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“Fracking” for natural gas gets some attention, but so far it’s just yakking

5:45 pm in Uncategorized by Consumer Watchdog

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ExxonMobil, which is making big bets worldwide on hydraulic fracturing for deeply buried natural gas, is also making big bets on its sincere, earnest advertising about clean, safe natural gas. The ads turn me into a crazy person, yelling at the television during halftimes and seventh-inning stretches.

Their claim that they ensure compliance with all “applicable environmental and safety regulations” is my personal turning point, because in the U.S. those regulation barely exist. It’s easy to comply with nothing, so Exxon can get away with telling us that fracturing bedrock thousands of feet deep, drilling through the aquifers that supply our drinking water, using scarce water supplies spiked with an unidentified slew of toxic chemicals, is as safe as braiding a a daisy chain.

Some other countries, however, are starting to act on their doubts.

France has outlawed this drilling, known as “fracking,” until doubts about what it does to water supplies and how its waste poisons the land are dealt with. Britain’s Advertising Standards Authority banned one of the Exxon ads, stating that its claim on liquefied natural gas as one of the world’s cleanest fuels is misleading.

In the U.S., enviro and consumer groups grumble, and SolarDave has made an on-target spoof of the Exxon ads, but our lawmakers and regulators are still mostly twiddling their thumbs. There isn’t a federal requirement that drillers tell us what chemicals they’re squirting into the ground, or a law to prevent dumping their wastewater into the rivers from which we drink.

After a slew of investigative reporting (special kudos to ProPublica) on the health and environmental fallout from fracking, government is starting to ask questions. This week, Sen. Jeff Bingaman of New Mexico led off a Senate Energy and Commerce hearing on fracking, ticking off the water issues, land poisoning and air pollution issues, and adding on fracking’s release of highly potent climate-change gases, particularly methane. But a show of sympathy is a long, long way from effective regulation. Read the rest of this entry →

Natural Gas Drillers: ‘We Don’t Need Your Stinking Air Rules’

4:22 pm in Uncategorized by Consumer Watchdog

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Whenever regulators try to clean up our air or water, industry issues its standard “job killer” press release. Let your children keep their asthma and we won’t shut down our (oil, gas, coal) (refinery, drilling facility, surface mine), is the general theme. No surprise, then, that a coalition of deep-well natural gas drillers responded sternly to proposed national clean-air regulations on their almost entirely unregulated industry:  ”This sweeping set of potentially unworkable regulations represents an overreach that could, ironically, undercut the production of American natural gas,” said the Marcellus Shale Coalition.

Yet the real shock in the story is that we allow energy companies take vast quantities of fresh water, add largely unregulated chemicals and force it under high pressure into deep shale beds to fracture rock and release natural gas. The gas rises back up like soda water and releases the gases it collected underground (methane) and the chemicals added by drillers, sometimes morphed by heat and pressure into something more dangerous (cancer-causing benzene).

It turns out that in 2005, the Bush Administration got Congress to exempt this “fracking” technique from federal clean air and water rules.

Here’s the result, described by a Texan living in the middle of it, as told to Propublica.com:

I live and work in south central Texas. The nations new hotspot for fracking. The enviromental destruction Fracking has caused in the last 5 years is unbelievable. The air quality in this rural area is worse than in most large cities. The wholesale destruction of the ecosystem is unimaginable. The amount of water used in fracking is irresponsible in a water scarce region.

The Environmental Protection Agency is acting to curb the smog-causing methane and other air pollutants because of a federal lawsuit by environmental groups. Its selling point for the regulation is that the drillers could actually make money by capturing and selling the methane. Conspicuously absent is any mention that methane is a far more potent greenhouse gas than carbon dioxide–though of course it’s now so unfashionable to believe in global warming, much less talk about it.

Federal regulators are still prohibited by the 2005 law from controlling the ruination of vast amounts of clean water in drought-ridden states and the contamination of drinking water. So it’s left to the states. Expectably, Pennsylvania and New York are acting. But Texas, the free-market state, will take the asthma, please, and its drillers, from Exxon down, will no doubt do all they can to cripple the federal regulations before they’re final.

See ProPublica’s pioneering series on fracking, and the damage the industry has inflicted from New York to the Southwest, here.
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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

If Exxon Can’t Deal With the Montana Spill…

2:19 pm in Uncategorized by Consumer Watchdog

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Exxon is still fumbling to deal with a 42,000-gallon oil pipeline spill on the Yellowstone River west of Billings, Montana. Its initial response was pathetic–it was slow to turn off the gushing pipeline, had no plan for dealing with a spill in high water (i.e. every spring) and, most alarmingly, “misspoke” about how deeply the pipe was buried in the riverbed, even denying a shortly before the spill that the pipe could be damaged by water erosion.

From the Associated Press:

Officials in Laurel, near the site of the spill, raised questions last year about erosion along the riverbank threatening the Exxon Mobil line. The company in December surveyed the pipe’s depth and said it was at least 5 to 8 feet beneath the riverbed.

The line was temporarily shut down in May after Laurel officials again raised concerns that it could be at risk as the Yellowstone started to rise. The company restarted the line after a day, following a review of its safety record.

The company said in a June 1 email — just a month before the spill — that the line was buried at least 12 feet beneath the riverbed, according to documents from the U.S. Department of Transportation, which oversees pipelines.

There’s lots more: it doesn’t have a plan or a timeframe for fixing the pipeline. It has no plan yet for how it will restore land along the scenic, wild river that provides water for crops, humans and the wildlife of Yellowstone National Park. It has no idea where the erroneous “12 feet” figure in an official Exxon document came from. And its statement that the oil would only affect 10 miles of river was off–now by a factor of more than four.

At least the spill won’t hurt Exxon’s tens of billions of dollars in yearly earnings. Whew. That’s a relief. It means the company can put a couple of high-powered PR people in charge of telling us how its response to a relatively piddling spill in Montana doesn’t mean it would completely blow the response to a major spill of several million gallons, like BP’s well in the Gulf. And how nothing like that could ever happen to a major Exxon well or pipeline. And how Exxon would respond vigorously to the next safety warning about one of its facilities.
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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Is There a ‘Gashole’ in Your Tank?

3:37 pm in Uncategorized by Consumer Watchdog

The national average price of plain old regular gasoline is up a dollar a gallon over the past week to $3.83, according to AAA. California, which alerts the rest of the nation to where pump prices are going, is at $4.20. And nationwide, the diesel fuel that drives our trucks and trains is $4.14 a gallon, even though diesel is cheaper to make than gasoline. No wonder food prices are spiking.

It’s as though we had another Hurricane Katrina furiously driving up the price of fuel, but without the storm. Which makes it interesting that an indie documentary called “Gas Hole,” (trailer), examining the reasons for our high gas prices in the post-Katrina world and oil company influence on the gas-guzzling engines in our cars, is now getting wider release. You can be sure that Exxon didn’t provide the funding for this funny/weird/disturbing doc. (I love the old desert-rat types with faded sedans that get 100 mpg, and their stories of disappearing clean-car patents.)

We find out why there’s no supply and demand in any real sense driving the price of gas today. Oil prices are spiked upward by speculation in futures markets, not by physical shortage on the market. Gasoline is driven upward not just by oil prices, but by refining companies’ restrictions on their output, and overall supplies. Then the price of gasoline pushes up oil prices some more. We’re all at the mercy of greed, not supply and demand.

Some of the serious points covered in “Gas Hole” track OilWatchdog’s studies and reports over the years, which are covered in my colleague Jamie Court’s book, “The Progressive’s Guide to Raising Hell.” (video). (Full disclosure: Jamie was interviewed for the movie.)

Some of the most eye-opening points from the book:

Remarkably, the idea that oil companies have control over the price at the pump is controversial in Washington, D.C. Oil company executives point to geopolitical instability, future predictions of crude oil scarcity, OPEC, and other forces beyond their control as the culprits.

The public knows the scoop, and its instincts track the research. Oil companies know they can make more money by making less gasoline, so they do.

I have studied the issue of high gasoline prices for more than a decade.

Here’s what I have learned about how the big five oil companies control gasoline prices by making the commodity scarce and keeping the price high. This knowledge is critical to opposing the industry’s anticonsumer behavior and pushing Americans toward real energy change.

• Rather than compete with each other to provide more and cheaper gasoline, oil companies cheat together to withhold needed gasoline supply from the market. Consistently, the companies artificially pull back refinery production of gasoline in order to reduce supply coming in during periods of peak demand so they can increase prices. … This behavior has been documented by government agencies like the Federal Trade Commission, which found, for example, in an investigation of Midwest gasoline price spikes, that one refiner admitted keeping supply out of a region in need because it would boost prices.

• Oil companies failed to build ample refining capacity to meet demand. Over the last twenty years,America’s demand for gasoline increased 30 percent and refinery capacity at existing refineries increased only 10 percent. No new American refinery has come on line during the last thirty years. Internal memos and documents from the big oil companies show they deliberately shut down refining capacity in order to have a greater command over the market.

• The big oil companies have their own crude oil production operations and control substantial foreign production of crude oil. They profit wildly when the price of crude oil skyrockets, so they have an interest in driving up the price, despite the fact that they blame OPEC for those crude oil increases.The crude oil producers can even drive up the price of crude by restricting gasoline production and trading crude oil among their own subsidiaries to drive up the price paid for crude by others. Traders with connections to the oil companies can also make big bets on the opaque crude oil futures market to drive up the price and also drive up the value of their Exxon shares.

• The crude oil that big integrated oil companies use in their own refineries is mostly bought on long-term contracts or through their own production, so the oil companies don’t pay the world price for crude oil when it’s high. Their raw material costs are much lower than they would like us to believe. So when the companies raise the price of gasoline in tandem with the run-up in crude oil prices, they are making big profits because Exxon’s crude oil unit is charging its own refining unit a higher price for crude than is necessary.The accounting shenanigans result in an overall windfall profit but show the companies’ gasoline refineries making little profit.

“Gas Hole” also pays close attention to oil companies’ long history of influencing markets and government to boost their profits and protect their business model. It pays impressive tribute to the inventor of modern investigative reporting (and one of my personal heroes), Ida Tarbell, whose 1904 history of Standard Oil laid bare a price-fixing national monopoly with tentacles everywhere in government.

Gee, does that sound familiar today? “Gas Hole” has too much sense of the absurd–even a clip from “Reefer Madness”–to be pedantic. But knowledge is power. In the end, it’s a lot more useful than boycotting the Exxon station.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

What’s Causing the Gas Hole in Your Wallet? You’ve Got to See This Movie

4:29 pm in Uncategorized by Consumer Watchdog

If you want to know why we’re really paying over $4 per gallon for gasoline, and there appears to be no end in sight, the film Gas Hole lays it all out for anyone who wants to know the history of the pain at the pump.

The filmmakers pull back the curtain on the dirtiest secrets of the oil industry: from oil companies buying up patents for devices that would give you 100 miles per gallon, to intimidation of inventors of green technology, to oil company manipulation of the gasoline supply that drives up prices.

Being released on DVD in time for Earth Day, Gas Hole, narrated by Peter Gallagher and featuring Joshua Jackson, is an eye-opening documentary about the history of oil prices and sheds light on a secret that the big oil companies don’t want you to know — that there are viable and affordable alternatives to petroleum fuel!

View the Gas Hole Trailer from Cinema Libre Studio on Vimeo.

Gas Hole provides a detailed examination of our continued dependence on foreign oil and examines various potential solution.

The film also tells the story of the battle my group, Consumer Watchdog, fought with Shell Oil to keep the company from demolishing a key gasoline refinery during a period of high demand and low supply in order to drive up the price at the pump. A combination of public pressure and intervention by US Senator Barbara Boxer and then California Attorney General Bill Lockyer forced Shell to keep the refinery open and sell it to a competitor.

As Gas Hole documents, it took every bit of raising hell know-how we had to keep Shell honest. Most communities just cannot fight back.

The film artfully lays out what I learned about fighting oil companies for more than a decade about how they jack up the price up at the pump.

• Rather than compete with each other to provide cheaper gasoline, oil companies cheat together to withhold needed gasoline supply from the market. Consistently, the companies artificially pull back refinery production of gasoline in order to reduce supply coming in during periods of peak demand so they can increase prices.

• Oil companies failed to build ample refining capacity to meet demand. Over the last 20 years, America’s demand for gasoline increased 30 percent and refinery capacity at existing refineries increased only 10 percent. No new American refinery has come on line during the last 30 years. Internal memos and documents from the big oil companies show they deliberately shut down refining capacity in order to have a greater command over the market.

• The big oil companies have their own crude oil production operations and control substantial foreign production of crude oil. They profit wildly when the price of crude oil skyrockets, so they have an interest in driving up the price, despite the fact that they blame OPEC for those crude oil increases. The crude oil producers can even drive up the price of crude by restricting gasoline production and trading crude oil among their own subsidiaries to drive up the price paid for crude by others. Traders with connections to the oil companies can also make big bets on the opaque crude oil futures market to drive up the price and also drive up the value of their Exxon shares.

• The crude oil that big integrated oil companies use in their own refineries is mostly bought on long-term contracts or through their own production, so the oil companies don’t pay the world price for crude oil when it’s high. Their raw material costs are much lower than they would like us to believe. So when the companies raise the price of gasoline in tandem with the run-up in crude oil prices, they are making big profits because Exxon’s crude oil unit is charging its own refining unit a higher price for crude than is necessary. The accounting shenanigans result in an overall windfall profit but show the companies’ gasoline refineries making little profit, and “upstream” crude-oil production divisions making the lion’s share.

The oil companies cannot be shamed, but Gas Hole shows why we need to keep them on a short regulatory string.

What are the solutions? Gas Hole offers them up starting with claims of buried technology that dramatically improves gas mileage, to navigating bureaucratic governmental roadblocks, to evaluating different alternative fuels that are technologically available now, to questioning the American Consumers’ reluctance to embrace alternatives.

If you are paying $4 dollars or more per gallon for gasoline, spending a little more on the DVD of Gas Hole is a wise choice.

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Jamie Court is the president of Consumer Watchdog and author of The Progressive’s Guide To Raising Hell (Chelsea Green)

Follow Jamie Court on Twitter: www.twitter.com/RaisingHellNow

BP’s Tax-Subsidized Cleanup Workers from the Chain Gang

4:02 pm in Uncategorized by Consumer Watchdog

inmate laborYou think you’re done being mad at BP? You’re over the fact that it’s still getting piles of U.S. taxpayer subsidies, including subsidies on what it promised to pay for the cleanup? Jim Hightower, the Texas populist and scourge of misbehaving corporations, tells us that BP isn’t just hiring out-of-work Florida Pandhandle folks–it’s using semicamouflaged prison labor, and the scary fellas come with a subsidy of $2,500 per head:

In the early days of the cleanup, crews suddenly appeared wearing scarlet pants and white T-shirts with bold red letters spelling out, "Inmate Labor." Investigative reporter Abe Louise Young writes that the sight of prison laborers outraged the local community, so they were removed.

Not the inmates, the uniforms. Now they wear BP shirts, jeans and rubber boots with no prison markings, and they are moved to and from the job in unmarked white vans. No officials with BP or the feds could or would tell Young how many inmates are being used or what they’re being paid. However, a local sheriff’s official told Young, "They’re not getting paid – it’s part of their sentence."

But guess who is getting paid for this convict labor? BP. It’s getting paid by you and me. Under a little-known tax provision passed during the Bush regime, corporations can get a "work opportunity tax credit" of $2,400 for every work release inmate they hire.

Then he totes up a bunch of other subsidies, including $10 billion from all of us because BP can deduct its costs of paying for the cleanup from its U.S. tax bill.

On second thought, it’s not BP that deserves a new dose of outrage, it’s Congress, which pounds on BP in hearings and in speeches, but sits on its hands rather than touch the tens of billions of dollars in tax breaks that the whole oil industry gets. Clean energy, meanwhile, is stuck on a roller-coaster of now you see it, now you don’t federal investment.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.