Repost from the New York Times [Editorial comment by Marilyn Bardet: “How ironic! For years, Exxon promulgated lies, denying or casting doubt on any scientific research that pointed to humans’ contribution…to climate change, despite the fact that Exxon funded its own independent research on climate that confirmed the very thing the company denied! Go figure. So, Tillerson’s statements now are rather astounding— almost bespeaking a conversion or ‘mea culpa’. He’s certainly not wrong that the lies now being told by Trump and Co. thwart the existence of any semblance of democracy.” — Marilyn Bardet]
In Rebuke of Trump, Tillerson Says Lies Are a Threat to Democracy
By Gardiner Harris, May 16, 2018
WASHINGTON — In what appeared to be a rebuke of President Trump, former Secretary of State Rex W. Tillerson warned on Wednesday that American democracy is threatened by a “growing crisis in ethics and integrity.”
“If our leaders seek to conceal the truth, or we as people become accepting of alternative realities that are no longer grounded in facts, then we as American citizens are on a pathway to relinquishing our freedom,” he said in a commencement address at the Virginia Military Institute in Lexington, Va.
Even small falsehoods and exaggerations are problematic, Mr. Tillerson said. (Mr. Trump is prone to both.)
“When we as people, a free people, go wobbly on the truth even on what may seem the most trivial matters, we go wobbly on America,” Mr. Tillerson said.
“If we do not as Americans confront the crisis of ethics and integrity in our society and among our leaders in both the public and private sector — and regrettably at times even the nonprofit sector — then American democracy as we know it is entering its twilight years,” Mr. Tillerson warned.
The former Eagle Scout — who often cited a commitment to respect, integrity and accountability as the guideposts of his life and leadership — has been in near-seclusion at his Texas ranch since he was fired by tweet in March, just hours after returning from a trip through Africa. He had agreed to deliver the V.M.I. commencement address before he was fired.
GOP Tax Law Bails Out Fracking Companies Buried in Debt
By Justin Mikulka • Thursday, April 26, 2018 – 08:44
EOG Resources is one of the top companies in the fracking industry, and thanks to the new tax bill passed by Republicans and President Donald Trump at the end of last year, EOG had an exceptionally strong year compared to 2016.
In 2017, the company reported a net income of $2.6 billion. The previous year? A loss of $1.1 billion. That financial turnaround seems very impressive until you realize that $2.2 billion, or about 85 percent, of its 2017 income was the result of the new tax law. Without that gift from the GOP and Trump, EOG would have lost approximately $700 million between those two years. Instead they are $1.5 billion ahead of the game.
With numbers like these, it is easy to see how the Tax Cuts and Jobs Act of 2017 was a much-needed lifeline for the money-losing fracking industry. EOG is routinely touted as one of the best shale oil and gas companies. Yet the company still lost $700 million in the past two years. Or at least it would have if not for the tax bill.
This is the same company that an analyst at the investment advice website Seeking Alpha says is “generally considered one of the best unconventional upstream oil and gas players in the business, and its financials back it up.” If those are the best financials in your industry, your industry has a big problem.
An interesting side note is that EOG stands for Enron Oil and Gas, which was spun off as its own company from Enron — the company notorious for one of the great energy Ponzi schemes of the 20th century. Today, an Enron spinoff company is being held up as the most fiscally sound in the shale oil industry.
And Seeking Alpha is now pushing EOG as a good investment and wondering when “the equities market will wake up and smell this opportunity” despite EOG still being over $6 billion in debt. Without the tax overhaul it would be much harder to make this argument.
There is one prominent person in the shale industry warning against rosy forecasts for shale oil, and that is Mark Papa, head of independent oil company Centennial Resource Development. Papa’s last job? CEO of EOG Resources.
Continental Resources is another of the shale companies being heralded as a good investment in 2018. Continental is run by Harold Hamm who was an advisor to the Trump campaign and has taken the title of “Shale King” that once belonged to Aubrey McClendon. Hamm’s net worth is estimated at over $13 billion.
Thanks to the new tax law, Continental took home an extra $700 million because its effective tax rate for 2017 was negative 406 percent.
Continental Resources 2017 Annual 10-K Filing
And Continental needed that money (although Hamm certainly doesn’t). In 2007 Continental had $165 million in debt and paid $13 million a year in interest on that debt. In 2016 its debt had ballooned to $6.5 billion and the annual interest payments rose to $321 million. The GOP tax law essentially pays off two years of Continental’s interest payments, allowing this failing business model to continue because Continental has not been generating enough income to pay even the annual interest on its debt.
While the company he leads is drowning in $6.5 billion of debt, Harold Hamm is personally worth twice that amount. He’ll be fine. He was easily able to afford one of the most expensive divorce settlements ever.
These are just two examples of shale companies receiving an immediate financial lifeline from the GOP tax bill. These companies also will benefit from lowered tax rates in future years. However, this one-time handout simply masks the reality that the shale revolution looks a lot like a Ponzi scheme enriching CEOs and Wall Street financiers by producing oil and gas with borrowed money that is unlikely to be paid back in the future.
And Hamm and the Wall Street financiers have no incentive to do anything differently. Sure bankrupt energy companies destroy worker pensions, wipe out investors equity, layoff thousands of workers — but if we use the coal industry as an example — CEOs will still get bonuses after driving their companies into bankruptcy.
Tax Bill Especially Beneficial to Oil Companies
The benefits of the new tax bill are certainly not unique to oil and gas companies. Utility companies did even better and the big Wall Street banks who are financing the cash-burning shale industry also are awash in new profits thanks to the GOPtax overhaul.
However, due to the nature of how oil and gas companies book profits and losses — and the epic money-losing streak the shale industry created over the past few years — these companies benefited more than most.
To be clear — this bill which was signed at the end of 2017 was applied to the deferred tax liabilities that were already on the books — thus erasing a large chunk of the liabilities for these companies that had built up while the industry kept borrowing to drill more and ultimately lose more money. Simply a bailout of reckless financial behavior by any other name.
And it wasn’t just the companies primarily working in shale that benefited. ExxonMobil raked in a $6 billion benefit from the new tax law, which even CNN Money referred to as a “gift.”
Industry Will Use Bailout to Borrow and Drill More
In discussing the trade deficit President Trump recently tweeted the following:
When you’re already $500 Billion DOWN, you can’t lose!
While the mainstream media is pushing the industry message that shale companies now are focused on profits instead of just production volume, record U.S. oil production and predictions for even greater increases would appear to reveal the lie in that promise. Just as most sharks must swim to stay alive, shale companies must drill to preserve CEO bonuses, which are often tied to oil production, not profits. So, they drill. Even when that means losing money on nearly every barrel of oil they pump.
A graphic from the Wall Street Journal reveals just how much money the shale industry has been losing compared to traditional oil — all while CEOs such as Harold Hamm were amassing billions in personal wealth. The shale oil industry generated free cash flow pumping oil for one brief period in the last seven years. Hamm has done a bit better personally during that time frame.
Shortly after President Trump signed the new tax bill, he took another vacation to Mar-a-Lago where he reportedly told those in attendance: “You all just got a lot richer.”
A rare moment of honesty from the President. And while he wasn’t speaking specifically to shale oil CEOs — it’s safe to say they got the message loud and clear.
Repost from Bloomberg News [Editor: You can count on the oil industry to prevaricate. The Baton Rouge Advocate reports that ExxonMobil released a statement disputing this Bloomberg report. “‘Contrary to some reports, the ExxonMobil Baton Rouge Complex is operating. It is our practice not to comment on specific unit operations at our facilities,’ the company said.” – RS]
Exxon Said to Slow Louisiana Refinery as People Escape Flood
By Barbara J Powell & Brian K Sullivan, August 17, 2016 6:13 AM PDT, Updated 4:14 PM PDT
• Fourth-largest U.S. refinery affected as waters rise
• Louisiana is home to about 18% of U.S. refining capacity
Exxon Mobil Corp. curbed operations at the fourth-largest U.S. refinery as record flooding in Louisiana shut roadways, sent tens of thousands fleeing from their homes and threatened the state’s oil infrastructure.
The Baton Rouge refinery along the Mississippi shut four production units and idled others when the flooding threatened an offsite liquefied petroleum gas storage facility and pumping station, a person familiar with operations said early Wednesday. The refinery can process 502,500 barrels of crude a day into gasoline, diesel and other fuels.
At least 11 people have died, 30,000 people rescued and 40,000 homes have been damaged as almost 2 feet (61 centimeters) of rain fell in parts of southern Louisiana, the Associated Press reported Wednesday. Flood warnings extended across much of the southern portions of the state with many bayous and rivers still at dangerous levels. Louisiana is home to about 18 percent of U.S. refining capacity, according to Energy Information Administration data.
Most in danger from direct disruption from flooding is the support infrastructure consisting of pipelines, terminals, salt caverns and above-ground pumping stations, said Andy Lipow, president of Lipow Oil Associates in Houston.
“Those that supply support services to refineries could be in danger of shutting down, and that could impact refineries’ operations,” Lipow said.
Todd Spitler, an Exxon spokesman, said the refinery is operating. The company doesn’t comment on specific unit operations and has continued to meet contractual commitments, he said
Through Tuesday, Baton Rouge had received 22.11 inches of rain since the start of August, more than 19 inches above normal, according to the National Weather Service. New Orleans got 7.46 inches, or 4.35 above normal; Lake Charles had 11.22 inches, or 8.69 above normal; and Lafayette logged 23.19, or 20.81 higher than the 30-year average.
Governor John Bel Edwards declared an emergency on Friday. Residents in 20 parishes are eligible for federal assistance and in two days 39,000 people have registered, the Governor’s Office of Homeland Security and Emergency Preparedness said.
Motiva Enterprises LLC said in an online message to employees Wednesday afternoon that it will staff its Convent refinery, about 38 miles southeast of Baton Rouge, with only essential personnel through at least Sunday. The company had previously said the restriction would last until Wednesday.
Angela Goodwin, a Motiva spokeswoman, didn’t immediately respond to a request for comment. She said Tuesday that operations at Motiva’s Convent and its Norco refinery, about 38 miles to the south, are stable.
Gulf Coast fuel prices climbed early Wednesday on the prospect of refinery outages. Ultra-low sulfur diesel strengthened 1 cent to 2.75 cents below New York Mercantile Exchange futures, the narrowest discount since November 2014, according to data compiled by Bloomberg. Conventional gasoline gained 1.88 cents to trade near parity with futures for the first time in four days.