says the measure provides little opportunity for competition on existing Amtrak routes and doesn’t include provisions that would condition Amtrak’s funding based on the progress of reforms.

The Bush administration has pushed for ending Amtrak subsidies and eliminating unprofitable lines, while supporters in Congress argue there’s no major national railway in the world operating without government subsidies

[From White House threatens Amtrak veto ]

Via Atrios