Repost from Air Hugger [Editor: Global Community Monitor‘s excellent blog, Air Hugger, has been around since early 2010. Tamhas Griffith’s piece is a thorough exploration of the oil industry’s influence over local, regional and California government officials. See especially his expose on the behavior of Jack Broadbent, Chief Air Pollution Control Officer of the Bay Area Air Quality Management District. – RS]
By Tamhas Griffith, August 14, 2014
Recently I have been spending more time in city and county meetings where the topic is theoretically how local government will regulate the activity of a local refinery – which is actually a multi-national multi-billion dollar entity with a local franchise. Somehow during these meetings the regulation of health and safety of the community always seems to take a back seat to jobs and money.
We all know one thing that these big oil companies have is a lot of MONEY. For example, the 2013 profits for the BIG 5 oil companies, you know, BP, Chevron, Conoco Phillips, ExxonMobil, and Shell – were $93.3 billion last year! That’s $177 G’s per minute.
Admittedly, Big Oil companies do have some expenses. But where they are spending this money may surprise you.
Over the past 15 years, Big Oil spent $123.6 million to lobby Sacramento and $143.3 million on California political candidates and campaigns. I wouldn’t know from experience but I’d bet you can make a lot of friends with that much money dropping out of your pockets, year after year.
These friends might attach more importance to Big Oil’s concerns about over-regulation than they would to a resident who might not have the funds to contribute to anyone’s campaign fund.
A recent report by the Alliance of Californians for Community Empowerment Institute (ACCE) and Common Cause, “Big Oil Floods the Capitol: How California’s Oil Companies Funnel Funds into the Legislature,” speaks to the extreme power of the Oil and Gas Lobby, as well as the Western States Petroleum Association (WSPA) in Sacramento.
Dan Bacher, California Central Valley reporter for IndyBay, in his review of the report, noted that the
“fact that the oil industry is the largest corporate lobby in California, one that dominates environmental politics like no other industry“ makes California “much closer to Louisiana and Florida in its domination by corporate interests.”
Another way oil companies grease the wheels of influence is through their charitable giving in local communities. Where I live in Martinez, the yellow Shell refinery logo is on virtually all city events including our local Earth Day celebration located at the historic home of iconic environmentalist John Muir. In Richmond, Chevron ladles out millions of dollars to local social services nonprofits working with low-income Richmond residents while simultaneously polluting their community.
These kinds of donations seem to reduce short term costs for the local government, but there is a very real long term cost as well.
And one of the most insidious dynamics is that city budgets are structurally reliant on tax revenue from refineries. According to the Contra Costa Times, “tens of millions in Chevron tax revenue bolster the [Richmond] city budget, providing police and other services that similarly sized cities in Contra Costa County can only dream about.”
It certainly seems like Big Oil has a stranglehold on California politics and regulatory agencies. Recently, the Bay Area Air Quality Management District (BAAQMD) came out in favor of Chevron’s expansion project. After being advised by members of the Stationary Source committee that the appropriate behavior would be to merely answer questions at the Richmond meetings, BAAQMD Chief Air Pollution Control Officer, Jack Broadbent, chose to sign up as a speaker at both Richmond public meetings. He spoke in favor of the Chevron project and formally stated that there was no scientifically feasible way to mitigate condensable particulate matter for the Chevron project. This kind of emission from refineries is composed of carcinogenic particles about 1 micron in width that can lodge deep down in your lungs – see reference below.
Prior to the two Richmond meetings, it had been clearly spelled out for the BAAQMD Stationary Source committee by multiple experts (with Broadbent present) that there was a mitigation technique (SCAQMD FEA Rule 1105.1) that would lessen pollution in Richmond by some 56 tons of the worst stuff you can breathe per year. And it has been mitigated since 2003 in the South Coast Air Quality Management District. So, choosing not to mitigate the really dangerous stuff pouring out of Chevron, like cancer-causing condensable particulate matter, is an impossible conclusion to reach by the authority charged with air quality control. Especially when you know otherwise. This is a 56 ton stain on the BAAQMD board and staff. And 56 tons of micron sized particles are unnecessarily heading for the lungs of the men, women, children, and animals that live or work in Richmond over the next year.
Is anyone at these BAAQMD meetings pushing for cleaner air except the community rights advocates? What influence removes the teeth from the bill, waters down the regulation at the last minute, and causes people to lose their most basic moral compass? A healthy community and environment should always be the priority. And nothing should influence you to believe otherwise.
-Tom Griffith, Martinez Environmental Group, August 14, 2014.
Repost from DESMOGBLOG [Editor: The influential White House Office of Information and Regulatory Affairs (OIRA) is reviewing the newly-proposed oil-by-rail safety regulations rolled out by the DOT and PHMSA. Significant quote: “A DeSmogBlog review of OIRA meeting logs confirms that in recent weeks, OIRA has held at least ten meetings with officials from both industries on oil-by-rail regulations. On the flip side, it held no meetings with public interest groups.” See also important statements by BNSF and the DOT on the need for an entirely new tank car design near the end of this article. – RS]
Meeting Logs: Obama White House Quietly Coddling Big Oil on “Bomb Trains” Regulations
During his presentation at NYU, Shelanski spoke at length about how OIRA must use “cost-benefit analysis” with regards to regulations, stating, “Cost-benefit analysis is an essential tool for regulatory policy.”
But during his confirmation hearings, Shelanski made sure to state his position on how cost-benefit analysis should be used in practice. Shelanski let corporate interests know he was well aware of their position on the cost of regulations and what they stood to lose from stringent regulations.
With the “cost-benefit analysis” regarding environmental and safety issues for oil-by-rail in OIRA’s hands, it appears both the oil and rail industries will have their voices heard loudly and clearly by the White House.
A DeSmogBlog review of OIRA meeting logs confirms that in recent weeks, OIRA has held at least ten meetings with officials from both industries on oil-by-rail regulations. On the flip side, it held no meetings with public interest groups.
Attendees of that meeting included Misty McGowen, Director of Federal Relations for API and Michael Yoham, Manager Rail Transportation Services for Chevron.
This API-Chevron White House visit parallels the one they made together when OIRA mulled over new rules on sulfur in gasoline. In 2012, a group led by API president Jack Gerard went to the White House to discuss this issue with another of President Obama’s closest advisers, Valerie Jarrett.
This visit clearly paid dividends for the industry when the new regulations were delayed.
Akin to what is currently happening with the oil-by-rail regulations regarding Bakken shale oil and the DOT-111 tank cars, it was coordinated with a big public relations push trashing the regulations as unnecessary.
History, as they say, has repeated itself in the oil-by-rail sphere.
“I can tell you that I don’t have confidence in the DOT-111 [and] I’m unconvinced that the 1232 — which is the upgraded car — is the absolute solution,” said Foxx. “I think there’s going to have to be a new type of tank car established to keep this country as safe as possible.”
As his C2 Group biography explains, Cline has also passed through the revolving door, formerly working for both the White House and DOT.
“John served in the White House as a Special Assistant for Intergovernmental Affairs under President George H.W. Bush,” Cline’s bio states.
“Prior to his service in the White House, he was Director of the Office of Congressional Affairs for the U.S. Department of Transportation (DOT)… John entered public service in 1989 upon his selection by President Bush as Associate Administrator for the Federal Transit Administration at DOT.”
Exactly what API, Chevron, ExxonMobil, BNSF and other powerful factions discussed in their meetings with OIRA remains unknown for now.
But one thing remains clear: the only side OIRA has listened to so far in official meetings is Big Oil and Big Rail.
This is consistent with the trend-lines unpacked in the Center for Progressive Reform’s study titled, “Behind Closed Doors at the White House,” a comprensive review of OIRA meeting logs between 2001-2011.
“Over the last decade, 65 percent of the 5,759 meeting participants who met with OIRA represented regulated industry interests — about five times the number of people appearing on behalf of public interest groups,” stated the report.
“[E]ven under this ostensibly transformative President [Obama]…industry visits outnumbered public interest visits by a ratio of almost four to one.”
Oil Majors Need To Boost Leadership On Climate Change
5/29/2014 | Mindy Lubber
Earlier this month, Shell became the latest oil major to respond to an international group of investors asking the world’s largest fossil fuel companies to assess the risks they face from climate change. These investors, managing trillions of dollars in assets, are motivated by concerns that companies in their portfolios are not adequately preparing for a future of lower demand for fossil fuels as the world transitions to cleaner energy sources. Not to mention climate-related physical impacts such as rising seas, stronger storms and more severe droughts.
Like its peers ExxonMobil and Statoil, which have also responded publicly to the request, Shell says it views climate change as a serious issue, and that the company invests in carbon-reducing technologies and incorporates a carbon price in business planning. And, like Statoil, Shell calls the current international goal to limit global warming to below two degrees Celsius “desirable.”
While it is good to see these companies publicly acknowledging climate change and the need to reduce carbon pollution, Shell and its peers appear to be preparing for a world of ever rising – not declining – oil demand. Indeed, ExxonMobil, Statoil and Shell all argue that oil demand will keep growing until at least 2030. They largely ignore the grim picture painted by the Intergovernmental Panel on Climate Change of what the world will probably look like if carbon pollution continues unabated, arguing that it is impossible to turn the tide in the timeframe scientists say is necessary. As a result, the companies reject the idea that they face any substantive financial risk.
Of course, these arguments are not surprising. In fact, the companies’ approach to shareholder engagement on this issue has been a constant refrain about the essential role they play in meeting the world’s insatiable demand for fossil fuels. This perspective is short-sighted and needs to evolve.
Shell and Statoil do provide some discussion of the International Energy Agency’s scenario that shows how the two-degree goal could be achieved, which shows oil demand peaking around 2020 and then declining. But they are quick to point out that even under that scenario, the world will continue to use oil and companies will need to make new oil discoveries to meet consumer demand. Statoil comes the closest to answering investors, saying, “In Statoil we are of the opinion that we have a fairly robust project portfolio, even in the event that global or regional climate regulations were to become much stricter than what we currently expect.”
Investors know that the world is not going to stop using oil overnight, and they aren’t advocating for that either. Rather, as smart stewards of capital, investors want to know what oil projects companies are betting billions on, which may be suspect down the road. These riskier, expensive projects – like deepwater drilling and oil sands – might make sense according to the companies’ bullish oil demand growth forecasts, but would be highly questionable in a world where some of that demand growth doesn’t materialize.
This is a critical question for investors, not just because they don’t want to finance oil projects that shouldn’t go forward in a world that takes the economic threat of climate change seriously, but also because oil demand destruction is a real risk. Companies know this, but are declining to discuss it publicly.
Recent research by the Carbon Tracker Initiative (CTI) shows that, over the last decade, capital spending by the 11 largest publicly traded oil companies has increased five-fold, while their production levels have remained essentially flat. Meanwhile, despite historically high oil prices, their returns have fallen below a 30-year average of 11 percent, leading firms like Goldman Sachs to raise questions about whether companies can generate enough cash to meet their dividend and investment commitments without oil prices rising even higher. Yet, CTI shows how, in a world that tackles climate change, lower oil demand could push oil prices down to around $75 per barrel.
In its response, Shell outlines an upstream capital investment budget for 2014, including exploration expenditures of $35 billion, with the “oil” element of that being an estimated $10 billion. Indeed, over the next decade, CTI shows that the oil industry has the potential to invest an estimated $1.1 trillion for high-cost oil projects that require oil prices above $95 per barrel to be profitable. Shell accounts for more than $63 billion of that. While such projects are economically marginal even at today’s oil prices of just over $100 per barrel, they could become uneconomic if oil demand were to decline by a relatively small amount. Shell openly admits that high oil prices are needed to make such projects viable.
Despite how much certainty these companies have expressed that strong international policies on climate change are unlikely in the next few years – and we have reason to believe they’re wrong – this isn’t the only factor that could dampen oil demand. We’re already seeing increasing fuel efficiency, fuel substitution and technological advances in clean energy and electric vehicles. The oil majors themselves are already seeing flat to declining oil demand in the U.S. and other developed countries due to these factors. They see virtually all of the demand growth coming from the developing world, and argue that meeting that demand is important to improve living standards for the world’s poor. It’s a fair point.
But what is the best way to meet that energy demand, considering that climate change disproportionately affects the world’s poor? Scientists warn that hundreds of millions of people will be displaced by the end of this century due to climate impacts, increasing the risk of violent conflict and wiping trillions off the global economy. Furthermore, how much oil will the developing world actually demand if prices keep rising? Given that oil prices are high now and the industry needs them to stay that way, oil alternatives would be a safer bet as developing countries reach for the living standards of the developed world.
It’s not only fair for investors to be asking companies for more transparency around their capital spending plans – it is the fiscally responsible thing to do. We have mistakenly invested in companies and markets that were ‘too big to fail’ in the past, and we have seen the catastrophic results. The fact is that the effects of the subprime mortgage meltdown on the global economy pales in comparison to what will happen if we do not change how we invest in energy. As major players in an industry the world relies on for so much, ExxonMobil, Statoil and Shell have not yet demonstrated the kind of leadership we need from them.