October 27, 2004
One
for Oil and Oil for One
The Bi-Partisan
Politics of Oil
By
JEFFREY ST. CLAIR
Shortly
after John Kerry sewed up the delegates needed to seize the Democratic
nomination for president, he huddled for two hours with James Hoffa,
Jr., the boss of the Teamsters union. The topic was oil. The Teamsters
wanted more of it at cheaper prices. They had suspicions about Kerry.
After all, the senator had already won the backing of the Sierra
Club, who touted him as the most environmentally enlightened member
of the US Senate.
Hoffa
emerged from the meeting sporting a shark-like grin. Hoffa and the
Teamsters have long pushed for opening up the Arctic National Wildlife
Refuge to drilling and for the construction of a natural gas pipeline
to cut across some of the wildest land in North America from the
tundra of Alaska to Chicago. “Kerry says, look, I am against
drilling in ANWR, but I am going to put that pipeline in, and we're
going to drill like never before”, Hoffa reported. "They
are going to drill all over, according to him. And he says, we're
going to be drilling all over the United States”. Kerry didn’t
stop to comment. He slipped out the door and into a waiting SUV.
Oil’s Republicans
The
Bush administration has been aptly pegged as a petroarchy. It isn’t
so much under the sway of Big Oil as it is infested top to bottom
with oil operatives, starting with the president and vice president.
Eight cabinet members and the National Security Advisor came directly
from executive jobs in the oil industry, as did 32 other Bush-appointed
officials in the Office of Management and Budget, Pentagon, State
Department, and the departments of Energy, Agriculture and, most
crucially in terms of opening up what remains of the American wilderness
to the drillers, Interior.
The
point man in the Bush’s administration’s oil raid on
the public estate is Steve J. Griles, Gale Norton's top lieutenant
at the Interior Department. As Deputy Secretary of Interior, Griles
is the man who holds the keys to the nation's oil and mineral reserves.
Since landing this prized position, he used those keys to unlock
nearly every legal barrier to exploitation, opening the public lands
to a carnival of corporate plunder. He became the toast of Texas.
From
the time he took his oath of office, Griles was a congressional
investigation waiting to happen. The former coal industry flack
was one of Bush's most outrageous appointments, an arrogant booster
of the very energy cartel he was meant to regulate. His track record
could not be given even the slightest green gloss. A veteran of
the Reagan administration, Griles schemed closely with disgraced
Interior Secretary James Watt to open the public lands of the West
to unfettered access by oil and mining companies, many of whom funded
Watt's strange outpost of divinely inspired environmental exploitation,
the Mountain States Legal Center.
As
Deputy Director of Surface Mining, Griles gutted strip-mining regulations
and was a relentless booster of the oil-shale scheme, one of the
most outlandish giveaways and environmental blunders of the last
century. He also pushed to overturn the popular moratorium on offshore
oil drilling on the Pacific Coast, a move of such extreme zealotry
in the service of big oil that it even caught Reagan off guard.
After
leaving public office, Griles quickly cashed in on his iniquitous
tenure in government by launching a DC lobbying firm called J. Stephen
Griles and Associates. He soon drummed up a list of clients including
Arch Coal, the American Gas Association, National Mining Association,
Occidental Petroleum, Pittston Coal and more than 40 other gas,
mining and energy concerns, big and small, foreign and domestic.
Then
Griles was picked as Norton's chief deputy. After contentious senate
hearings that exposed his various and lucrative entanglements with
the oil and gas industry, Griles was finally confirmed to office
on July 7, 2001. He later signed two separate statements agreeing
to recuse himself from direct involvement any Interior Department
matters that might involve his former clients. He later flouted
both of those agreements, as disclosed by his own calendar of meetings,
liberated through a Freedom of Information Act filing made by Friends
of the Earth.
As the calendar and meeting notes reveal, Griles used the cover
of the 9/11 attacks and the war on Iraq to advance his looting of
the public domain for the benefit of some of his former clients
and business cronies. He pushed rollbacks in environmental standards
for air and water; advocated increased oil and gas drilling on public
lands; tried to exempt the oil industry from royalty payments; and
sought to create new loopholes in regulations governing strip mining.
Griles
wasted no time compiling a wish list for his pals. Within days of
assuming office, Griles convened a series of parleys between his
former clients and Interior Department officials to chart a game
plan for accelerating mining, oil leasing and coal-methane extraction
from public lands. Between August of 2001 and January of this year,
Griles met at least 7 times with former clients; 15 times with companies
represented by his former client the National Mining Association;
on at least 16 occasions he arranged meetings between himself, former
clients, and other administration officials to discuss rollback
of air pollution standards for power plants, oil refineries and
industrial boilers; on 12 occasions he arranged similar meetings
between regulators and former clients regarding coal mining.
Griles
was an ownership partner in a DC lobbying firm called National Environmental
Strategies, a polluters’ lobby founded in 1990 by Marc Himmelstein
and Haley Barbour. Barbour soon left the firm to become head of
the Republican National Committee. Griles moved in.
When
he was nominated as deputy secretary of Interior, Griles was forced
to sell his interest in the firm for $1.1 million, and he fixed
up a deal with Himmelstein, a friend and Republican powerbroker.
Instead of paying Griles off in a lump sum, Himmelstein promised
to pay the Bush official $284,000 each year over the next four years.
Griles claimed he arranged this kind of payment plan so as not to
leave NES "strapped for cash”.
But in effect Griles remained financially tied to the health of
Himmelstein's firm. And, in fact, Himmelstein admitted that over
the past two years he and Griles have gotten together several times
over beers and dinner.
Oil’s
Democrats
As
these pungent episodes from Griles’ tenure at Interior revealed,
the Bush administration’s fatal flaw has been its inclination
to over-reach, such as when the Interior Department, at the prodding
of politically tone-deaf Dick Cheney, unveiled a plan to offer oil
leases off the coast of Florida. The president’s brother,
Jeb, shot the plan down. A similar blunder occurred in California,
where new offshore leasing had been banned since the oil spills
of the 1970s. The Bush administration floated a plan for new leases
off the coast of Northern California, Oregon and Washington. They
backed down after the scheme met with resistance from the likes
of Arnold Schwarzenegger. Still these should be viewed as probing
raids, testing the tenacity of the opposition, while the real opportunities
for plunder were being pursued in more compliant terrain, where
the door had already been opened by the Clinton administration.
But
Jimmy Hoffa was on to something. Despite what you hear from the
Sierra Club, Kerry and his Democratic cohorts have never arrayed
themselves in opposition to the interests of the oil cartels. Far
from it. In Clintontime, oil industry lobbyists flowed through the
White House as easily as crude through the Alaskan pipeline, leaving
behind campaign loot and wish lists. Several oil execs enjoyed sleepovers
in the Lincoln bedroom. Hazel O’Leary, Clinton’s first
Energy Secretary, traveled the world with oil execs in tow, brokering
deals from India to China. Meanwhile, Ms. O’Leary, a former
utility executive from Minnesota, compiled an enemies list of environmentalists
and reporters who raised unsettling questions about her amorous
ties to big oil.
In
the summer of 1994, while Clinton vacationed in the Tetons, just
down the trout stream from Dick Cheney’s ranch, eight top
oil executives dropped in for a visit. This confab in Jackson Hole
became Clinton’s version of the Cheney energy task force.
The oil moguls pressed Clinton for a number of concessions: 1. Increased
drilling on the Outer Continental Shelf, especially in the Gulf
of Mexico; 2. A break on royalty payments; 3. Expedited leasing
for coal-bed methane the Rocky Mountain Front; 4. Opening the National
Petroleum Reserve-Alaska to drilling; 5. Removal of the ban on export
of Alaskan crude oil to overseas refineries.
At
24 million acres in size, the National Petroleum Reserve-Alaska
stood as the largest undeveloped tract of land in North America.
Located on the Arctic plain just west of Prudhoe Bay, it is almost
indistinguishable ecologically from the hallowed grounds of ANWR,
which abuts the eastern edge of big oil’s industrial city
on the tundra. The same ecology, only much bigger. The oil industry
had craved entry into the NPR-A since the 1920s, when it was set
aside for entry only in the case of a national emergency. Clinton
and his Interior Secretary Bruce Babbitt gave them what Nixon, Ford,
Reagan and Bush had been unwilling or unable to deliver.
But
there’s more. For 25 years, the oil companies operating on
the North Slope had been required to refine the crude oil in the
United States. Indeed, the opening of the North Slope to oil drilling,
and the construction of the leaky 820-mile long Trans-Alaska Pipeline
to transport the crude from Prudhoe Bay to Valdez, was sanctioned
by the US Congress only because the oil was intended to buttress
America's energy independence. Exports of raw crude were explicitly
banned. At the time Senator Walter Mondale warned that the oil companies
would eventually have the ban overturned, saying they had always
intended it to be the "Trans-Alaska-Japan pipeline”.
Mondale correctly foresaw that the oil companies would export large
shipments of the Alaskan crude to Asia in order to keep winter heating
fuel prices high in the Midwestern states. Now, nearly three decades
after this prediction, the oil companies have the jackpot in their
grasp.
The
winning strategy to lift the export ban was hatched by Tommy Boggs,
the Rasputin of American lobbyists, whose firm, Patton, Boggs, represents
a thick portfolio of oil companies, including Exxon, Mobil, Shell,
and Ashland. In this instance, Boggs was the advance man for Alyeska,
owned by the Alaskan oil consortium. Alyeska operates the Trans-Alaska
pipeline and supervises oil extraction on the North Slope. Alyeska
is owned by the consortium of companies doing business in northern
Alaska. In an August 1995 memo to a prospective client, Boggs, a
golfing pal of Bill Clinton, boasts of his bipartisan expertise
in moving the measure through Congress: "We have a very good
working relationship with the Alaska delegation, having led the
private-sector effort to get exports of Alaskan North Slope oil
approved by the 104th Congress and signed by President Clinton”.
Boggs' normal price tag is a robust $550 per hour, which translates
into $22,000 for a 40-hour week.
Students
of the political economy of the Clinton White House are correct
in assuming that the billions handed over by Clinton to the Alaskan
oil cartel were predicated on a swollen river of slush coming the
other way. The fund-raisers at 1600 Pennsylvania Avenue were not
disappointed.
After
all, ARCO – the prime beneficiary of the new Alaskan oil bonanza
– is one of the preeminent sponsors of the American political
system. The oil giant maintains a hefty federal political action
committee. In the 1996 election cycle, the ARCO PAC handed out more
than $357,000. But this is only the beginning. Over the same period,
ARCO pumped $1.25 million of soft money into the tanks of the Republican
and Democratic national committees. The company contributed at least
another $500,000 in state elections, where corporations can often
give directly to candidates.
At
the time, Robert Healy was ARCO's vice-president for governmental
affairs. On October 25, 1995, Healy attended a White House coffee
"klatsch" with Vice-President Al Gore and Marvin Rosen,
finance chairman of the Democratic National Committee. A few days
before the session, Healy himself contributed $1,000 to the Clinton/Gore
re-election campaign. But from July through December of 1995, largely
under Healy's direction, ARCO ladled $125,000 into the bank account
of the DNC.
The
man who did much of ARCO's political dirty work in Washington, D.C.
was Charles T. Manatt, former chairman of the Democratic Party.
Manatt runs a high-octane lobbying shop called Manatt, Phelps, Rothenberg
and Evans, formerly the lair of Mickey Kantor. The lobbyist attended
a White House coffee with Clinton on May 26, 1995. In 1995 and 1996,
Manatt alone doled out $117,150 in hard and soft money. Members
of Manatt's family threw in $7,000. His law firm tossed in $22,500
and the firm's PAC another $81,109.
Inside
the Clinton cabinet, Manatt's former partner, Mickey Kantor, became
the most strident agitator for lifting the export ban on Alaskan
oil, promoting it as a vital prong in the administration's Asian
trade policy. Kantor resigned his position as Secretary of Commerce
and resumed his law practice with the Manatt, Phelps firm.
ARCO's
former CEO, Lodwrick Cook, is a personal friend of Bill Clinton.
In 1994, Cook celebrated his birthday at the White House. The President
himself presented the oil executive with a towering cake. Cook traveled
with Commerce Secretary Ron Brown on a trade junket to China in
August 1994. During that trip, Cook and Brown negotiated ARCO's
investment in the huge Zhenhai refinery outside Shanghai. The refinery
is now ready to process Alaskan crude, which suggests that at least
two years before Clinton's executive order on oil exports in the
spring of 1996, ARCO had inside knowledge of what was to come.Greens
for Oil
In
one of the more pungent hypocrisies of the Clinton age, the green
establishment largely went along with Babbitt’s plan to open
the petroleum reserve, under the deluded impression that to do so
meant they would be able to keep the oil companies out of ANWR.
Of
course, by swallowing Babbitt’s plan to open the petroleum
reserve to oil drilling the greens basically undermined nearly every
ecological and cultural argument for keeping the drillers out of
ANWR. Like ANWR, the petroleum reserve is home to a caribou herd.
But the Western Arctic caribou herd that migrates across the reserve
is almost twice as large as the herd that travels across ANWR.
Similarly,
the petroleum reserve is home to a slate of declining species, including
polar bears, Arctic wolves and foxes, and musk ox.
Unlike
ANWR, the petroleum reserve contains one of the great rivers of
the Arctic, the Colville River, the largest on the North Slope,
which starts high in the Brooks Range and curves for 300 miles through
the heart of the reserve to a broad delta on the Arctic Ocean near
the Inupiat village of Nuiqsut.
The
Colville River canyon and the nearby lakes and marshes form one
of the world’s most important migratory bird staging areas.
Over 20 percent of the entire population of Pacific black brant
molt each year at Teshekpuk Lake alone. The bluffs along the Colville
River are recognized as the most prolific raptor breeding grounds
in the Arctic, providing critical habitat for
the peregrine falcon and rough-legged hawk.
In
early 2003, the Bush administration moved to expand the drilling
in the NPR-A, originally approved by Babbitt and Clinton. Under
the Bush plan, 9 million acres would be opened to drilling almost
immediately and another 3 million acres, near the Inupiat village
of Wainwright, would be opened later in the decade. The plan, tailored
to meet the needs of ConocoPhillips, will call for thousands of
wells, hundreds of miles of road, dozens of waste dumps and a network
of pipelines to transport the oil to Prudhoe Bay and the trans-Alaska
pipeline.
But
oil and gas may not be the only prize. The BLM, which never misses
an opportunity to pursue maximum development of public lands, estimates
that the petroleum reserve may harbor approximately 40 percent of
all coal remaining in the US (400 billion to 4 trillion US tons).
When
Hoffa vowed that Kerry was going to drill everywhere except ANWR
like never before, he was talking about the NPR-A. He was also referring
to plans to sink oil wells into the Kenai Peninsula and off of Kodiak
Island and near the Chugach forest. There are also more than 670
lease applications piled up in the Clinton years for new offshore
oil development in Alaska, from the Gulf of Alaska, to the Copper
River Delta (perhaps the greatest remaining salmon fishery in the
world), to Cook inlet (flanked by the Katmai national park and the
Kenai peninsula) to Bristol Bay, to the Chukchi Sea up by Point
Hope, to the Beaufort Sea. In other words, under both the Kerry
and Bush energy plans the entire coast of Alaska is now in play.
And
not only Alaska.
Democrats
and Republicans Grease
Oil’s Plans in Northern Plains
The
biggest oil rush in recent American history is taking place not
on the North Slope, where reserves are ebbing out, but on the Great
Plains, at the foot of the Rocky Mountains, in Montana and Wyoming.
Here are huge deposits of coal methane in Power River Basin in Montana
and Wyoming. These reserves, worth billions of dollars, have long
been craved by the natural gas industry. It looms as the largest
energy development project in the country and has been assailed
by environmentalists and native groups as a nightmare.
The
project, which calls for the development of more than 80,000 coal-methane
wells, is so fraught with danger that even the Bush administration's
own EPA issued a report sharply criticizing the environmental consequences
of the scheme. Among the findings:
the
80,000 coal methane wells will discharge nearly 20,000 gallons
of salty water each day onto the ground surface, fouling the land,
creeks and aquatic life;
over
its life span, the project will deplete the underground aquifer
of more than 4 trillion gallons of water that will take hundreds
of years to replenish;
full-scale
production will also entail 17,000 miles of new roads, 20,000
miles of pipelines and will turn nearly 200,000 acres of rangeland
into an industrial zone.
This
rare rebuke from the normally supine EPA roused Steven Griles into
furious action. On April 12, 2002, Griles sent a ferocious memo
under his Department of Interior letterhead chastising the EPA for
dragging its feet on the project. He chided the agency of being
uncooperative with industry. It turns out that Griles had formerly
represented the very companies that he was now accusing the EPA
of failing to give proper deference to. As a lobbyist, Griles's
clients included the Coal Bed Methane Ad Hoc Committee, Devon Energy,
Redstone and Western Gas Resources, all companies seeking to gain
access to the Powder Basin gas fields. His old firm, NES, also hosted
an industry-sponsored tour of Powder Basin for EPA and Interior
Department officials. NES also represents Griles' former client
Devon Energy, which stands to make a killing if the deal is approved.
Griles's
meddling in this matter came to the attention of the Department's
lawyers. On May 8, they forced Griles to sign an agreement disqualifying
himself from any further involvement in the coal-methane issue.
He later said he did so "for all the world to know that I'm
not even going to be talking to anybody about it again”.
Tweedle-Griles
(R) and Tweedle-Hayes (D)
Griles
has been rightfully vilified for his role in the Powder River Basin
scandal, which prompted investigations by the Justice Department,
Congress and the Inspectors General Office at the Interior Department.
But none of this started under Bush. Not Alaska, not the Gulf of
Mexico, not the Powder River Basin.
Here’s
David Hayes, Undersecretary of Interior for Energy, testifying before
Congress in July of 2000 on the Clinton legacy for oil leasing on
public lands and offshore sites. “The Clinton Administration
is supportive of the U.S. domestic oil and gas industry”,
Hayes told the Senate Committee on Energy and Natural Resources.
“We have supported efforts to increase oil and natural gas
recovery in the deep waters of the Gulf of Mexico; we have conducted
a number of extremely successful, environmentally sound off-shore
oil and gas lease sales; and we have opened a portion of the National
Petroleum Reserve-Alaska (NPR-A) to environmentally responsible
oil and gas development, where an estimated 10 trillion cubic feet
(tcf) of recoverable natural gas resources lie in the northeast
section of the reserve”.
Hayes
boasted that while domestic oil production had declined on private
lands since 1989, the Clinton administration responded by boosting
oil production on public lands. Under Clinton oil production from
public lands increased by more than 13 percent from 1992 figures
under Bush Sr, widely decried by liberals as being owned by big
oil.
Here
are the numbers cited by Hayes for BLM oil leasing under Clinton.
He called the figures impressive, which they are, although sobering
might have been a more precise description:
*
leasing in the Gulf of Mexico to increase almost tenfold between
1992 and 1997.
*
From 1993 to 1999, 6,538 new leases were issued covering approximately
35 million acres of the Outer Continental Shelf.
*
Lease Sale 175 in the Central Gulf of Mexico, held on March 15,
2000, offered 4,203 blocks (22.29 million acres) for lease. We
received 469 bids on 344 blocks. 334 leases were awarded.
*
More than 40 million acres of Federal OCS are currently under
lease. Approximately 94% of the existing OCS leases (7,900) are
in the Gulf, and about 1,500 of these leases are producing.
*
Issued over 28,000 leases and approved over 15,000 permits to
drill.
*
In 1999, the BLM held a lease sale offering 425 tracts on 3.9
million acres in the National Petroleum Reserve-Alaska.
*
Implemented legislation changing the competitive lease term from
5 years to 10 years, allowing lessees greater flexibility in exploration
without endangering the lease.
*
Oversaw a 60 percent increase in the production of natural gas
on Federal onshore lands over the past 7 years – from 1.3
trillion cubic feet in 1992 to 2.0 trillion cubic feet in 1999.
Here’s
Hayes speaking reverently about the Powder River Basin coal bed
methane leases, which liberals and greens have tried to lay solely
at the feet of Bush and Griles: “Estimates of recoverable
gas reserves on public lands from this basin alone are as high as
9 trillion cubic feet. If maximum operating capacity of the current
pipelines in the Powder River Basin is achieved, production could
be as much as 1 billion cubic feet per day. That will produce enough
fuel to heat nearly fifty thousand homes in the United States for
twenty years. Industry is producing the gas and submitting applications
for permits to drill at an unprecedented rate and, presently, there
are more than 4,000 coal bed methane wells in the basin. Upon completion
of further environmental analysis, we expect to nearly double that
amount.”
The
only real difference between the Clinton plan for the Powder River
Basin and the Bush scheme is that the Bush administration, prodded
by Steven Griles, moved to accelerate the leasing planned by Clinton,
Babbitt and Hayes and truncate the environmental reviews. The end
result was a foregone conclusion under both administrations.
So,
the three biggest oil and gas bonanzas attributed to the rapacity
of the Bush regime – the Alaska petroleum reserve, the Gulf
of Mexico, and the Powder River – were all initiated by the
Clinton administration.
One
more note on David Hayes. Before joining the Clinton team, Hayes
served as the chairman of the Environmental Law Institute, a DC
green group. But this was only a part-time position. His day job
was as a lawyer/lobbyist at the DC firm of Latham and Watkins, which
represents a plump roster of corporations seeking to plunder the
very lands as deputy secretary of Interior he would be charged with
protecting. After leaving the Clinton administration, Hayes navigated
a soft landing back on his old roost at Latham and Watkins. How
is this any different from the lucrative migrations of the hated
Steven Griles, who traveled from the Reagan administration to an
oil lobby shop to the Bush II administration?
The
revolving door spins for all.
Teresa
Heinz Kerry Gets Lay
When
it comes to oil policy Bush relies on Griles, while John Kerry turns
to Ralph Cavanagh at the Natural Resources Defense Council, the
neo-liberal environmental group headed by John Adams. In Clintontime,
Adams and his group made a famous splash when they publicly betrayed
their fellow environmentalists by endorsing NAFTA. NRDC’s
endorsement shattered the coalition and secured passage of the bill
through congress, a prize that had been denied the first Bush administration.
Adams felt no regrets. He later gloated about “breaking the
back of the environmental opposition to NAFTA”.
Ralph
Cavanagh is exceptionally close to John Kerry and his wife, Teresa
Heinz. In fact, Heinz’s foundation bestowed on Cavanagh its
annual eco-genius award and a $250,000 check for his pioneering
work in energy policy. But just what did this work entail?
Here’s
what: While his boss John Adams pushed free trade, Ralph Cavanagh
hawked the deregulation of the energy business in the name of environmental
efficiency, an old canard discredited in the progressive era. Cavanagh
plays the role of Betty Crocker in bestowing green seals of approval
for enviro-conscience and selfless devotion to the public weal by
corporations like… Enron.
These
green seals of approval were part of the neoliberal pitch, that
fuddy-duddy, horse-and-cart age regulation should yield to modern,
"market-oriented solutions" to environmental problems,
which essentially means bribing corporations in the hope they'll
stop their polluting malpractices. Indeed, NRDC and EDF were always
the prime salesfolk of neoliberal remedies for environmental problems.
NRDC was socked into the Enron lobby machine so deep you couldn't
see the soles of its feet. Here's what happened.
In
1997 high-flying Enron found itself in a pitched battle in Oregon,
where it planned to acquire Portland General Electric, Oregon's
largest public utility. Warning that Enron's motives were of a highly
predatory nature, the staff of the state's Public Utility Commission
(PUC) opposed the merger. They warned that an Enron takeover would
mean less ability to protect the environment, increased insecurity
for PGE's workers and, in all likelihood, soaring prices. Other
critics argued that Enron's actual plan was to cannibalize PGE,
in particular its hydropower, which Enron would sell into California's
energy market.
But
at the very moment when such protests threatened to balk Enron of
its prize, into town rode Ralph Cavanagh. Cavanagh lost no time
whipping the refractory Oregon greens into line. In concert with
Enron, the NRDC man put together a memo of understanding, pledging
that the company would lend financial support to some of these groups'
pet projects.
But
Cavanagh still had some arduous politicking ahead. An OK for the
merger had to come from the PUC, whose staff was adamantly opposed.
So, on Valentine's Day, 1997, Cavanagh showed up at a hearing in
Salem, Oregon, to plead Enron's case.
Addressing
the three PUC commissioners, Cavanagh averred that this was "the
first time I've ever spoken in support of a utility merger”.
If so, Cavanagh’s was the quickest transition from virginity
to seasoned service in the history of intellectual prostitution.
Cavanagh bodied forth the ripe delights of an Enron embrace: "What
we've put before you with this company is, we believe, a robust
assortment of public benefits for the citizens of Oregon which would
not emerge, Mr. Chairman, without the merger”.
With
a warble in his throat, Cavanagh moved into rhetorical high gear:
"'Can you trust Enron? On stewardship issues and public benefit
issues I've dealt with this company for a decade, often in the most
contentious circumstances, and the answer is, yes”.
Cavanagh
won the day for the Houston-based energy giant. The PUC approved
the merger, and it wasn't long before the darkest suspicions of
Enron's plans were vindicated. The company raised rates, tried to
soak the ratepayers with the cost of its failed Trojan nuclear reactor
and moved to put some of PGE's most valuable assets on the block.
Enron's motive had indeed been to get access to the hydropower of
the Northwest, the cheapest in the country, and sell it into the
California market, the priciest and – in part because of Cavanagh's
campaigning for deregulation – a rich energy prize awaiting
exploitation.
Then,
after two years, the company Cavanagh had hailed as being "engaged
and motivated" put PGE up on the auction block. Pending sale
of PGE, Enron has been using it as collateral for loans approved
by a federal bankruptcy judge. In the meantime, Enron continued
to bilk the citizens of Oregon. Enron ordered PGE to raise rates
in Portland purportedly to cover taxes owed by Enron that were unrelated
to PGE business. The rates went up by $35 million. Enron executives
pocketed the millions. The taxes were never paid.
Enron
is best known as George W. Bush's prime financial backer. But it
was a bipartisan purveyor of patronage: to its right, conservative
Texas Senator Phil Gramm; to its left, liberal Texas Democrat Sheila
Jackson-Lee (who had Enron's CEO Ken Lay as her finance chairman
in a Democratic primary fight preluding her first successful Congressional
bid; her Democratic opponent was Craig Washington, an anti-NAFTA
maverick Democrat the Houston establishment didn't care for).
In
the late 1990s, Cavanagh, backed by money from the Energy Foundation,
marshaled environmental support for the disastrous scheme to deregulate
California’s electric utilities, a prize long sought by the
state’s two biggest power companies, Pacific Gas and Electric
and Southern California Edison.
It
so happens that the CEO of Southern California Edison is a lawyer
named John Bryson, who in the early 1970s started a little environmental
outfit with another lawyer named John Adams. That group, of course,
was NRDC. According to Sharon Beder, Cavanagh considers himself
a protégé of the utility mogul.
In
support of the deregulation scheme, Cavanagh argued that regulation
of the utilities was passé. In plaintive tones, he promised
that after deregulation the competitive forces of unleashed by the
free market would keep a lid on prices, discourage new nuclear plants,
and provide an incentive for conservation and renewable energy sources.
Enough people bought this line to allow the deregulation bill to
slip through the General Assembly.
None
of Cavanagh’s promises materialized. Instead, rates and power
company profits soared.Liberated from the scrutiny of regulators,
corporate concern for the reliability of the power grid wilted and
California was hit with a series of blackouts in the summers of
2000 and 2001.
One
of the big concerns raised by consumer advocates and environmentalists
about deregulation was the issue of reliability. Once, freed from
obligations imposed by regulators would private companies, driven
solely by the profit motive, have an incentive to maintain power
lines and power plants to keep them in working order. Yes, said
Cavanagh. It turned out quite differently. The companies actually
had an incentive to turn the plants off at the precise moment demand
was at a peak. Now, thanks to a lawsuit brought by Judicial Watch,
we have tapes of Enron executives plotting how they could prolong
the misery of California residents and maximize their own profits.
In
one of the tape-recorded conversations, two Enron executives are
heard plotting to raise prices by shutting down a steamer at a power
plant.
"I
was wondering, um, the demand out there is er ... there's not much,
ah, demand for power at all and we're running kind of fat”,
one executive complains. “Um, if you took down the steamer,
how long would it take to get it back up?”
"Oh,
it's not something you want to just be turning on and off every
hour. Let's put it that way”, another Enron employee replies.
"If
we shut it down, could you bring it back up in three — three
or four hours, something like that?" the executive asks.
"Oh, yeah”, the other says.
"Well,
why don't you just go ahead and shut her down, then, if that's OK”,
David says.
On
another occasion, two energy traders are joking about how Enron
manipulated the prices for electricity in California.
"They’re
taking all that fucking money back?” says one energy trader
to an Enron executive. ”All the money you guys stole from
those poor grandmothers of California?"
"Yeah,
Grandma Millie, man”, the Enron executive replies. “But
she's the one who couldn't figure out how to fucking vote on the
butterfly ballot”.
"Now
she wants her money back for all the power you've charged right
up, jammed right up her ass for $250 a megawatt hour”, the
other trader chortled.
The
Enron traders loved the blackouts, because that meant they could
cash in on the skyrocketing prices helpless consumers were forced
to pay. "Just cut 'em off”, one Enron executive said.
“They're so fucked.
They
should just bring back fucking horses and carriages, fucking lamps,
fucking kerosene lamps”.
When
wildfires threatened to incinerate power lines and an electric transfer
stations, the Enron traders could be heard singing, "Burn,
baby, burn”.
One
Enron employee is heard speaking reverently about one of the most
gifted Enron energy traders preying on the California energy crisis.
"He
just fucks California”, says one Enron employee. "He
steals money from California to the tune of about a million”.
"Will
you rephrase that?" asks a second employee.
"OK,
he, um, he arbitrages the California market to the tune of a million
bucks or two a day”, replies the first. All under the watch
of Enron’s top executives Jeffrey Skilling and Ken Lay.
Through
all of this, John Kerry remained curiously mute. Perhaps because
his wife, and chief financial underwriter, Teresa Heinz is not only
pals with Cavanagh, but Ken Lay as well.
Teresa
Heinz's interest in environmental issues has been mostly expressed
through her Heinz Foundation whose board until very recently was
adorned by that hero of free-market enviros, Ken Lay of Enron.
The
Heinz Foundation put Ken Lay in charge of their global-warming initiative.
When Enron went belly up, the Foundation stuck by their man: "Whatever
troubles he had at Enron, Ken Lay had a good reputation in the environmental
community for being a business man who was environmentally sensitive.
When someone does wrong in one part of their life, it doesn't mean
they can't do good in another part of their life”.
It's
the kind of sublime indifference to the messy realities of politics
and life that inspired Democrats and environmentalists to rally
behind Kerry, under the vacant banner, Anybody But Bush.
Memorial
Day Surprise
On
Memorial Day weekend 2004, the price of premium gas in California
edged near $3 a gallon. Yet, there were no calls for price caps
from the Kerry camp and no demand for a criminal investigation into
price gouging by the oil cartel. Instead, all Kerry could muster
was a limp plea that the strategic petroleum reserves be tapped,
an impotent measure unlikely to depress prices by more than two
or three cents a gallon for a couple of weeks. But we all know where
that oil comes from: drilling on public lands and on the outer continental
shelf.
In
early June, Kerry raced off to a pow-wow with the American Gas Association,
where he reiterated his message to Hoffa that he was ready to Drill
everywhere, like never before. Shortly afterwards, the trade
association issued a smirking press release affirming that Kerry
was on board for increased drilling, especially for natural gas.
Back
in the 1970s, Richard Nixon promoted an energy policy that was far
more enlightened than what we now see under Bush or Kerry. And Ken
Lay, then a junior staffer at the Federal Energy Commission, had
a hand in developing it. Yes, those truly were the good old days.
Jeffrey
St. Clair is the author of Been
Brown So Long It Looked Like Green to Me: the Politics of Nature.
This essay is excerpted from Dime's Worth
of Difference: Beyond the Lesser of Two Evils, which he coedited
with Alexander Cockburn.
Today's
Stories
October
27, 2004
Jeffrey
St. Clair
The Bi-Partisan Politics of Oil