The proposal in the current spending bill could lead to a lot more carbon emissions and government hand outs for the oil industry, says DeSmogBlog.org’s Steve Horn.
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Story Transcript
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to the Real News Network. I’m Sharmini Peries coming to you from Baltimore.
Just as we are all decompressing from the disappointing outcome at COP21 in Paris, and reeling from the fact that the world fossil fuels does not even appear in the international agreement on climate change, today the U.S. Congress is on the brink of agreeing to end a four-decade ban on most exports of crude oil. The deal is a part of a broader deal made in Congress to the oil industry by way of a spending bill. The $1.15 trillion spending bill, negotiated in secret talks over the last two weeks, would be difficult for President Obama to veto. The administration is claiming that they are opposed to lifting the export ban.
To figure out what this is all about I’m being joined by Steve Horn from Madison, Wisconsin. He’s an investigative journalist and research fellow at DeSmog Blog. Steve, good to have you with us.
STEVE HORN: Thanks for having me.
PERIES: So Steve, what is this link that’s going on, really, between the oil industry and the climate change deniers, for example, and the corporate lobbying and congressional support for lifting this ban?
HORN: That’s a long story, and I think the long and short of it is that the oil industry through think tanks and through lobbyists, and both, I think, to put on equal pedestals in terms of how important the efforts have been. But through those think tanks and through lobbying have pushed this through, especially in 2015. it’s gotten a lot less notice, say, than the Keystone XL pipeline got this year. And say, just individual things, like that are happening in communities. For some reason this oil exports thing never really resonated in a major way with environmentalists. It wasn’t really anything was ever fought very hard against.
And so unfortunately the environmental community just wasn’t really prepared come this push that was inserted into this budget bill, actually was inserted during the Paris climate summit, at the very end of it. In the second week that’s when it was announced that it was going to be part of this budget bill. I think it caught everyone by surprise, maybe even including industry observers, [inaud.] the business press. I don’t think anyone really thought that it would happen this year. People thought that it was a moonshot. But even stories last week were saying it was a 20 or 30 percent chance. A story that appeared in Bloomberg, for example. There was analyst from Clearview. And he said there was a 20 or a 30 percent chance. Now, one week later that same analyst is saying it’s close to 90 to 100 percent certain. And it’s, of course the language is now actually in the bill. So unless someone in Congress takes it out, or unless President Obama says he’s going to veto it unless some language is taken out, it looks like it’s going through, among other things, like subsidies to the refining industry and subsidies, I will say, to the wind and solar industries. Pretty much everyone got a little bit of what they wanted [that was] at the top of their wish list.
And so the wind and solar industry isn’t going to fight against the oil industry on this one, because they got what they wanted, too. And so it’s a pretty ugly outcome and a pretty ugly end of the year development that’s happened here in the United States.
PERIES: So Steve, how does these subsidies compare in general with the total amount of subsidies given to the fossil fuel industry?
HORN: Well, so the refining industry was very worried about the fact that if the spigot was lifted on oil exports they would be bankrupted. They wouldn’t have the profits coming this way, because a lot of the oil that they’re refining is now going to go to the global market. And so of course that was taken care of in this bill. In a different provision, actually, that, a the very end of the bill. It’s a 2009-page budget. On page 2008-2009, the last two pages, is this massive subsidy that 25 percent of the transportation costs are now going to be subsidized by United States taxpayers instead of by them. So that’s obviously a huge expense, moving the product either to the refineries or from the refineries. It’s now subsidized by United States taxpayers.
And that was a concerted lobbying effort by this group named Consumers and Refiners United for Energy, or CRUDE. And they were led by a lobbyist, used to be the general council, actually, by Vice President Joe Biden. His name is Jeffrey Peck. And so since 2014 they’ve been lobbying. They were supposedly against exports, but it looks like actually they’re not really against exports. What they really were looking for was the subsidy, which they got in this broader budget bill.
PERIES: Steve, give us a sense of what the magnitude of these kind of subsidies add up to to the oil industry when we’re trying to curtail and contain fossil fuels and carbon emissions at this time.
HORN: Well, G20 countries, that is, the global superpowers, the financial superpowers, in total in the past decade or so have given trillions of dollars of subsidies to the fossil fuel industry. This was in a report put out by Oil Change International right before the G20 global leader summit which took place just before the Paris climate summit.
So the bulk of those subsidies come from the United States and Russia and China. Three countries combined give by far the, the best, the plurality at least, of the subsidies compared to the rest of the, the G20. And you know, it’s in all sectors of development, from cradle to grave, including spills are even subsidized. Like BP, BP was able to write off its huge spill and its legal settlement as cost of doing business, for example.
And so it’s, you know, that’s how the industry has lots of costs. It’s expensive, for example, to do fracking. It’s expensive, for example, to mine tar sands. It’s expensive to move that stuff through pipelines. And so if they can cut some of those expenses, which they do by getting subsidies from the United States government, from the United States taxpayers, that’s what they do. And so this is just a really, I think a teachable moment right here in the budget bill. This refinery thing. Where they looked, these refiners looked like they were patriotic actors in the United States, and pushing against United States oil from being exported to the global market. I think even some environmentalists were thinking those refiners could be allies.
It turns out, of course, when they’re–you know, they got their subsidy in the budget bill. They’re all for the oil exports thing as long as they got their piece of the cake, too. So it’s just a very good example of how things work in the United States in terms of subsidies.
PERIES: Steve, you’ve recently written a report that says Texas Eagle Ford shale basin, the most prolific shale oil basin in the U.S., has declining resources. But what does the significance of this bill and the lifting of the ban has on this particular case?
HORN: Of course, lifting an oil export ban opens up oil to new markets around the world. And so that means that this report, which came out by the Post-Carbon Institute shows that after six years only of heavy drilling the Eagle Ford shale, in terms of its top line productivity, it’s already starting to decline. And that was in spite of the fact that there were low oil prices. It didn’t start declining until about halfway through the oil price decline. And it looks like, based on the trends where they’re drilling, and the sweet spots, the most productive places of the basin, those are already in decline. So if they go elsewhere to try to get that oil they’re going into spots where the geology is worse, and that means it’s even harder to get that oil. They’d spend even more money to get potentially less.
So looking at, after six years, a slow but sure terminal decline of that field, the company–that means, of course, that with the exports and with the subsidies, say, to the refiners, we’re looking at it being drained about as quickly as it can. Doing everything we can in our power, this United States energy policy, to drain the field. And that means, of course, what–you know, what comes next. There’s all these community impacts. There’s all the methane impacts of the methane pollution. The climate change. The [inaud.] of other impacts. All those things, and of course, the trump card is climate change.
But then, what comes next? Of course this resources isn’t being used in a very wise way. It’s just being, the drilling is being dictated by Wall Street, being dictated by private equity firms and hedge funds, and that sort of thing. And so it raises all these kinds of questions, like what is the United States energy policy actually based upon, and why is there such a rampant push to do exports? Of course, I think at the end of the day, and there is a story that appeared in Bloomberg right after the export ban provision was inserted in the budget. And Bloomberg, they were reporting that oil traders are already chomping at the bit and looking at this as just one of the biggest opportunities that’s ever happened to them, the oil exports, and entirely new. Adding basically the casino opportunity has ascended.
And so that’s what’s going on here. I think you have to look at, at the highest levels of power. Wall Street, private equity, hedge funds. They’re the ones that are dictating this, and that is why, you know, the Eagle Ford shale is being tapped in such a rapid fire manner. And of course, this isn’t strategic. It’s not going to help actual everyday American people. Their trade associations and front groups will say so. But that’s, that’s what’s going on in the Eagle Ford shale. And of course, the Bakken shale, and other shale basins around the United States.
PERIES: Steve, as always, thank you so much for joining us and exposing all of this.
HORN: Thanks a lot for having me. I appreciate it.
PERIES: And thank you for joining us on the Real News Network.
End
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.
