Category — Energy Companies
“When government undertakes tasks for which it is ill equipped it squanders the authority necessary for carrying out its core responsibilities. Pervasive rent-seeking, bad for our economy and worse for our republic, should be discouraged instead of rewarded. If government becomes integral to securing every advantage and assuaging every grievance, then governance becomes impossible.”
- Richard Voegeli, “Reclaiming Democratic Capitalism,” Claremont Review of Books, Spring 2012, p. 46.
Governments around the world are having buyers’ remorse with their bets that solar and wind could effectively diminish oil, gas, coal, and nuclear. So much cost, so little energy. So much cost, so little reliability, and so much need for backup power.
The story is the same for the U.S. Department of Energy. The Obama administration’s rocky road with green-energy boosterism is no secret. With big names like Solyndra and Solar Trust of America, it’s hard to lose sight of the administration’s funding failures.
But what may come as a surprise is the overall amount of money being thrown away on these green companies that the administration has championed. Of the $10.7 billion in green-energy commitments, detailed below, approximately $3.2 billion is to companies that are in bankruptcy, and another $7.1 billion is committed to teetering firms.
The good news is that private developers are postponing (and probably canceling) projects that even with government subsidies are uneconomic. General Electric Co. just last week halted construction of what would have been the largest solar-panel factory in the U.S. Some 335 workers can now find economic employment.
Here’s the breakdown of the “green” energy carnage to date: [Read more →]
July 9, 2012 9 Comments
Petroleum Development in the Ecuadorian Amazon: Setting the Record Straight (Part III: Did International Oil Firms Despoil Eastern Ecuador’s Environment?)
[Ed. Note: This concludes Douglas Southgate's review of Ecuador’s claims of “reckless environmental damage” against Chevron, and through them international oil companies (IOCs). Part I challenged the facade that Ecuador's passive view of its own resources led to exploitation by Big Oil; Part II examined the economic benefits of fossil-fuel development in the country.
This post refutes the charge that environmental damage is the responsibility of foreign firms alone. Indeed, it is the state company, Petroecuador, that was chiefly responsible for environmental despoliation in the Amazon region. These postings are timely in light of a recent article in The New Yorker,  a new book about the construction of a trans-Andean pipeline,  and other literature in which IOCs’ actions in Ecuador are criticized.
Billions for Government, Nada Environment
Opponents of petroleum development in the Amazonian lowlands (Oriente) of eastern Ecuador maintain that damage to the region’s natural resources has been the result of IOCs’ dominance of the country. But in the first of three postings about the anti-oil campaign, I show that the Ecuadorian government actually exercised considerable power in its dealings with foreign companies. Soon after petroleum was discovered in the Oriente, Ecuadorian authorities obliged IOCs to spend tens of millions of dollars on transportation infrastructure in order to facilitate colonization, in which the firms had no real interest. [Read more →]
February 17, 2012 2 Comments
Petroleum Development in the Ecuadorian Amazon: Setting the Record Straight (Part II: Oil wealth & socioeconomic progress in Ecuador)
[Ed. Note: This series addresses key issues at the heart of Ecuador’s claims of “reckless environmental damage” against Chevron, and, through them, international oil companies (IOCs). Part I challenged the facade that Ecuador's passive view of its own resources led to exploitation by Big Oil. Part III tomorrow addresses the misperception that environmental damage in this small, South American nations is the responsibility of foreign firms alone.]
Oil and gas has been a 40-year economic driver in Ecuador. With the national treasury benefiting from oil and gas revenue, any lack of socioeconomic progress during the last decades cannot be blamed on international oil company (IOC) profit-making there.
Indeed, no serious observer claims that Ecuador has failed to experience development. Criticism has focused instead on waste and misallocation of the large cash bounty that multinational investment created for Ecuador.
Who Got the Money?
Much of the blame for misallocation rests with the uniformed services, which have received a sizable portion of the country’s petrodollars. Military expenditures averaged 45 percent of the national budget from 1972 through 2000, which has enabled the armed forces to acquire a fleet of oil tankers, an airline, and other commercial enterprises. However, oil wealth also has been spent on social services and subsidies for the public at large.
Despite waste, corruption, and misallocation, gross national income (GNI) per capita improved during this period. So did non-economic indicators of human well-being, including the infant mortality rate (IMR) and life expectancy at birth, thanks to better water supplies and public sanitation, wider access to pharmaceuticals, and, most importantly, improved nutrition.
Conditions in 1967
At the time when oil was discovered in the Oriente, mean GNI in Ecuador ($260) was barely half the Latin American and Caribbean average ($478); only in Haiti’s GNI per capita was appreciably lower.  The country’s standing in terms of non-economic measures was a little better. [Read more →]
February 16, 2012 No Comments
Petroleum Development in the Ecuadorian Amazon: Setting the Record Straight (Part I: Was Ecuador ever subservient to foreign oil firms?)
[Ed. Note: In this three-part series, Douglas Southgate, an economist and professor at Ohio State University, addresses key issues at the heart of Ecuador’s claims of “reckless environmental damage” against Chevron, and, through them, international oil companies (IOCs). Part II and Part III will address two other charges: that the small, South American nation has benefited little from energy-resource development, and that environmental damage is the responsibility of foreign firms alone. These postings are timely in light of a recent article in The New Yorker, a new book about the construction of a trans-Andean pipeline, and other literature in which IOCs’ actions in Ecuador are criticized.]
Part I in this series challenges the charge from the Ecuadorian régime’s (and its U.S. backers) that:
(1) Ecuador was an innocent seduced by the siren song of Big Oil, and became a vassal to their interests;
(2) Ecuador’s relationship to its oil potential was merely passive; and
(3) Oil development monies did not benefit Ecuador.
In fact, the country moved aggressively to capture the lion’s share of the benefits created by private investment. Nationalization and taxation left the government with 97.3 percent, or $22.7 billion, of the monetary returns created by the concession originally developed by Texaco and Gulf between 1972 (when production and exports began) and 1992 (when the state oil company gained complete ownership of the concession).
The Legal Setting
Continuing appeals of a February 2011 ruling by a district court in the Amazonian lowlands of eastern Ecuador and charges of fraud leveled against plaintiffs’ counsel  are recent and noteworthy developments in a legal campaign launched nearly two decades ago against Texaco, which along with Gulf Corporation began drilling for petroleum in the region during the 1960s and which has been affiliated since 2001 with Chevron. [Read more →]
February 15, 2012 3 Comments
It is a common refrain in headlines at Joe Romm’s Climate Progress:
- “Koch-Fueled Americans for Prosperity Takes Credit for Bullying GOP Lawmakers Into Climate Denial” (Emilee Piece: December 8, 2011);
- “Koch-Fueled Denial Backfires: Independents, Other Republicans Split With Tea-Party Extremists on Global Warming” (Romm: December 2, 2012); and
- “Koch-Fueled Americans for Prosperity Spends $2.4 Million on Solyndra Attack Ad (VIDEO)” (Stephen Lacey: November 28, 2011).
Smearing and innuendo is hardly fair play. But in this case, Joe Romm has something embarrassing to hide. Just as Koch Industries might be his least favorite company, Enron was his darling company.
Specifically, Romm was not only a cheerleader of Enron (Enron is “a company I greatly respect,” Romm would say). He was also an unpaid consultant and collaborator with the infamously fraudulent division, Enron Energy Services (EES), purveyor of energy efficiency service in (gamed) long-term contracts.
It is timely to reestablish the linkage between Joe Romm and once-mighty Enron Corporation, a company which went bankrupt ten years ago this month. Perhaps this history will help the combustible Romm to deal with the arguments more and funding links less. (Besides, would he like for his critics to bring in the funding link between George Soros and Center for American Progress?)
Some Romm Enron Quotations
“I hope there is something in [my book] Cool Companies Mr. Lay can refer to. I’m sorry Enron isn’t in it, but if you have any good case studies, I would love to use them as I talk to the media and Fortune 500 companies. Feel free to use my personal email.”
- Email communication from Romm to Enron, June 6, 1999. [Read more →]
December 19, 2011 11 Comments
“It’s time to move the debate past the dogmatic view that carbon dioxide is evil and toward a world view that accepts the need for energy that is cheap, abundant and reliable.”
- Robert Bryce, “Five Truths About Climate Change,” Wall Street Journal, October 6, 2011.
“Every [energy] policy objective should be viewed through the lens of affordability.”
- John S. Watson, Chairman and CEO, Chevron Corporation
Remarks at the Peterson Institute for International Economics, Washington, D.C., October 19, 2011.
Chevron CEO John Watson delivered a major address last month in Washington, D.C. that reorients energy sustainability from controversial neo-Malthusian notions toward consumer affordability and reliability. As such, it marks an end to the ‘apologetic’ era launched by BP’s John Browne in his 1997 Stanford University speech, which proclaimed that fossil fuels were problematic in relation to anthropogenic climate change. The moral high ground of consumerism also points to market capitalism in place of political capitalism.
Watson’s speech follows verbatim with subtitles added.
This is one of those places in our nation’s capital where serious minds turn to serious matters. The spirit of the Institute is to take the long view, to look past election cycles to the fundamentals of good policy, in this country and beyond. That’s an attitude that serves us well in any place and time, and certainly right now, in this fourth year of low economic growth, high unemployment and many other challenges.
This room is filled with people who spend a lot of time analyzing these problems, and advocating policy prescriptions to deal with them. And few policy issues are more contentious than energy.
There’s a reason for that. When it comes to energy policy today, we’re talking past one another. We all want a secure source that
minimizes adverse environmental impacts. But we’re failing to be clear about what our central priority ought to be among our energy objectives.
Today, I’d like to share what I believe that priority should be. I submit to you that affordable energy is the priority that should underpin all of our actions. Every policy objective should be viewed through the lens of affordability.
To make the case, think back over the last 150 years. We’ve seen the greatest advancements in living standards in recorded history because we have developed abundant, affordable energy. Light, heat and mobility have been made available to billions of people.
Agriculture has been mechanized, freeing populations to spend time developing other industries and toiling less for the very basics of life.
The evolution of energy supply over that time period has been just as stunning. As late as 1910, about a quarter of all U.S. farmland was still devoted to feeding horses used for transportation. Today, we use half as much land for all of our roads and highways, oil pipelines, refineries and wells combined.
Since Edison switched on his first generators in 1882, the average price of a kilowatt hour of electricity has fallen almost without interruption. Markets have driven a diverse portfolio of affordable energy sources that is anchored by oil, natural gas and coal, but also includes nuclear, hydropower and other renewables.
And we’re using our energy more efficiently. It takes 60 percent less energy today to produce a dollar of GDP than it did in 1949.
Affordable energy supports the very foundation of American life. Americans love their mobility, whether for business or pleasure. The population has roughly doubled since 1950, but gasoline consumption has quadrupled, even as gas mileage has improved. And we’re flying more. U.S. airlines use about 80 percent more fuel today than when I was in college, even as they have became more fuel efficient. [Read more →]
November 25, 2011 2 Comments
[Editor note: This article first appeared in the October 2010 issue of Discovery, the quarterly newsletter of Koch Companies, Inc. This company's values include an adherence to free-market capitalism, in opposition to political capitalism or rent-seeking, currently the fashion at a number of major U.S. corporations. (Also see "The Future of Economic Freedom"). ]
We live in an era when many people–including policymakers and media celebrities–view businesses and corporations with disdain or intense suspicion. Their way of thinking begs a simple question: What is the primary role of business?
Is it to create jobs and provide benefits? Help advance a social agenda? Or just to make as much money as possible, by exploiting customers and employees?
As a matter of principle, Koch companies believe there is only one reason for any business to exist: creating value.
“Value creation,” says Charles Koch, “involves making people’s lives better.
“It means contributing to prosperity in society. If a company’s not doing that – enhancing the well-being of society – then it needs to go out of business.
“We all tend to pursue our own interests, but in a true market economy we can only prosper long-term by providing others with what they value.”
History and sound theory have both shown that the only way to consistently create value for society is to faithfully follow a set of reality-based principles.
For Koch companies, those are the 10 MBM® Guiding Principles, which include integrity, compliance, value creation, humility and respect. [Read more →]
January 17, 2011 8 Comments
In line with conservative values, and with the passion of a local Tea Party leader, U.S. Senator LeMieux (R–FL) is behind his state’s lawsuit against the federal government’s healthcare reform law. He also has a national debt clock on his WEB SITE, and his headline platforms include reducing government waste and improving transparency and accountability from soup to nuts.
So can we feel assured this senator upholds these values across the board?
No, unfortunately, when it comes to the failed government experiment with politically correct renewable energy.
Senator LeMieux has co-sponsored a bill–along with 25 of his closest friends across the aisle–to extend the ARRA 1603 tax credits, doling out 30% of project costs up front to so-called “renewables.”
So what goes? Florida is not a big renewables state. Florida voters are rebelling against Big Government, as recently shown at the polls. Florida is also a marginal solar state and has dismal wind resources.
Floridians should be furious. [Read more →]
December 7, 2010 5 Comments
[Editor note: In a sea of political capitalism and rent-seeking by corporations, it is refreshing to see a principled defense of capitalism from the business sector. This piece from the current issue of Discovery, the quarterly publication of Koch Industries, Inc., is reprinted here in honor of today's important elections.]
On Nov. 2, the United States will hold an important mid-term election.
At stake will be control of the U.S. Congress, 39 state governorships and thousands of other state and local offices.
High unemployment, record deficits, a sluggish economy and a swelling federal government have become flash point issues for millions of concerned Americans of every political persuasion.
For the nearly 50,000 Koch company employees in the United States, this election is an opportunity to help decide the future of economic freedom.
A Heavy Hitter
According to the International Monetary Fund, the United States accounts for about one-fourth of the world’s total output of goods and services, and one-fifth of the world’s purchasing power.
Like it or not, what’s bad for the United States – including misguided federal policies that undermine economic freedom – is usually bad for the rest of the world.
What has proven to be best for all societies is economic freedom.
Citizens on every continent enjoy more prosperity, cleaner environments, longer lives and higher literacy rates in economically free societies.
That’s why, for more than 40 years, Koch Industries has openly and consistently supported the principles of economic freedom and market-based policies.
Unfortunately, these values and principled point of view are now being strongly opposed by many politicians (and their media allies) who favor ever-increasing government.
Government – like fire, water, chemicals and most everything – is productive at some level and destructive at others. [Read more →]
November 2, 2010 5 Comments
“The BP incident highlights big differences in how socially responsible funds prioritize various causes. Some of these managers considered BP’s stance on climate change a strong positive. ‘BP was the first to break the logjam on climate change policy’ and had been a leader on alternative energy, says Mark Regier, director of stewardship investing for MMA Praxis.”
- Quoted in Eleanor Laise, “Oops: ‘Socially Responsible’ Funds Hold Big Stakes of BP,” Wall Street Journal, July 17–18, 2010.
The greenwashing strategy of BP and Enron has been the subject of three recent posts at MasterResource:
Don’t believe that “Beyond Petroleum” BP fooled the politically correct after Enron and even all the way up to the Deepwater Horizon explosion/Gulf spill of May 2010? Then consider the Wall Street Journal’s “Oops: ‘Socially Responsible’ Funds Hold Big Stakes of BP” (reprinted below as Appendix A). [Read more →]
July 20, 2010 3 Comments