By Gaius Publius, a professional writer living on the West Coast of the United States and frequent contributor to DownWithTyranny, digby, Truthout, and Naked Capitalism. Follow him on Twitter @Gaius_Publius, Tumblr and Facebook. Originally published at at Down With Tyranny. GP article archive here.
Short and brutally ugly. This is an all-hands-on-deck moment. The White House is reportedly the chief negotiator on behalf of Big Oil’s attempt to lift the crude oil export ban. As part of the government shutdown negotiation, the White House, in collusion with Democrats in the Senate, is willing to lift the crude oil export ban in exchange for “renewable energy … conservation benefits … and other party priorities” (see below for this language). More here; search for “oil”.
To be clear, lifting the four-decades-old crude oil export ban would be a disaster. In particular, it would:
- Give the GOP and the American Petroleum Institute (API) a huge win on a top-priority item.
- Throw a lifeline to struggling U.S. oil producers, many of whom are terribly over-leveraged and would otherwise default on their debt. (This is one reason API wants the ban lifted so badly.)
- Bail out the industry’s debt-holders (banks and other entities), whose money is at risk should these oil producers fail (yes, another bank bailout).
- Add a great deal to the carbon that enters the atmosphere by removing a choke-point for bringing extracted U.S. carbon to the global market. (Think of this as offsetting the Keystone pipeline rejection. Instead of preventing carbon from coming to the market, this would enable it.)
- Offset any good Obama may be trying to do in Paris, by a lot.
- Offset or destroy his attempt to create a “good on carbon” legacy. Obama, simply put, is acting like a “Big Oil enabler,” and should the deal go through, he deserves to see that phrase on his tombstone every time he looks at it.
Bottom line, President “good on carbon” Obama and the White House are the driving force behind a Big Oil top priority, if it can traded for “other party priorities.” For perspective, realize we have to strangle fossil fuel production and consumption, not enable it, to have a hope in hell of surviving the chaos that’s about to be locked in. Obama, the Republicans, and every Democrat in Congress who votes Yes to lifting this ban is voting to end your children’s future, not preserve it.
(They probably think their own climate-chaos exit is secure, as Chris Hedges notes here: “Those who are despoiling the earth do so for personal gain, believing they can use their privilege to escape the fate that will befall the human species.” I’m not sure they’re going to escape successfully. The carbon-enabling elites had better be living in Sweden, with Blackwater mercs surrounding their isolated compounds, when the cascading collapses occur — though I’m not sure Sweden, or Canada, will let them all in.)
Make no mistake. While the world works hard on a deal in Paris to stave off carbon emissions, the White House and the Senate are brokering a deal (currently S.1372) to “pave the way for the US to become a petro state,” as one commenter put it.
For more, here’s Elana Schor, writing in Politico (no link; subscription only):
White House keeps GOP hopes for oil exports alive
By Elana Schor
12/08/2015 04:04 PM EDT
The White House on Tuesday declined to rule out accepting a Congressional measure to allow U.S. oil exports for the first time in four decades, a potential signal to senior Democrats who are considering striking a deal with the GOP to overturn the ban in exchange for other party priorities.
The White House “continues to oppose” a legislative provision rolling back the decades-old ban on exporting U.S. crude, spokesman Josh Earnest told reporters, “but I’m just not going to get into a detailed list of things we are going to veto or not veto.” …
Climate Hawks Vote political director Brad Johnson urged President Barack Obama to close the door to oil exports to reinforce the administration’s goal of reaching a strong global emissions pact at the climate change conference in Paris this week.
“All the efforts of his climate negotiators in Paris could be blown away by this one boneheaded appeasement of Big Oil,” Johnson said.
One official at a group fighting to preserve the export ban said environmentalists are concerned that the White House’s “door [is] wide open for wheeling and dealing and trading.”
Some in the White House “think there’s a way to get a good conservation package” in exchange for allowing oil exports, said a source off the Hill who is closely tracking the talks who requested anonymity. …
Though Johnson slammed as “unconscionable” the growing openness among some Democrats and green groups to a trade-off that would roll back the export ban in exchange for renewable energy and conservation benefits, that willingness to compromise showed no signs of abating on Tuesday.
The so-called “green groups” are not innocent bystanders. Many are enablers, along with so-called “liberals” like Barbara Boxer:
Sen. Barbara Boxer (Calif.), top Democrat on the Environment and Public Works Committee, shrugged off environmentalist fears about trading conservation and renewables’ benefits for oil exports. There is “division” among green groups over whether to cut a deal, she said in a brief interview. “I’ve heard environmentalists say this is a great opportunity; others say it’s not,” she said.
Any deal would also likely include some type of aid for refineries in the Northeast that have benefited from cheap domestic crude that cannot be exported currently. Sen. Tom Carper (D-Del.) said he said he is in discussions for an approach “to make whole American refineries that in many cases would simply go out of business” should exports be permitted.
House Minority Whip Steny Hoyer (D-Md.) told reporters that oil exports were not objectionable enough to sink a possible deal on their own.
Ending the 1970s-era ban on exports, the year’s top priority for the American Petroleum Institute, is “not where we want to go,” Hoyer said. “But on the other hand, if there were substantial agreements by the Republicans on some things that we thought were very important, that might be something” to consider during the budget talks.
Among the perps are some of the solar companies, who would get a small benefit for themselves from a Democratic “compromise.” For example:
SolarCity CEO Lyndon Rive, head of the nation’s biggest rooftop solar power company, fueled talk of a deal that would marry clean-energy tax benefits with conservation funding – as well as other Democratic priorities – during an interview in Paris yesterday. If allowing exports “in return, enabled us to have long-term visibility into continuing to incentivize and promote solar, then I think that’s a fair trade,” Rive said.
Another perp is the National Wildlife Federation. Yes, NWF is supports the deal. Feel free to read their sell-out logic for yourself. One reason we can’t have nice climate is our enemies. The other is our “friends,” like NWF, Barbara Boxer, Barack Obama and the rest of that crew.
What You Can Do
The deal is not done, and the carbon part of the shutdown negotiation may be sabotaged for any number of reasons, including your opposition. But it’s an all-hands-on-deck moment. If your senators are listed below, please call them now and say, “To keep the earth habitable, the ban must stand.”
Schumer (New York) — likely brokering the deal
Booker (New Jersey)
Heinrich (New Mexico)
Udall (New Mexico)
For good measure:
Ayotte (New Hampshire)
Senate phone numbers here. You can also support the strongest pro-climate candidate in the presidential race, Bernie Sanders (adjust the split any way you like at the link).
The deadline for the biggest climate tipping point — irreversible warming to an uncivilized planet — is less than 10 years away, by my estimation, if we do nothing to stop the carbon industry and its lust for money. Ten years — which means we should be permanently decelerating emissions as aggressively as possible, and doing it now. Everything on the climate front is happening faster than anyone predicted — sea level rise, glacial melt, everything. Preserving the crude oil ban is at least as important is stopping the Keystone pipeline, and likely more so, given the number of other pipelines we continue to build.
This really needs to stop, these accelerating emissions — by which I mean, be stopped. Please, if they won’t take action, you still can. Because frankly, if we don’t manage the chaos that’s on the horizon, it will manage us, and I hear chaos is a very bad manager.
While I agree with the basic premise here, that we should try and stop the export ban from being lifted, I quibble with a few of the reasons listed, mainly 2-4.
I don’t think lifting the ban is going to help the smaller producers and shale drillers much if at all. Now I could be wrong here, but I thought that since oil is “fungible” any crude we send offshore will just increase imports, all other things being equal. If anything the main effect I would think will be a collapse in the “spread” between WTI and Brent, which might help marginally but isn’t going to move the needle that much for a desperate driller facing bankruptcy.
The real problem for these companies is that they are not profitable unless crude goes back to $80-90 a barrel, or some level much higher than what we’ve got now.
I’ve noticed that the stock market tends to pick up on these things early and I haven’t seen any kind of sustainable rally in the energy sector that would set off my alarm bells.
The refiner bailout referenced does seem hideous. I guess those refiners are making a killing because there is currently a glut of supply and they can get a discount.
Finally, Congress is notorious for doing stupid things and this would probably fall in to the same category as selling oil from the strategic petroleum reserve into the worst supply overhang since the nineties (channelling Gordon Brown.) I can easily envision a reversal on this policy 2-4 years down the road when they realize they
have “top ticked” the market and all those shale producers are out of business, and they have to re-instate the ban due to soaring gas prices.
There are probably some posters with more inside knowledge than I that can offer.
Crude oil is not completely fungible. Refineries have to be built for particular grades of crude. For instance, one of the reasons for the Keystone pipeline was to bring the bitumen (tar sands) crude (heavy and sour, which means high in sulfur) from Canada to the Gulf Coast refineries that can handle it, some of which are owned by the Koch brothers. IIRC, they were originally built to refine Venezuelan crude.
I’m for protecting US production in the price war with the Saudi’s et al and as a attack on their capacity to keep funding of jihadist fundamentalism in the war on terrorism. So I am against export and I think the frackers and offshore drillers (including pipelines, suppliers of pipe and chemicals, and workers) right now would happily accept evironmental constraints for a price support system (similar to agriculture programs perhaps) that guaranteed a decent level of profitability. I would rather see my taxes allocated to subsidies to environment-protected domestic oil and gas production and (!) abundant domestic supplies at low prices to uses than to military fiascos, weaponry, domestic spying and the erosion of Constitutional protections. Black gold is too scarce a resource to throw away on global markets. It needs to be handled with care. What I am trying to say is not in contradiction to what is being said here against Big Oil and in favor of non-polluting, sustainable alternatives; on the contrary.
not sure what to say regarding price supports to the industry and am replying specifically to your last thought
“Black gold is too scarce a resource to throw away on global markets. It needs to be handled with care. What I am trying to say is not in contradiction to what is being said here against Big Oil and in favor of non-polluting, sustainable alternatives; on the contrary.”
I have found significant common ground with republican friends that we’re best off leaving the oil in the ground. Sportsmen and women from the right can be reasonably engaged on this, among other topics of concern to the nation as a whole.
What is it about growth curves people fail to understand? Linear extrapolation of a growth event is just wishful thinking.
We are past the climate change tipping point. What is in the system and what will be released because of the current warming will propel the system to a new equilibrium.
Government will become vicious as soon as the wealthy’s asset value continue to drop. It is all those pesky poor proles breathing which are causing the problem. It cannot possibly be rent extraction or greed driving the system.
Single cell organisms, mostly republicans, will survive. Many multi cell organisms will become rare of extinct.
Synoia: How succinctly and beautifully stated in such a short comment. Kudos.
A remarkably stupid article. Why don’t we attack the consumption side in the US? Killing off the US oil and gas industry only makes our trade deficit worse.
On what planet does banning oil exports (while allowing the export of gasoline and other processed products) make any sense? This policy has not been an issue for the most of the previous 40 years, but since 2010 has been causing economic wastage since it entices refineries to inefficiently burn the surplus of light oil coming out of the shale plays.
With low oil prices, OPEC has succeeded in killing a large number of oil and gas development projects. Since oil production is subject to annual depletion rates in excess of 5% a year, let’s all look forward to some really painful oil prices within a few years.
Huh? The US will wind up subsidizing the cost of LNG facilities (you appear unaware of the fact that we can’t just ship shale gas overseas) and due to the fact that the best estimates show shale production falling by the mid 2020s due to the relatively short lives of those well, those facilities, which are expected to be subsidized by the government, will be a lousy investment in economic terms. By contrast, if we kept didn’t waste taxpayer money in the US, energy prices would be cheaper here, which would give US manufacturing and advantage (I’ve read studies that estimate the likely job gains and they are not trivial). So your take is really off base even if you reject Gaius’ environmental argument.
Really painful oil price increases would reduce the use of oil and hence the rate of carbon skydumping . . . IF the price increases were painful eNOUGH. The way to encourage conservation is to discourage waste, and a way to discourage waste is through punitive pricing. Any policy measure which might raise the price of oil to punitive anti-use levels a few years from now is worth supporting for that reason too.
“[banning crude exports] entices refineries to inefficiently burn the surplus of light oil coming out of the shale plays.”
I’m confused. Refineries refine crude oil, they don’t burn it.
Any crude a refinery possesses it has paid for. Why would it burn the stuff?
I already assumed this was a done deal. The Brent-WTI spread has been bouncing around 2.50-3.50 for some time now, whereas it used to bounce around 5.00-7.00.
While I agree with the author concerning his opinion that Big Oil doesn’t need to be bailed out, I disagree with him on the carbon issues. Too much certainty has been injected into the climate debate, where there is still a lot of uncertainty. Pro global warming theory enthusiasts trumpet the IPCC’s findings, and forget that the IPCC has to find that there is human caused global warming. That is what it’s charter is. If they did not find that, they would have to disband. And the oft quoted figure that 97% of scientists agree that human caused CO2 emissions are leading to global warming is pure rubbish. There are many, many, scientists who disagree, even the founder of Greenpeace for example. Obama and Kerry have used that 97% figure and it is just false. Obama based it on a paper written by Australian John Cook, where supposedly after reviewing 11,944 published papers by scientists from 1991 to 2011 on the subject, Cook stated that “97.1 of scientists endorsed the consensus opinion that humans are causing global warming.” That is a patently false statement. Why? Because the fact is that in reality 66.4% of the scientists had no position. This is just one example of the shewing of data that takes place in the attempt to prove that humans are the cause of global warming. Humans may well be the cause. Certainly it would seem that if CO2 is the cause of the current global warming, that humans are contributing to that. But the fact is there really isn’t any hard data supporting the contribution of CO2. Most of the opinions given to support that theory are based on computer models and many of those models have been shown to be flawed. Thomas Kuhn of the Structure of Scientific Revolutions shows that a paradigm cannot be disproved, only replaced. I think that is the problem with the climate debate. The skeptics do not have a theory to substitute for the human caused global warming theory, so that theory (and again it is a theory) prevails.
I have a couple of comments on a small portion of what you wrote…
I assume you are referring to Patrick Moore (not the astronomer). Here’s a snippet from the Wikipedia article about him, which provides a taste of his lack of credibility:
I understand that Patrick Moore’s lack of credibility concerning glyphosate is not directly relevant to his credibility on global warming, but I think we should be cautious about believing what he says.
You appear to be identifying the word “theory” with the word “hypothesis”. In popular parlance, the words are interchangeable, but they really have different meanings. A theory is a well-substantiated, unifying explanation for a set of verified, proven hypotheses. A hypothesis can be thought of as an educated guess, which may or may not turn out to be true. The meaning of “theory” is close to the meaning of “a verification of several closely related facts”, as in the theory of evolution or the theory of relativity.
We need to swap our light sweet for Mexico’s sludge. We already do this to an extent with Canada. Refineries need a certain mixture of high gravity oil. They have too much currently due to the shale plays. This causes the price at the pump to fall even slower relative to crude. Cushing has even been paying less for light sweet. The oil will be sold anyway this isn’t a bail out. The only thing it could possibly do is close the price gap between Brent & WTI.
Senators Bennet, Coons, and Warner are on the list. They are also on the list of Trade Traitors, who voted for “fast track” (Trade Promotion Authority), which will facilitate the passage of toxic trade agreements such as TPP, TTiP, and TiSA.
Sen. Carper from my list in the text should definitely be called. (202) 224-2441.
He’s now floating a trade where he votes to lift the ban lifted and some (not all) refineries, like those in Delaware, get a tax credit, presumably for lost business.
Politico Pro (sub. required):
The man is definitely for sale. Any idea, anyone, where Reid stands on this?
To keep in mind for the present discussion: the US is still a net importer of crude oil, by a healthy margin.
Exactly. Last time I looked at EIA’s data, the U.S. was importing a lot from Canada, as well as importing a good amount from Mexico and Saudi Arabia. There’s no need to export when we can decrease our imports, specifically from Saudi Arabia.