BP Oil Slick The Result Of Republican DOJ And Regulatory Policy

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The economic and environmental damage resulting from the exploding fireball compromise of the Deepwater Horizon oil platform may be unprecedented, with the potential to emit the equivalent of up to four Exxon Valdez breakups per week with no good plan to stop it. There will be plenty of finger pointing among BP, Transocean and Halliburton, while it appears the bought and paid for corporatist Congress put the screws to the individual citizens and small businesses by drastically limiting their potential for economic recovery; all in the course of insuring big oil producers like BP have effectively no damage liability for such losses.

How did this happen? There are, of course, a lot of pertinent factors but, by far, the one constant theme underlying all is the mendacious corporate servitude of the Republican party, their leaders and policies. The arrogance and recklessness of BP and its oily partners gestated wildly under the Bush/Cheney administration.

Until the turn of the decade, BP had a relatively decent safety and environmental record compared to others similarly situated. Then BP merged with American oil giant Amoco and started plying the soft regulated underbelly of Republican rule in the US under oil men George Bush and Dick Cheney. Here from the Project On Government Oversight (POGO) is an excellent list of BP misconduct, almost all occurring and/or whitewashed under the Bush/Cheney Administration. If you open the door, foxes eat the chickens.

But it is not just regulatory policy behind the open and notorious recklessness of BP and its ilk, it is intentional policy at the Department of Justice as well. Here is how the former Special Agent In Charge for the EPA Criminal Investigative Division, Scott West, described the DOJ coddling of BP under the Bush/Cheney Administration:

In March 2006, a major pipeline leak went undetected for days, spilling a quarter-million gallons of oil on the Alaskan tundra. The spill occurred because the pipeline operator, British Petroleum (BP), ignored its own workers warnings by neglecting critical maintenance to cut costs. The spill sparked congressional hearings and a large federal-state investigation. Despite the outcry, in a settlement announced in late October 2007, BP agreed to one misdemeanor charge carrying three-year probation and a total of only $20 million in penalties (a $12 million fine with $8 million in restitution and compensatory payments).

The settlement resulted from a sudden U.S. Justice Department August 2007 decision to wrap up the case, according to West. That precipitous shutdown meant Read more →

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Erik Prince Proposes Blackwater Become Big Oil’s Enforcer

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Jeremy Scahill reports on a recording that was liberated from a recent Erik Prince talk in which Prince talks about all the great roles he thinks Blackwater should play in protecting Big Oil. Mind you, he didn’t call it Big Oil. But he proposed sending Blackwater to a number of countries to (seemingly) counteract Iran’s challenge of Saudi hegemony in the Middle East.

Prince painted a global picture in which Iran is “at the absolute dead center… of badness.” The Iranians, he said, “want that nuke so that it is again a Persian Gulf and they very much have an attitude of when Darius ran most of the Middle East back in 1000 BC. That’s very much what the Iranians are after.” [NOTE: Darius of Persia actually ruled from 522 BC–486 BC]. Iran, Prince charged, has a “master plan to stir up and organize a Shia revolt through the whole region.” Prince proposed that armed private soldiers from companies like Blackwater be deployed in countries throughout the region to target Iranian influence, specifically in Yemen, Somalia and Saudi Arabia. “The Iranians have a very sinister hand in these places,” Prince said. “You’re not going to solve it by putting a lot of uniformed soldiers in all these countries. It’s way too politically sensitive. The private sector can operate there with a very, very small, very light footprint.” In addition to concerns of political expediency, Prince suggested that using private contractors to conduct such operations would be cost-effective. “The overall defense budget is going to have to be cut and they’re going to look for ways, they’re going to have to have ways to become more efficient,” he said. “And there’s a lot of ways that the private sector can operate with a much smaller, much lighter footprint.”

In addition to his plot to use Blackwater to counter Iranian power, Prince also called to send Blackwater to Nigeria, in what would amount to propping up a corrupt (but US-friendly) government to beat back the indigenous opposition to the abuse, environmental degradation, and corruption related with the oil industry in that country.

Prince also proposed using private armed contractors in the oil-rich African nation of Nigeria. Prince said that guerilla groups in the country are dramatically slowing oil production and extraction and stealing oil. “There’s more than a half million barrels a day stolen there, which is stolen and organized by very large criminal syndicates. There’s even some evidence it’s going to fund terrorist organizations,” Prince alleged. “These guerilla groups attack the pipeline, attack the pump house to knock it offline, which makes the pressure of the pipeline go soft. they cut that pipeline and they weld in their own patch with their own valves and they back a barge up into it. Ten thousand barrels at a time, take that oil, drive that 10,000 barrels out to sea and at $80 a barrel, that’s $800,000. That’s not a bad take for organized crime.” Prince made no mention of the nonviolent indigenous opposition to oil extraction and pollution, nor did he mention the notorious human rights abuses connected to multinational oil corporations in Nigeria that have sparked much of the resistance.

Scahill doesn’t say it explicitly (nor did Prince), but this amounts to a plan to use mercenaries to shore up the hegemonic system the US build on big oil.

Scahill describes a lot more of Prince’s braggadocio in his post. But I, for one, am particularly intrigued by Prince’s naked aspirations to become Big Oil’s privatized enforcer.

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$75 Million Buys BP Six Years of Lobbying or One Giant Oil Spill

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As you’ve no doubt heard, BP’s own liability for the damages the Deepwater Horizon spill will cause may be limited to $75 million (though it will have to pay for cleanup).

The federal government has a large rainy day fund on hand to help mitigate the expanding damage on the Gulf Coast, generated by a tax on oil for use in cases like the Deepwater Horizon spill.

Up to $1 billion of the $1.6 billion reserve could be used to compensate for losses from the accident, as much as half of it for what is sometimes a major category of costs: damage to natural resources like fisheries and other wildlife habitats.

Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill.

That’s obviously puny. But to give you a sense of just how puny it is, consider that, at its current levels of spending on lobbying, BP will spend as much every six years on politicians in DC.

BP is one of the most powerful corporations operating in the United States. Its 2009 revenues of $327bn are enough to rank BP as the third-largest corporation in the country. It spends aggressively to influence US policy and regulatory oversight.

In 2009, the company spent nearly $16m on lobbying the federal government, ranking it among the 20 highest spenders that year, and shattering its own previous record of $10.4m set in 2008. In 2008, it also spent more than $530,000 on federal elections, placing it among the oil industry’s top 10 political spenders.

But the puny amount for which BP will be liable for damages didn’t stop them from potentially trying to make their liability even punier. The early contracts it drew up to pay Alabama fishermen to help contain the spill included a $5000 damage limit, which presumably wouldn’t even cover the cost of a fishing boat.

Alabama Attorney General Troy King said tonight that he has told representatives of BP Plc. that they should stop circulating settlement agreements among coastal Alabamians.

The agreements, King said, essentially require that people give up the right to sue in exchange for payment of up to $5,000.

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BP’s Procedural Spills

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Another thing that happened while I was tromping around one of the most beautiful places on earth (Yosemite) is that the BP drilling rig that had an explosion and fire last week sunk and oil has started to spill into the Gulf (as this dramatic NASA picture makes clear). In the last day, the Minerals Management Service (one of the federal agencies that regulate offshore drilling) has released documents showing that BP was cited in 2007 for training problems related to a similar problem in 2002.

BP Exploration & Production, which owns the deep water rig that exploded last week in the Gulf of Mexico, was cited in 2007 for inadequately training employees in well control, according to the US Minerals Management Service.

The conditions of the training are the same as those suspected in the possible blowout aboard the TransOcean Deepwater Horizon, which left 11 workers missing and presumed dead.

MMS slapped BP with $41,000 in fines in October 2007 after a series of violations related to a near-blowout five years earlier.  In November 2002, the Ocean King rig, operated by Diamond Offshore Drilling, in the Gulf had to evacuate all 65 of its workers for nearly two days after operators detected a dangerous rise in gas pressure.  The rig, which had been drilling at a depth of more than 5,000 feet, didn’t resume work for nearly a week, according to the MMS report.

Unlike last week’s disaster, workers were able to keep the well from leaking by using cement and mud to plug the well.  The same subcontractor, Diamond Offshore, was also used when BP was fined $25,000 in 2004 for bypassing a gas detection system while drilling.  A BP spokesman in London says the company still uses Diamond Offshore as a contractor.

KEY SAFETY PROCEDURES

In the 2002 incident, the MMS said that BP and Diamond Offshore were unaware that some of the key safety procedures they used to initially stop the dangerous rise in pressure could have contributed to a blowout.  The MMS cited BP for what it called “no formal procedures” and “no written guidelines” to follow in case of an emergency.  MMS also cited BP and contract workers in the incident for what they said was a “lack of knowledge of the system, and lack of pre-event planning and procedures.”

Let me give some background on this. In the 1990s, I worked for a company that consulted on safety procedures for the oil industry (a writer who reported to me did some procedures for one Amoco refinery, which was subsequently purchased by BP; we bid on, but did not get, a job that included BP; and we did some procedures for a drilling entity that has since been purchased by Halliburton, which is involved here as well). The way in which the government forces oil companies to operate in ways which minimize the safety and environmental danger of inherently dangerous processes is to ask (either nicely or by mandating) a set of procedures to cover both normal and emergency procedures. It’s a way of setting up documented procedures which can be trained and audited; the procedures allow the government to check whether the operators are operating as safely as possible. Just as importantly, it’s a way of proactively making sure that in case something does go badly wrong, the operator in question–and more importantly, the workers actually doing the work–will have a way of figuring out what to do quickly enough so as to minimize the safety and environmental damage.

MMS is saying that in 2002, BP not only had none of these procedures, but it hadn’t trained the workers and contractors on the rig, and as a result, the workers did the wrong thing to contain the damage. BP got lucky in 2002, because doing the wrong thing did not exacerbate the problems.

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Biden To Announce Fisker Auto Plant In Wilmington Delaware

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imagesVice President Joe Biden is set to make an appearance in his home state of Delaware today to make an announcement that Fisker Automotive will be purchasing, retooling and opening up operations in a shuttered former General Motors facility in Wilmington. From the Washington Post:

Vice President Biden will make the announcement that Fisker Automotive of Irvine, Calif., is expected to invest $175 million to retool the plant.

Fisker, which will pay the old GM $18 million for the facility and equipment, is getting tax incentives from the state of Delaware, although officials there declined Monday to say how much.

Fisker plans to make a car in Delaware that is being developed under the name “Project Nina” after the ship belonging to explorer Christopher Columbus. Russell Datz, a Fisker spokesman, said that the project’s name is meant to be “symbolic of the transfer from the old world to the new in terms of auto technology.” The car is expected to cost about $39,900 after tax incentives.

The Fisker facility is expected to create 2,000 jobs and will likely be operational by 2011. Administration officials said the deal will indirectly create another 3,000 jobs once the plant is fully operational, expected in 2014. Administration officials say that Fisker expects many of the jobs will go to former GM or Chrysler auto workers.

Time will tell, but on the front end this looks like a wonderful deal in a lot of ways. Fisker is a company that has been putting the pieces together behind the scenes for a couple of years for a major production move, and their initial prototype, and soon to be production model, the Karma, is absolutely stunning and, from all reports, technologically sound. Wilmington is an area that, while not as hard hit as Detroit, is certainly depressed and has been further decimated by the recent closing of the large GM plant there as well as a separate Chrysler plant. When fully up and running, the Fisker Nina plant in Wilmington may Read more →

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Don’t Drill Baby, Don’t Drill

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In yet another chapter of Ken Salazar being my temporary favorite cabinet secretary, Salazar and Obama have reversed Bush’s plans to increase offshore drilling.

The Obama administration on Tuesday overturned another Bush-era energy policy, setting aside a draft plan to allow drilling off the Atlantic and Pacific coasts.

"To establish an orderly process that allows us to make wise decisions based on sound information, we need to set aside" the plan "and create our own timeline," Interior Secretary Ken Salazar announced in a statement.

Alleging that the Bush administration "had torpedoed" offshore renewable energy in favor of oil and natural gas, Salazar said he was extending the public comment period by 6 months.

"The additional time we are providing will give states, stakeholders, and affected communities the opportunity to provide input on the future of our offshore areas," he said.

Salazar also ordered Interior Department experts to compile a report on the Outer Continental Shelf’s energy potential — not just oil and gas, but also renewables like wind and wave energy.

"In the biggest area that the Bush administration’s draft OCS plan proposes for oil and gas drilling — the Atlantic seaboard, from Maine to Florida — our data on available resources is very thin, and what little we have is twenty to thirty years old," he said. "We shouldn’t make decisions to sell off taxpayer resources based on old information."

Granted, compared to Eric Holder (who gets to embrace renditions as his first meaningful act) and Tim Geithner (who is stuck with the worst economy in decades), Salazar has it easy. He can stay busy for months just undoing Bush’s harm. 

Still, it’s nice to see one Department improving on what Bush had done.

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Salazar’s Successes

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desolation-canyon.jpgI didn’t think I’d be saying this, two weeks into the Obama Administration. But thus far, Ken Salazar has been the high point of the new Administration for me.

Yesterday, we learned via POGO that Salazar is interested in reopening cases against those at the Minerals Management Service who made a mockery of that department. 

According to several sources at the department, Salazar is specifically interested in Gregory Smith and Lucy Denett. They’re both former high-ranking Interior officials; Justice declined to prosecute either one.

Smith is a former director of the controversial royalty-in-kind program at MMS. He took tens of thousands of dollars in consulting fees from a company that wanted to do business with oil and gas companies, and accepted gifts and trips from the industry. Denett ran the Minerals Revenue Management agency, part of MMS, and steered more than $1 million in contracts to a friend.

These are the alleged crimes, recall, referred to DOJ–including alleged sexual assault of a subordinate–that Michael Mukasey didn’t think merited prosecution.

And today we get the news that Salazar is going to cancel Bush’s last minute drilling leases on sensitive land in UT. 

Interior Secretary Ken Salazar is cancelling oil and gas leases on 77 parcels of federal land in Utah, according to sources familiar with the decision, ending a fierce battle over whether to allow energy exploration in the environmentally-sensitive area.

The Bush administration conducted the lease sale in December, but environmental groups went to court to block the winning bids encompassing roughly 110,000 acres near pristine areas such as Nine Mile Canyon, Arches National Park and Dinosaur National Monument.

Just before Bush left office last month, U.S. District Judge Ricardo M. Urbina issued a restraining order on the lease sales, postponing the final transactions until he could hear arguments on the merits of the case.

An Interior spokesman declined to comment on the matter, but several sources familiar with the decision said Salazar planned to announce it later today, adding that he can reject the winning bids without a penalty because the transactions had not become final and the department has the discretion to accept or reject lease bids that prevail at a public auction.

He’s also modifying upcoming leases in Wyoming to account for local concerns about conservation and recreation.

Granted, thus far Salazar has simply set about reversing some of the most egregious abuses of the Bush Administration. Read more →

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Oh Noes! Lobbyists Standing in Line with Labor Leaders!!

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standing-in-line.jpgThe really amusing part of this story–describing how a number of business interests who ran were warmly welcomed in the Bush White House are aghast that they have to stand in line in the same waiting room with labor interests–is behind a firewall (thanks to egregious for liberating it).

The extent of substantive interaction varies. Some lobbyists, particularly those representing industries Obama wants to promote, report numerous contacts and substantive meetings.

But other K Street veterans report a shocking new reality.

Top business officials accustomed to red-carpet treatment in the Bush White House say they must stand in line in the cold outside transition headquarters along with people they don’t recognize, waiting to be cleared to meet with Obama staffers they don’t know and who don’t always appear to understand their issues. One veteran business official lamented that the only Obama official he has recognized so far is former Environmental Protection Agency Director Carol Browner — along with lobbying foes for labor and environmental organizations he has seen milling around or standing in the queue.

"We were part of the team" during the Bush transition, reminisced another top K Street player. "The business lobby was not pro-Obama," he acknowledged. "And for good reason, if you look at the campaign rhetoric."

Several business representatives wondered whether they were involved in a "check the box" scam designed to show inclusiveness rather than practice it.

"You get your five-minute elevator presentation," said one top industry lobbyist who said his meetings have been devoid of meaty discussion. "They say nothing. It’s a pure note-taking exercise. Will they be able to say they reached out? Sure." [my emphasis]

And these poor lobbyists are also worried that the white papers they give the Obama Administration, which under the Jack Abramoff style system employed by the Bush White House would be printed out on White House letterhead and presented as Administration policy, will be released in original form on the net.

Obama appears so far to be sticking to his promise to shed daylight on the process, reversing Bush White House practices most famously exemplified by Vice President Dick Cheney’s secret meetings with energy lobbyists. Instead, business types huddling with Obama officials are immediately told that the position papers and other documents they are pushing across the table are going directly onto the Web. 

To be fair, the story describes the industries which Obama has welcomed warmly: Read more →

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A Gas Tax Instead of CAFE

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I’m working on a post describing what I think the Big Two and a Half ought to propose on December 2 when they drive their hybrids to DC (in lieu of flying) to beg for money again. As part of that, I will suggest that they ask Congress to levy a stiff gas tax. But since I am getting into more and more discussions with environmentalists who want any bailout to be tied to increased CAFE standards, I’m going to lay out why I think a tax is much better than increased CAFE standards for everyone.

Why CAFE Standards Suck at Achieving their Goal

I’m going to start with the assumption that the goal of CAFE standards is to force auto manufacturers to build more environmentally efficient cars (arguably that’s not what it was originally intended to do). It does so with brute force regulation that does not, at the same time, change the actual market-wide interest (or not) in environmental efficiency.

Until gas reached $4 plus this summer (and things are returning–though haven’t entirely returned–to where they were now that gas has gotten cheaper again), people calculated "energy efficiency" into their considerations when buying a car in terms of cost of ownership–that is, as one factor among others: how much the car cost, how much monthly loan payments would be, how much maintenance cost, how much insurance cost, and how much gas to run the car cost (this is reflected by the stickers dealers use to sell their cars, which usually describe efficiency both in terms of MPG but also in terms of year gas costs). For most people, efficiency is still a cost issue, and not a benefit per se.

Now consider how that will factor into the choice of a vehicle. For a lot of people, all those cost calculations will be less important than perceived safety or utility arguments. So if having something that feels like a tank is really important to you, you’re going to buy something that feels like a tank and only then consider how much it’ll cost you to run your psuedo-tank. The cost calculations will weigh, overall, much less in your consideration.

But if cost of ownership is your primary consideration, then you’re going to look at the cheapest cars that meet your basic needs, and pick which one is actually cheapest to run. Read more →

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T. Boone or not T. Boone

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h/t www.thewindturbines.com/

h/t www.thewindturbines.com/

We have had quite the go lately here at the FDL Borg Hive over the automaker bailout and, more specifically, the most pressing of which is GM. For the moment though, I want to touch on a corollary to the future of the American auto industry, and that is the transition to clean and green that needs to occur for long term sustainability of Deetroit wheels.

If we could flip the switch on a perpetual motion device, heck even the Chevy Volt, tomorrow, that would be wonderful. But we cannot. The path back to health and profit prosperity for American auto will be a process that takes time, and it is going to take intermediate steps while the new technology comes on line, gets refined and evolves into maturity.

The guy, for better or worse, that has been out front making noise about the transition from oil to clean and green is none other than the infamous, and legendary, Texas oil man T. Boone Pickens. Transition is the key word regarding the Pickens Plan as it relates to our topic de jour, automobiles. Because the Volt is not scheduled for release until 2010, and even assuming GM and its Volt makes it that far (which is no given), it will take a while for plug in technology to become deeply rooted. And, of course, a massive shift all at once to electric autos would crash our strapped and deteriorating power grid.

Pickens’ main point on internal combustion transition is that natural gas should be a, it not the, transition fuel for cars, and, more significantly, fleet vehicles.

Pickens’ Plan proposes that the natural gas that is currently used to fuel power plants could be used instead as a fuel for thousands of vehicles. Ken Medlock says that the US will continue to use natural gas for electric power generation. Natural gas burns cleaner than coal, making it an increasingly popular fuel for power plants. Gas plants also produce fewer greenhouse gas emissions.

The technology needed for Compressed Natural Gas (CNG) vehicles such as City buses, fork lifts and passenger cars with CNG drivetrains is available now. Honda sells the Civic GX, with a 170-mile range. In addition, it is possible to convert vehicles to run on CNG in addition to leaving the conventional fuel injection intact, allowing the driver to switch back and forth at will. Kits are available for the do-it-yourselfer. Read more →

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