BP and the Gulf Oil Spill

(Green Watch, September 2010 PDF here)

Despite its generous past contributions to environmental groups, BP is facing a torrent of green criticism since the Deepwater Horizon explosion and oil spill in the Gulf of Mexico. Green groups and other agenda-driven activists are using the spill to promote a job-killing energy agenda. This issue of Green Watch looks at the spill-related campaigns initiated by activist and advocacy groups, and examines how they may affect BP, the American public and the U.S. economy.

On April 20, 2010 an explosion on the Deepwater Horizon oil rig killed 11 employees, injured nearly 20 others, and caused an oil spill that released an estimated five million barrels of oil into the Gulf of Mexico, bringing environmental damage and economic distress to coastal communities from Louisiana to Florida.

The rig’s operator, the British oil company BP, has sustained major financial pain, including a roughly 50 percent decline in the value of its shares. The company’s projected clean-up bill looks so large that it is considering selling perhaps as much as $30 billion in assets, as reported by the Wall Street Journal. Its need for cash is exacerbated by BP’s recent declaration of a $17 billion loss – its first loss in 18 years. In the midst of all this turmoil, BP decided it had to oust its hapless, fumble-prone British CEO, Tony Hayward, and replace him with Robert Dudley – the first American to ever hold the position.

According to Politco.com, BP is also fighting the mother of all Washington political battles, having spent about $1.7 million “on lobbying between the beginning of April and the end of June, a slight uptick from its revised first-quarter numbers…[BP] spent almost $16 million lobbying last year.” Lobbying in a time of crisis represents an opportunity for BP to reach out directly to lawmakers, provide its side of the story, and explain its efforts to mitigate the damage caused by the spill – all in hopes of blunting the pressure building on Congress to take extremely punitive actions against the company.

The spill also has done great damage to America’s energy security: On July 12, the U.S. imposed a deepwater drilling ban, partially in response to public pressure from environmentalists. That followed President Barack Obama’s April 30 suspension of his earlier March 30 decision to allow new offshore oil exploration in the Gulf, pending an investigation of the Deepwater spill.

Unfortunately, a number of U.S. environmental groups are trying to use the Deepwater Horizon spill to pressure elected officials for even-greater government controls over the energy sector. Seeing an opportunity to attract the public’s attention, they have advocated the nationalization of BP, perhaps as a way to gauge public support for the seizure of private energy companies. These activists are determined, to paraphrase Obama chief of staff Rahm Emanuel, not to “waste a good crisis” or miss a chance to push their policy goals.

They are happy to do so at BP’s expense, despite BP’s million-dollar contributions to green groups over the years. As the Washington Post reported on May 24, the Nature Conservancy gave “BP a seat on its International Leadership Council” and accepted nearly $10 million in cash and land contributions from BP and affiliated corporations over the years.” Another nonprofit, Conservation International, received $2 million in donations from BP; the group even allowed John Browne, BP’s chief executive from 2000 to 2006, to sit on its board.

As a result of this largesse, BP received relatively gentle pre-Gulf spill treatment from green groups, even as they went after other energy-producing companies. “BP bought great, relative silence of the greens, in my opinion, thanks to its years of working closely with the activists in a shared coalition to promote the windmill and cap-and-trade agenda, originally organized with Enron,” said Chris Horner, Competitive Enterprise Institute senior fellow and author of Power Grab: How Obama’s Green Policies Will Steal Your Freedom and Bankrupt America (Regnery Publishing, 2010).

“Seize” and “Boycott” BP

The spill has radically altered the relationship between BP and the green movement. Besides the pressure from pending civil lawsuits, media inquiries and demands by regulators, investigators, and federal and state elected officials, BP faces protests and demonstrations coordinated by left-wing activists who demand that the company be nationalized – that all BP-owned property be seized by the U.S. government – to force it to atone for the consequences of the Deepwater spill.

The anti-BP campaigners collectively refer to their movement as “Seize BP” and their goal is stated plainly on their website (www.seizebp.org): “the seizure of BP’s assets in an amount commensurate with estimated damages and the delivery of immediate and ongoing compensation to all those who have suffered and will suffer lost jobs, wages and business for years to come.” In June, anti-BP campaigners put together a week-long series of protests from Tallahassee and Orlando in Florida, to Syracuse, NY, Washington, DC, Atlanta and Baltimore.

Fundraising for the nationalization campaign is coordinated through a tax-exempt San Francisco, California-based group, the Progress Unity Fund, which has links to the Marxist Workers World Party and other extremist left-wing groups, including former Attorney General Ramsey Clark’s International Action Center and the notorious International ANSWER (Act Now to Stop War and End Racism), an organizer of many anti-war rallies.

Because BP is a British company, the media there has taken more interest in the nationalization campaign than American outlets. However, no one seems seriously worried that President Obama or leftwing firebrands in Congress would attempt a nationalization campaign. One investment analyst interviewed by a British reporter observed, “We’re not in Venezuela and we’re not in Zimbabwe” – two Third World dictatorships where government seizures of private companies are routine.

According to National Legal and Policy Center analyst Carl Horowitz, the chatter about nationalizing BP “is about building socialism.” But he dismisses the practical impact: “Imposing receivership upon BP, a company with nearly $250 billion in revenues in 2009, will not provide accountability for the Gulf Coast oil spill. A society that values individual rights should not give liable parties a free pass. But a hostile federal takeover of BP would send a message to every other firm in the oil industry that their assets aren’t safe from plunder.”

A variation on the “Seize BP” campaign is promoted by Jesse Jackson, founder and president of the tax-exempt Rainbow PUSH Coalition. On June 1 Jackson joined Jack Darin, director of the Sierra Club in Illinois, in holding a “BP boycott” protest at a Chicago BP gas station.

This boycott effort will have economic consequences—but not for BP. A BP boycott will hurt entrepreneurs and small businesses that own BP franchises and sell BP’s gas under agreements with the company. There are about 330 BP gas stations linked to convenience stores located in nine U.S. states. That’s in addition to about 10,000 gas stations across the country that sell BP gas, the overwhelming majority of them independently owned.

Rev. Jackson has plenty of entrepreneurs to target and harass. Rainbow PUSH threatened “Bigger Protests, Better Protests, Bolder Protests” against BP stations throughout the summer. As one BP franchisee whose business has been hurt by the boycott told the Cleveland Plain Dealer in June: “‘Oh, we’re boycotting BP,’ [people] say. ‘No you’re not,’ I tell them. ‘You are boycotting me.’ People just don’t understand.”

Unfortunately, RainbowPUSH is not the only group boycotting small businesses. Public Citizen, a group founded by Ralph Nader, is also calling for a BP boycott (Until January 2009, Public Citizen was led by Joan Claybrook, who retired after a 27 year tenure. The current president is Robert Weissman, a longtime Nader associate). When asked whether a boycott will hurt independently-owned BP stations, Public Citizen has a stark answer: “It is true that the boycott is having an impact on the independent franchise owners,” its website says, “but it is also impacting BP in important ways. Any boycott is necessarily going to hurt some innocent parties, and any organization calling for a boycott and any person engaging in a boycott must take that into account. That can’t be a reason for consumers to forfeit their power for collective action.” Or in the words of the French revolutionary Robespierre, “You can’t make an omelette without breaking eggs.”

Public Citizen goes so far as to claim that its boycott of small business is a way to help independent station owners turn against BP, so that they will abandon the BP brand-name and join another chain of gas stations. Whether this will happen remains to be seen. What’s certain is that the boycott will turn station owners against Public Citizen.

Hoping for a ‘Big Bang’: Cap-and-Trade

The seizure and boycott campaigns are small parts of a larger story that concerns how nonprofit environmental advocacy groups are using the Gulf spill to flex their political muscle in national politics.

“Activists have for some time hoped to achieve a ‘big bang’ in the U.S. energy policy debate. The hoped-for ‘big bang’ was a comprehensive energy policy that binds the U.S. economy in a coherent approach through carbon pricing and so on,” says Hudson Institute analyst Christopher Sands.

Undoubtedly environmental activists expect President Obama to be on their side. As a candidate, he launched rhetorical tirades against “Oil – a 19th-century fossil fuel that is dirty, dwindling, and dangerously expensive,” as he thundered in June 2008.

The greens’ high-water mark arrived in June 2009, when the House of Representatives passed the American Clean Energy and Security Act of 2009 (a.k.a. the Waxman-Markey cap-and-trade bill). The Act, which is 1,300 pages long, would set up a pseudo-market “cap-and-trade” system to reduce industrial carbon emissions caused by the use of fossil fuels. It could be described as an effort to force the U.S. economy into a green straightjacket.

The environmentalist reaction to Waxman-Markey was mixed. Greenpeace, the Center for Biological Diversity and Friends of the Earth opposed the bill as a major disappointment that did not go far enough. Environmental Defense, the Natural Resources Defense Council, the Sierra Club and National Wildlife Federation, urged passage of the bill.

These divisions mean little, however, when the bill is put in perspective. Mustering a House majority for Waxman-Markey shows lawmakers’ appetite for more political controls over private sector energy. Green activists have a foot in the door.

Still, the push for a “big bang” transformation of energy policy recently stalled, and environmental groups are blaming the Obama administration and Senate Democrats. On July 21, Politico.com reported that green morale is so low that “some of the country’s largest environmental groups considered a TV advertising campaign criticizing the president for not doing enough to capture the 60 votes needed to pass a bill. But the groups pulled back after deciding such a campaign wouldn’t be effective or worth the money.”

Green morale fell further on July 23 in a major bout of finger-pointing. Senate majority leader Harry Reid postponed action on the Kerry-Lieberman energy legislation that includes a carbon emissions cap and renewable energy mandates; the Senate’s version of the Waxman-Markey bill. Environmental groups blamed insufficient leadership by the White House. White House officials blamed the environmental groups for failing to secure Republican support. And South Carolina’s Republican senator Lindsey Graham, an original co-sponsor of the Kerry-Lieberman bill, blamed Harry Reid for pushing the Senate to consider immigration reform ahead of the climate change bill.

Second-Best Options: Ban Offshore Drilling

While a political “big bang” is in abeyance, the greens are not giving up on their goal to use energy policy to reshape the American economy. Observers say their strategy for the time being is to find “second best” ways to get what they want.

One “second best” approach is to reduce the size of America’s energy supply. Here’s how it would work: If Congress will declare certain sources of oil to be too “dirty” or too “risky” to explore or develop, then oil supplies can be limited and prices will rise. At this point, environmental groups will urge the public to start thinking about producing more alternative fuels.

In fact, Americans have thought a lot about high energy prices in recent years. For instance, the Consumer Energy Alliance estimates that high fuel prices in 2008 cost American truckers nearly $170 billion, an amount that was surely passed on to American consumers.

“The greens are illogically and cynically using the Gulf spill to push ahead once again with their radical plans to massively tax coal-fired electricity and mandate windmills,” Competitive Enterprise Institute senior fellow Chris Horner told Green Watch. “Apparently they think we drive wind-powered cars and get electricity from oil.” Horner says environmental groups treat oil and coal interchangeably and are targeting both. Moreover, they are using the Gulf oil spill to propose for the first time to federalize the permit process for onshore oil and gas drilling. In addition, Horner says the greens would, in effect, have Congress prohibit future offshore oil and gas drilling with support from panicky Republicans. All of this is a White House effort to “fundamentally transform America,” Horner says.

Offshore oil is a prime target for the greens’ campaign, and the BP spill has given them the perfect opportunity to call for an end to offshore drilling. Sierra Club Executive Director Michael Brune sent this message ten days after the Gulf spill:

“Drilling is too dirty and dangerous for our coasts and the people who live there….This same disaster could happen at any one of the hundreds of drilling platforms off our coasts, at any moment…We don’t need to pay this price for energy…This disaster changes everything. We have hit rock-bottom in our fossil fuel addiction. This tragedy should be a wake up call. It’s time to take offshore drilling off the table for good.” [emphasis added]

On the same day Maggie L. Fox, President and CEO of Al Gore’s Alliance for Climate Protection, said, “This massive spill is a painful reminder of the environmental and economic dangers we face…If we want to truly protect our environment, our national security and our economic well being, the President and the Senate must step up their efforts to pass comprehensive clean energy and climate legislation.”

Never waste a crisis, indeed.

Vikki Spruill, the president and CEO of Ocean Conservancy and a director of the Tides Foundation, mixed sympathy for the spill’s victims with a call to arms:

“As terrible as the [Gulf] disaster is, it offers the opportunity to turn this catastrophe into something that offers brighter and more certain futures for the communities in the Gulf – namely, to make sure this kind of crisis doesn’t happen again…’Drill Baby Drill’ has taken a hit with the public response to BP’s Deepwater Horizon blowout, but that will change with the tide unless the focus against unwise drilling can be sustained over the long run and strong and significant pressure is put on Congress to reverse or modify decisions already made.

“This window of opportunity will not be open long, and attention must be immediate. Many organizations within the NGO community are poised to apply this significant and sustained pressure, but they need the support of foundations and other funders to do so. One of the most immediate – and most important – areas where imminent drilling must be stopped is in the fragile Arctic marine ecosystem, where a disaster of this magnitude could have equally dire consequences, and where no capacity to mount any serious response is currently in place.” [emphasis added]

Or consider this Environmental Defense Fund website message to its supporters: “We must recognize that the economic and ecological toll of our dependence on fossil fuels has once again proven to be very steep. America must transition our energy economy to clean, reliable, renewable energy sources as quickly as possible. The Senate must do its part and pass a strong climate and energy bill now to unleash our clean energy future.”

Of course, the greens don’t mention the economic catastrophe that a drilling ban would create. They overlook the fact that offshore oil and gas production is responsible for $100 billion in gross domestic product in Gulf Coast states and employs more than 200,000 people. Nor do they acknowledge the economic hardship the current drilling moratorium imposes on states already reeling from hard times. Rob Guidry, President & CEO of the Lafayette, Louisiana Chamber of Commerce, compares the impact of the drilling moratorium on Louisiana to U.S. sanctions on Iran.

Rallying for Economic Survival

You wouldn’t know it through the mainstream media, but not all Americans support the greens’ drive for more stringent drilling controls. On July 21, 11,000 people gathered in Lafayette to rally against the federal offshore drilling moratorium. It was billed as the “Rally for Economic Survival.” Rally organizers estimated that as many as 17,500 jobs in Louisiana would be lost during the first six months of the moratorium.

City official Joey Durel said it best: “Louisiana has been a reliable and constant energy source for the United States, producing 33 percent of the nation’s domestic oil and gas. The federal moratorium creates a tremendous void in our domestic oil production, leading to a greater reliance on foreign fuel sources and the exodus of the Gulf Coast’s primary economic engine.”

Durel is right. Besides the lost jobs at home, an offshore drilling moratorium will increase U.S. reliance on foreign fuel sources. Canada supplies the U.S. market with 1.8 million barrels of crude oil per day. However, most foreign suppliers are far less reliable than peaceful and democratic Canada, which cannot supply all U.S. needs. Our major oil suppliers include Saudi Arabia (#2), Mexico (#3), Nigeria (#4), Venezuela (#5), Iraq (#7), Algeria (#9) and Russia (#11) – a regular rogue’s gallery of unfriendly or unstable nations. Any drilling restrictions our government puts on U.S. oil production obviously increases the leverage these foreign suppliers have over the U.S. market.

The U.S. vulnerability to unfriendly foreign suppliers is more than just a plot-line for a novel or a movie. In 1967, for example, many Arab oil producers cut back on energy exports generally (and to the U.S. and Britain in particular) to protest Western support for Israel.

The 1967 cut-backs turned out to be a dress rehearsal for the 1973 oil crisis, when Arab oil producers formally embargoed the U.S. for supporting Israel during the Yom Kippur War that year. The embargo started in October 1973 and ended in March 1974. The pain at the gas pump for American consumers was almost intolerable – the price of a barrel of oil increased 400 per cent by 1974.

As a result, unfriendly Arab governments began to boast about the power of their “oil weapon” as a way to shape American policy. As the numbers above indicate, no one should overlook the possibility that the “oil weapon” could be unsheathed again. Average Americans, once again, would pay an extremely high price.

Alternatives to Green Austerity

Green non-profits that preach energy austerity and recommend bans on oil drilling get all the headlines. But not every nonprofit sees the BP Gulf oil spill as an opportunity put the American economy through the wringer. Some offer more useful policy recommendations—though they receive little media attention.

Citizens for Affordable Energy is a small Houston-based group run by John Hofmeister, a former president of Shell Oil. Rather than call for more austerity, Hofmeister promotes the “Four Mores,” a reference to “more energy from all sources, including hydrocarbons…more technology and innovation to efficiently utilize energy, including research and development…more environmental protection, including treatment and management of gaseous wastes;” and “more physical and legal infrastructure, to ensure efficient and environmentally sound distribution and delivery of both traditional and alternative forms of energy.”

Hofmeister isn’t alone in calling for more, not less energy. T. Boone Pickens, the oilman-turned-alternative energy advocate, argues that proposals to end offshore drilling are mistaken because offshore drilling and other domestic energy resources are essential to U.S. energy and economic security. “We need to develop traditional energy resources even as we build the necessary infrastructure for alternative energy use,” he wrote in a July 21 op-ed in Politico.com

Interestingly enough, echoes of Hofmeister’s positive and open-minded approach appear in the work of the Pew Charitable Trusts, the environmental policy heavyweight (2009 assets: $4.6 billion) that is no cheerleader for the oil industry. Well-known as a booster of climate change policies and other green initiatives, at least Pew has a realistic understanding of oil’s importance to the U.S. economy.

On July 20, a Pew news release urged Congress to focus on ensuring that oil companies “use the best available [drilling] technology” to prevent Deepwater Horizon-type spills. Pew also recommended Congress promote better training for oil drilling inspectors and “around-the-clock operational safety monitoring on drill rigs.” It said nothing about continuing the moratorium on drilling.

Conclusion

Regrettably, the environmentalist response to the BP spill illustrates a tendency common to many advocacy groups: They take advantage of unfortunate incidents and tragic accidents like the Deepwater spill to heighten public fears, and promote a broad policy agenda that’s unrelated to the immediate crisis. For green groups, that usually amounts to using an issue in today’s newspaper as an excuse to call for more bureaucratic meddling in our economy.

Neil Maghami is a freelance writer. His most recent article for Capital Research Center examined the Humane Society of the United States (Organization Trends, April 2010).

GW

Environmentalism Rests On False Premise By Matt Patterson

Congressional Democrats, exhausted by the health-care fight and nervous about the coming elections, have all but abandoned efforts to federalize the nation’s energy sector via cap and trade this year. To which the rest of America can thankfully exclaim – whew!

American families hurt by the recession would have seen their energy bills skyrocket as a result of cap and trade. Just look at the effects of such legislation in Britain: According to the U.K’s Taxpayer Alliance, British families are paying an average of $1,300 per year in extra taxes due to carbon-targeting regulations.

Environmentalists and their left-wing sympathizers are disappointed by this temporary set back, and little wonder – they have been astonishingly effective in lobbying for curtailments of liberty and economic opportunity (in the name of saving the planet, of course), and have been spoiled by their own past successes.

Defenders of free markets have pushed back largely on points; challenging data, methods, and motives of the other side. This can be a successful mode of counter attack – the recent exposure of emails from the University of East Anglia’s Climatic Research Unit, which showed professional global-warming alarmists colluding to manipulate data, has proven a spectacular tactical success for opponents of left-wing environmentalism, and doubtless helped derail the 2009-2010 cap-and-trade legislative train.

But these types of successes are all-too-often mere rearguard actions, amounting to a tit-for-tat struggle for public opinion. Too infrequently are the underlying philosophical and logical assumptions of modern environmentalism challenged. For these premises exhibit inherent contradictions, the explication of which could profoundly undermine the environmental movement and amount to a strategic rather than a tactical victory for the forces of freedom and common sense.

For example, the base equation of modern environmentalism seems to be: Nature good; Man bad. By this logic, a tree is more beautiful than a skyscraper; a beaver dam a wonder of nature, a man-made dam an unsightly blight, etc.

This is a false and dangerous dichotomy: Man is not separate from nature; he is a part of it. He was forged in the same evolutionary furnace as all Earth’s creatures; he is a product of the same bio-chemical forces, subject to the same physical laws and limitations.

To accept the false premise of Man contra nature is to surrender reason and context – and thus to embark on political and economic folly. Take, for example, the environmentalists’ obsession with CO2. This naturally occurring compound, an amalgam of carbon and oxygen, is both necessary to, and a byproduct of, biological processes such as respiration and photosynthesis. It is also a bi-product of man’s industrial activity, and it is in this guise that environmentalists classify CO2 as the engine of Earth’s destruction in the form of ‘global warming.’

Now, greenies will say that it is the amount of CO2 that man spews into the atmosphere that makes it dangerous. This is utter nonsense: Volcanoes have been pouring vast quantities of CO2 and other fluorocarbons into the atmosphere for billions of years. The Industrial Revolution, meanwhile, has resulted in significant atmospheric CO2 for less than a century.

And yet environmentalists would have us believe that the Earth cannot handle the recent, paltry carbon production of homo sapiens. Or that humanity, having adapted countless times as our planet warmed and cooled over the millennia, would somehow be unable to cope with a slightly warmer average temperature.

Madness, that way lies. The madness of wrecking our economy in pursuit of some fictitious, perfect global temperature.

The BP oil spill provides another illustrative case. Oil and natural gas regularly seep into the ocean in large quantities through natural fissures in the ocean floor. According to the Woods Hole Oceanographic Institution, for example, “There is an oil spill everyday at Coal Oil Point (COP), the natural seeps off Santa Barbara, California, where 20-25 tons of oil have leaked from the seafloor each day for the last several hundred thousand years.” Yet when BP or Exxon accidentally spill far, far less oil, it is treated by environmentalists as a catastrophe of Biblical proportions.

It isn’t any such thing, of course. Oil and water are both of the Earth, and the former is being folded into latter’s bosom, as has been transpiring since time immemorial – clean up crews in the Gulf can’t even find the oil they were sent to clean up.

Man has striven to alter his surroundings to his advantage, just as every other species. The fact that man has been singularly successful in this endeavor does not make it any less natural, or necessary. A skyscraper is every bit as beautiful as a tree – both are products of the same wondrous universe which we are blessed to be a part of – and help shape.

Matt Patterson is editor of Green Watch. His email address is [email protected]. This article was originally published by the Washington Examiner on August 3, 2010

Welcome To Green Watch

Why Green Watch? Why now? Simple, really. The backbone of the environmental movement in the United States is comprised of dozens of national, state and local non-profit organizations. These organizations vary broadly in structure, specialty, and fervor but they have one thing in common: They exist to exert pressure on elected officials and public opinion to bring federal, state, and local legislation in line with the environmentalist agenda.

And they have been uniquely successful in doing so. Agitation from green groups in the last century succeeded in bringing innumerable laws and regulations onto the books. At times, the results have substantially improved our shared spaces. But other fruits of environmental activism have proven either problematic or outright disastrous. The environmentalists’ successful crusade against the use of DDT as an insect repellent, for example, based largely on dubious data linking the pesticide with cancer in humans, contributed to an estimated 50 million malaria deaths over a mere 25 years – deaths that were utterly and tragically preventable.

The point is: Green groups – and the environmental philosophy they push – can have tremendous, sometimes life and death consequences for the public at large. And thus the raison d’etre of Green Watch – to track the non-profit advocacy groups that comprise the front-line soldiers of the environmental movement; to shine a light on their motives, methods, and money – because somebody has to.

To that end, Green Watch will gather the finest writers and observers of the environmental movement, and bring to the public debate fresh data and insightful analysis of environmentalism and its consequences. We will be tough but fair, thorough but, we hope, never dull.

So welcome. And now, to the fray….

Matt Patterson, Editor