Tumblelog by Soup.io
Newer posts are loading.
You are at the newest post.
Click here to check if anything new just came in.

July 29 2012

20:13

How Do You Spend $375 Million A Day? Ask The Oil Industry

The average U.S. household has seen both their net worth and their average income steadily decline over the last seven years. Unemployment in the United States still remains at uncomfortably high levels, and the poverty rate is about to reach highs that haven’t been seen since the 1960’s. But as average citizens are struggling to provide food for their families and gainful employment, there are a special few in the U.S.A. who have more cash than they know what to do with. Those special few would be the oil industry.

While most of us in the U.S. were cringing every time that ticker on the gas pump climbed higher and higher, executives at the top five oil companies were squealing with delight as their profits climbed even faster and higher than the prices at the pump.

This week, oil companies are sheepishly coming forward with their 2nd quarter earnings statements, likely praying that Americans forget about the fact that gas prices were recently at near-historic highs in areas of the country. From Climate Progress:
  

The top two corporations on the Fortune 500 Global ranking, Royal Dutch Shell and ExxonMobil, announced their 2012 second-quarter earnings today, bringing the total profits for three Big Oil companies to $44 billion for 2012 or $250,000 every day this year. Exxon profited by $16 billion this quarter, bringing its earnings for 2012 to $25 billion.

The New York Times wrote that Exxon and Shell’s earnings “disappoint,” because energy prices unexpectedly dropped for consumers this summer. Put their profits in the appropriate context, however, and Exxon and Shell still made a combined $160,000 per minute last quarter, even though the top five oil companies benefit from $2.4 billion federal tax breaks every year.
 

That certainly warrants repeating: Exxon and Shell made a combined $160,000 every minute for the last quarter, and still helped themselves to a piece of the $2.4 billion in federal tax breaks and subsidies that flow to the top five oil companies (the grand total for all members of the industry is estimated to be between $4 and $7 billion a year.)

At their current rate of pay by the minute, they are on track to beat their record from last year when the top five oil companies combined earned a total of $261,000 every minute, for a grand total of $375 million a day.

So the ultimate question is how do they spend all that money? The simplest answer is that they spend most of it in ways that only makes them wealthier. Again from Climate Progress:
  

ExxonMobil:

Exxon spent 42 percent — or $10.7 billion — of its 2012 profits buying back its stock, which enriches executives and largest shareholders.

Exxon has spent $17 million lobbying for the past 18 months, making it the top spender in the oil and gas industry. It has spent more than $52 million lobbying for the first three years of the Obama presidency, 50 percent more than in the Bush administration.

Exxon is sitting on $18 billion in cash reserves.

Exxon sent federal candidates $1.3 million in campaign contributions so far this campaign cycle, sending 91 percent to Republicans.

Exxon paid just 13 percent in federal taxes last year, lower than the average American family. Right after Mitt Romney, Senate Minority Leader Mitch McConnell (R-KY) is the top recipient of Exxon federal contributions.

Exxon CEO Rex Tillerson received $24.7 million total compensation.

Royal Dutch Shell:

Shell has spent nearly $22 million on lobbying for the past 18 months, making it the second-biggest spender of the oil and gas industry.

Shell bought back 15 percent of its second-quarter profits, or $900 million.

In its annual report, Shell noted that the number of oil spills increased from 195 in 2010 to 207 during 2011.
 

But Exxon and Shell aren’t the only companies to report massive paydays this week; ConocoPhillips is also apparently rolling in the dough. Here’s how they spent their $2.3 billion in 2nd quarter profits:
  

ConocoPhillips has already spent $1 million lobbying Congress this year. In 2011, ConocoPhillips spent over $20 million on lobbying Congress, making it the top spender of the oil and gas industry.

Conoco has contributed nearly $400,000 to federal campaigns this year, with 90 percent of the contributions going to Republicans.

Conoco is sitting on $1 billion in cash reserves.

The company spent 35 percent more than they earned this quarter — or $3.1 billion — buying back its own stock, which enriches the largest shareholders and executives.
 

Obviously, there’s nothing wrong with a company being profitable. The problem is that the oil industry is profitable at the expense of our national economy and our environment. Oil spills in recent years have cost billions of dollars – money that is coming from U.S. taxpayers – and the ridiculous prices at the pump are taking a huge toll on American families.

And again, at the same time these companies are reaping these profits, we’re giving them an extra $7 billion tip every year. And as long as they keep pulling in these massive profits, they’ll have enough money to pay off the right politicians to keep those billions in subsidies in place. Last year, the total amount spent on lobbying topped $30 million by the oil industry in order to preserve their subsidies, which netted them a whopping 42% return on their investment.

January 10 2012

23:41

The Fracking Job Creation Myth

The prospect of job growth in the United States has been a major selling point for industry in the four years since the beginning of the recession. And even with positive gains being made in the job sector over the last year and a half, unemployment is still hovering around 8.5%. That is why unemployed Americans are still eager to jump onto plans that promise to create much-needed jobs in our country.

The dirty energy industry is well aware of the fact that promising jobs in these times can get you ahead, and they are using this to their advantage. In an attempt to push for increased hydraulic fracturing (fracking), the industry is touting the alleged job creation benefits of the practice. They are pitching fracking as a snake oil salesman would pitch a “cure-all tonic,” claiming that allowing them to continue fracking and drilling activities will help our economy by creating jobs and it will help our country by solving our energy problems.

But fracking has been going on for decades, the industry likes to remind us, although it has picked up tremendous steam in the last 5 years with the advent of directional drilling. So where are all those hundreds of thounsands of jobs that we’ve been promised? The answer to that question is simple: They don’t exist - At least not in the numbers the industry wants us to believe.

Helene Jorgensen from the Center for Economic and Policy Research outlines how the dirty energy industry has tried to hoodwink the American public:

In an intensive lobbying campaign to influence a skeptical public’s opinions about fracking, the gas industry has commissioned a number of economic studies that find huge job gains from fracking. A recent study by the economic forecasting company IHS Global Insight Inc., paid for by the America’s Natural Gas Alliance, projects that fracking will create 1.1 million jobs in the United States by year 2020.

However, a closer read of the study reveals that the analysis also projects that fracking will actually lead to widespread job losses in other sectors of the economy, and would result in slightly lower overall employment levels the following 10 years, compared to what it would be if fracking were restricted. In another study, commissioned by the Marcellus Shale Coalition, researchers with Penn State University estimated that gas drilling would support 216,000 jobs in Pennsylvania alone by 2015. The most recent data from the Bureau of Labor Statistics show employment in the oil and gas industry to be 4,144 in Pennsylvania.

Jorgensen points out that Pennsylvania is one of the most actively fracked states in the country, and they provide an excellent example of the real job creation associated with fracking:

What the data tell us is that fracking has created very few jobs. In fact, employment in five northeast Pennsylvania counties (McKean, Potter, Tioga, Bradford and Susquehanna) with high drilling activity declined by 2.7 percent. Of course, the economy was in a recession, and it is possible that employment would have decreased by more had it not been for fracking. To evaluate this, one can look at the employment trend in five adjacent New York counties (Allegany, Steuben, Chemung, Tioga and Broome) which had a moratorium on fracking. By assuming that the change in employment in the five PA counties would have been the same as in the five NY counties, a baseline for employment can be established if no hydraulic fracturing had occurred. In the five NY counties, employment declined by 5.2 percent over the three year period.

Had employment declined by the same rate in the PA counties as in the NY counties since 2007, employment would have been 51,950 instead of 53,300 in 2010. This suggests that hydraulic fracturing contributed to the creation of around 1,350 jobs – this includes both direct jobs in the gas industry, indirect jobs in the supply chain and induced jobs from spending by workers and landowners. (An industry-funded study by the Public Policy Institute of New York projects that the same drilling level would create 62,620 jobs in New York).

Obviously, the practice does require a human workforce, but not nearly as many people as the industry would have us believe. For example, an industry-funded study tells us that opening up new areas of Ohio for fracking would create as many as 200,000 new jobs, similar to the projections that never materialized in Pennsylvania.

According to Jorgensen’s piece, which echoes what Food & Water Watch found in their report, the few jobs that are created are actually outsourced to already-employed oil industry workers from states like Texas and Oklahoma, instead of providing new jobs for local citizens. Nearly 80% of fracking jobs are outsourced in this manner.

But this new information is hardly shocking to those familiar with the dirty energy industry’s propaganda tactics regarding job creation and job loss in America. In addition to the myth being pushed about fracking creating jobs, the dirty energy industry and corporate-friendly politicians have been pushing the erroneous talking point that regulations (or other forms of “government interference) are killing jobs in America. That particular talking point has been debunked by more than a half dozen reports in recent months. Our own reporting on the subject is here. If that isn’t enough, you can check here, here, here, here, here, and here.

August 24 2011

04:24

Justice Department Launches Investigation Into BP's Oil Gusher Cover Up

The U.S. Department of Justice has launched an official investigation to determine whether or not BP lied to the public and to the government about the amount of oil that was leaking from a broken pipe during last year’s Gulf of Mexico oil disaster. The leak was the result of the explosion and subsequent sinking of the Deepwater Horizon oil rig, owned by Transocean but operated by BP.

During the initial days of the oil leak, BP was constantly updating their estimates of how much oil was flowing out of the broken pipeline. In spite of their advanced camera, computer, and other data technologies, they were somehow never able to give an accurate, or even close to accurate, account of what was happening beneath the water’s surface. The Justice Department is hoping to find out whether the company was acting dishonestly, or if they actually couldn’t determine the flow rate despite all the data available to them.

From a lengthy Huffington Post report on the investigation:

According to federal officials, BP was solely responsible for producing the very first spill estimate of 1,000 barrels per day, a figure which led to a sense of complacency about the seriousness of the event among some federal and state responders at the outset of the disaster, the presidential commission on the oil spill concluded in January 2011. BP has never publicly acknowledged generating this figure and even the commission’s investigators could not determine the methodology used to produce it.

Documents and interviews also indicate that BP, using reservoir data, computer modeling and imagery of the leaking pipe, may have had the ability to calculate a far more accurate estimate of the well's flow rate early on in the spill than it provided to the government. The company either never fully ran those calculations or their results were not disclosed to federal responders.

Obviously, it would have been in the company’s own best interest to convince the public that the disaster was smaller than it actually was, as the company was facing environmental fines of up to $4,300 per barrel of oil leaked into the Gulf. But it is hard to believe that BP couldn’t get an accurate count of what was coming out of that broken pipe, or even a reasonable rough estimate. After all, the company boasted in 2008 that they had developed technology that was capable of determining the flow rate of oil through a broken pipe – the very situation that was happening in the Gulf. They invented the technology, bragged about it, but when it would have actually been useful to deploy, BP claimed they couldn’t accurately measure the flow rate, and thus the scope of the disaster.

There’s no question that this investigation is a fantastic start. Especially when you consider that our current DOJ has spent more time investigating John Edwards' extramarital affair than they have investigating the Wall Street bankers whose actions helped bring down our economy. On top of that, we have an Attorney General who spent most of his career defending oil companies, pharmaceutical companies, and Wall Street banks – the same suspects we’re supposed to trust him to investigate. So this investigation is certainly a step in the right direction, but it needs to go much, much deeper than BP’s flow number irregularities.

To begin with, the DOJ needs to look into what was happening at the oil company before the Gulf disaster even occurred. Reports show that the company calculated the cost of safety measures for oil rigs versus the cost (value) they put on a worker’s life. Internal documents obtained by The Daily Beast show that BP called this analysis the “Three Little Pigs” scenario. After they realized that it was more cost-effective to pay losses to the families of injured workers, they opted to forgo certain safety measures. This is clearly an area where the Justice Department should focus significant attention.

The Justice Department should also look hard into the aggressive misinformation campaign that BP launched during the oil leak. After the Deepwater Horizon rig explosion, BP sent its PR machine into overdrive trying to misdirect the public about what was happening in the Gulf of Mexico.

Leaked BP emails show that the company actively attempted to “buy” scientists near the Gulf Coast, in order to produce favorable reports on the impact the oil would have on the environment. This tactic would have also prevented these scientific experts from later testifying for plaintiff’s attorneys representing oil disaster victims, as their payments from BP would have provided a significant conflict of interest.

BP's campaigns stretched far beyond buying scientists. The oil giant launched an aggressive online ad campaign, spending a staggering $3.7 million in just one month on Google AdWords relating to the oil spill - BP bought relevant search terms such as "oil spill," "leak," and "top kill." Buying these search terms gave BP an online advantage, as it put their sponsored links (most of which are still active today) ahead of relevant news stories and other information relating to the oil disaster in a web search.

After the online ad campaign took off, the company then began their “grassroots” efforts. Two industry-funded organizations went into heavy action: The Gulf of Mexico Foundation and the America’s Wetland Foundation. The Gulf of Mexico Foundation pulled its board of directors from the oil industry, and most members of the board were either actively working for oil companies, or for offshore oil drilling interests. America’s Wetland Foundation was even less discrete than hiring an oil industry board of directors – they took funding directly from the oil industry, including: Shell, Chevron, the American Petroleum Institute, Citgo, Entergy, and Exxon Mobil.

BP also donated $5 million to the Dauphin Island Sea Lab in July 2011, 3 months after the oil leak began. After this cash infusion, the Sea Lab released a report claiming that the massive dolphin deaths in the Gulf of Mexico were being caused by the cold water, not the oil and Corexit that BP poured into the waters. Scientists at the National Oceanographic and Atmospheric Administration pointed out that dolphins actually swim away to avoid cold water.

Companies across the globe have been fined for misleading the public on a variety of issues. As the above clearly shows, BP actively set out to mislead the public in numerous ways regarding the Gulf of Mexico oil disaster. These are active misinformation campaigns that continue to this day. Until the Justice Department looks into all of these matters, it is unlikely that the misinformation from BP is going to stop any time soon.

Older posts are this way If this message doesn't go away, click anywhere on the page to continue loading posts.
Could not load more posts
Maybe Soup is currently being updated? I'll try again automatically in a few seconds...
Just a second, loading more posts...
You've reached the end.
(PRO)
No Soup for you

Don't be the product, buy the product!

close
YES, I want to SOUP ●UP for ...