Category Archives: Oil Industry

America Voted. The Climate Lost.

Repost from The New Republic
[Editor: Benicia wasn’t alone in this last election, suffering from the intrusion of Big Oil’s Big Money.  Oil companies ratcheted up their meddling in local politics all across the land.  This article highlights only a few: oil interests apparently spent $20 million in WA and $40 million in CO defeating key measures (carbon fee & fracking safety rules respectively).  – R.S.]

Fossil fuel companies spent record amounts to oppose pro-climate ballot initiatives, and it paid off.

By EMILY ATKIN, November 7, 2018

The last two years in American politics have spelled trouble for the global climate, thanks largely to the Trump administration. And the next two years probably won’t be much better, given the results of Tuesday’s midterm elections.

Voters failed to pass a historic ballot initiative in Washington state to create the first-ever carbon tax in the United States. They rejected a ballot measure to increase renewable energy in Arizona, and to limit fracking in Colorado. Some of Congress’ most outspoken climate deniers held onto their seats. Several candidates who ran on explicitly pro-climate agendas lost.

Democrats did not quite get the blue wave they wanted, but it was even worse for environmentalists. There was no green wave whatsoever. That’s partially because of record political spending by the fossil fuel industry to oppose pro-climate initiatives, but also because of the Democratic Party’s failure as a whole to draw much attention to the issue.

The midterm elections were always going to be consequential for climate change. The world’s governments only have about twelve years to implement policies that can limit global warming to 1.5 degrees Celsius. That’s the point at which catastrophic impacts begin, according to a recent report from an international consortium of scientists.

The U.S., as the largest historical emitter of greenhouse gases, is essential to achieving that target. But for the last two years, the U.S. government has been ignoring the need to reduce emissions—and in many cases, actively working against it. Along with withdrawing from the Paris climate agreement, President Donald Trump has been attempting to repeal and weaken existing climate regulation, with the support of the Republican-controlled Congress.

The midterms gave voters two opportunities to change America’s course on climate change. They could have elected a Congress that would no longer support Trump’s anti-climate agenda. And they could have approved strong statewide climate policies to counter the federal government’s inaction.

Voters took the first opportunity, but only slightly. Democrats won the House of Representatives, making it near-impossible for Trump to pass any anti-climate legislation.

But voters didn’t elect many candidates who ran on pro-climate agendas. Environmentalists had hoped that Florida, being on the front lines of climate change, would make history in that regard. But Democratic Senator Bill Nelson, a climate champion, was unseated by Governor Rick Scott, a Republican accused of banning the word climate from state government websites. And Democratic gubernatorial candidate Andrew Gillum, who pledged to act swiftly on climate, lost to a Republican who has dismissed the problem.

Voters rejected almost every opportunity to enact strong state-level climate policies.The biggest failure by far was in Washington. Initiative 1631 would have made the state the first in the country to charge polluters for their emissions. The proceeds from the carbon fee could have provided Washington with “as much as $1 billion annually by 2023 to fund government programs related to climate change,” Fortune reported, and “potentially kickstart a national movement to staunch greenhouse gases.” The measure lost by 12 percentage points.

The renewable energy ballot initiative in Arizona also presented a big opportunity to reduce emissions. Proposition 127 would have required electric companies in Arizona to get half of their power from renewable sources like solar and wind by 2030. (In a rare win for the environment on Tuesday, Nevada voters passed their own version of that initiative.) Proposition 112, Colorado’s ballot initiative to keep oil and gas drilling operations away from where people live, was far more about protecting public health than it was about limiting climate change. But the effect would have been to limit further fossil fuel extraction in the state.

The oil and gas industry spent quite a lot of money opposing all of these pro-climate ballot initiatives. The campaign against Washington’s carbon fee “raised $20 million, 99 percent of which has come from oil and gas,” according to Vox. The carbon fee was thus one of the most expensive ballot initiative fights in Washington state history. The renewable energy fight in Arizona was also the most expensive in state history because of oil industry spending. The same was true for Colorado’s anti-fracking measure, as the oil and gas industry clearly spent nearly $40 million opposing it.

While Tuesday’s results show the impact of massive political spending by the fossil fuel lobby, they also shine a light on Democrats’ failure to mobilize voters on the issue. The Democratic Party has failed to treat climate change with much, if any urgency this election season. According to The New York Times, the “vast majority” of the party’s candidates did not mention the problem “in digital or TV ads, in their campaign literature or on social media.” And the party’s leaders in Congress have given little indication that they intend to prioritize climate change in the future. Is it any wonder voters weren’t excited about solving the problem, either?


Correction: A previous version of this story stated that Nevada voters rejected Question 6, a ballot initiative on renewable energy. The measure won. 

Emily Atkin is a staff writer at The New Republic.

    Mayor Patterson: Benicia needs to plan for the declining role of oil and gas

    An E-Alert from Mayor Elizabeth Patterson
    [Editor: Mayor Patterson has been falsely accused of wanting to run Valero Refinery out of town.  A careful reading of her position shows that she wants the City to plan jointly with Valero and economic advisers for a stable future as we face into the predicted and inevitable decline in carbon-intensive industries.  Other California cities are planning ahead.  Patterson urges Benicia to do the same.  See below.  – R.S.]

    New state laws’ and policies’ impacts on Benicia’s future

    By Mayor Elizabeth Patterson, Benicia, California, October 2, 2018
    Elizabeth Patterson, Benicia Mayor 2007 - present
    Elizabeth Patterson, Benicia Mayor 2007 – present

    Does the city monitor economic trends to forecast the future revenue necessary to operate city services of public safety, road maintenance, safe drinking water, parks and recreation, library and community services?  To some extent, yes.  To the extent that there is an understanding of shifting economic activity such as declining role of oil and gas, no.  We have not done an in depth analysis of the impact of state policies and the law to achieve carbon neutrality by 2045.

    Brown is calling for the entire California economy to become carbon-neutral by 2045. That would mean deploying a combination of new technologies to vastly reduce the release of carbon dioxide and other greenhouse gases, plus the widespread implementation of methods to capture the rest, so that the state’s net release of emissions already altering the climate in devastating ways would be zero.  [from KQED, Sept. 24, 2018]

    What are the opportunities for the city to benefit from this carbon-neutral goal?  Should there be a working group with the city, Valero Refinery, economists and planners to think about 20 years from now?

    What are other cities and counties doing to achieve carbon-neutrality?  Will we be on the leading edge or play catch up?  I will continue to advocate for thinking beyond tomorrow and seizing opportunities for Benicia’s economy to evolve for the future so that we continue to have what I think is the best small town in California.

    Below is an article about what San Luis Obispo is doing to meet the challenge of carbon-neutrality by 2045.

    Elizabeth Patterson, Mayor, City of Benicia


    SLO wants to be carbon neutral by 2035, ahead of California

    The Tribune, sanluisobispo.com, by Nick Wilson, September 25, 2018 03:06 PM

    The City Council wants San Luis Obispo to be carbon-neutral by 2035, an ambitious target that’s 10 years earlier than Gov. Jerry Brown’s statewide goal of 2045.

    The council last week directed staff to move forward with a climate action plan that could mean new building codes and ramping up citywide electrical vehicle charging stations, among several other initiatives.

    Carbon neutrality, or net-zero energy, is the concept of reducing as much carbon dioxide and other greenhouse gases from the atmosphere as possible, with the overall goal to achieve a zero carbon footprint. It is achieved largely by replacing fossil fuel energy sources that emit greenhouse gases with renewables like solar and wind.

    Greenhouse gases are emitted from cars, homes and businesses, as well as from livestock, among other sources.

    An example of an electric vehicle charging station designed by Recargo, a Los Angeles-area company that’s planning to build four new DC fast-chargers in San Luis Obispo.

    “This is aggressive,” said Councilwoman Andy Pease. “It’s a really big goal. I think we can do it. But I think it should be a goal within our Climate Action Plan development.”

    The specifics of the city’s Net Zero 2035 commitment haven’t been formulated yet, pending the Climate Action Plan update next year.

    But efforts undertaken by the city already have reduced greenhouse gas emissions in the city by 10 percent since 2005, with a goal of reaching a 15 percent reduction by 2020.

    Ideas to further reduce greenhouse gas emissions, based on California Energy Commission recommendations, include:

    ▪ Reducing solid waste (including making sure people recycle and reuse items they consume, and compost food scraps), eliminating the need for landfills;

    ▪ Using carbon-free electricity, while transitioning from fossil-fuel based appliances and technologies (such as phasing out internal combustion-based vehicles in place of electric ones, and ratcheting down natural gas-fired furnaces or water heaters in favor of high-efficiency heat pump models that run on clean electricity, for example);

    ▪ Creating new laws around building codes to ensure efficient, clean energy uses rather than natural gas ones (pending legal and practical study of that possibility to be reconsidered by the council in 2019);

    ▪ Finding ways to attain carbon sequestration, meaning strategies to manage city forests that convert carbon dioxide into nutritional benefits for tree growth, and other means;

    ▪ Encouraging efficient use of water and cars (walking and biking whenever possible, versus driving, for example).

    Despite its commitment, the council will wait until its Climate Action Plan Update next year to formally decide on the 2035 goal, but it’s united in trying to implement policy to set that timeline in motion, which council members acknowledge is ambitious.

    The council was divided on whether to adopt a formal resolution to set the 2035 Net Zero target – immediately creating a formal policy directive to work from, rather than waiting to formalize that goal after more research on how it would affect city residents, builders, existing policy, land use and other considerations.

    Mayor Heidi Harmon argued in favor of adopting a resolution, saying that a formal, “bold” statement targeting a 2035 Net Zero goal could make it harder for a potentially new council, after this November’s election, to roll back that policy.

    “I think this is so important, and I know how tough culture shift is,” Harmon said. “But this is one of the main reasons I got elected was to be a champion on climate and have real, actionable things that we’re doing.”

    But Councilwoman Carlyn Christianson said that an “action plan” will better inform the council before it signs off on a 2035 policy.

    “There are large numbers of people who emotionally react one way or another on these issues,” Christianson said. “We need to know exactly what we’re talking about, and we kind of don’t (without further staff research).”

      GOP Tax Law Bails Out Fracking Companies Buried in Debt

      Repost from DeSmogBlog
      [Editor: See also the Pacific Standard report, Inside The Tax Bill’s $25 Billion Oil Company Bonanza.  – RS]

      GOP Tax Law Bails Out Fracking Companies Buried in Debt

      By Justin Mikulka • Thursday, April 26, 2018 – 08:44

      A Scrabble board spells out 'Bankruptcy' overlaid on an unconventional oil and gas rigEOG 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 industryEOG 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:

      Coming from a man whose career includes multiple bankruptcies, this shouldn’t be surprising. The shale oil industry definitely has a kindred spirit in the White House.

      What happens when you give free money to gamblers on an epic losing streak? In the shale industry, they double down.

      ExxonMobil has promised to use the billions it gained from the tax bill to … drill and frack more shale oil. Which is likely to result in further discounts of Permian Shale oil, which will lower the price of oil and put more pressure on the heavily leveraged shale companies.

      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.


      Follow the DeSmog investigative series: Finances of Fracking: Shale Industry Drills More Debt Than Profit