BEAT's Blog

Canada produces about 2.8 million barrels of crude oil per day, much more than it needs.  Most of that comes from the country’s western provinces –primarily Alberta.  But Canada’s industrial and population centers are primarily in the eastern part of the country.

Canada’s eastern provinces are right now importing European oil.  It would seem logical that Canada should ship its western crude to its eastern cities.  There are two reasons that this doesn’t happen.  First, there is no pipeline between Canada’s western and eastern centers.  Second, the refineries in the eastern part of the country are not able to handle the thick tarsands crude that is mined in the west.

The solution that Canada came up with to solve this problem was to build a short pipeline that connects the Alberta tarsands with its west coast ports in British Columbia.  This would allow the oil to be sold in the more lucrative Chinese and European markets.  (As I’m writing this, the price difference is about $20 per barrel.) The problem is that the Canadian environmental movement was able to stop the construction of this pipeline.

So what was Canada’s Plan B?  Sell the oil to the United States.  There are some problems with this idea, too.  The refineries in the United States are all the way down in Oklahoma, Colorado, Wyoming, and Texas.  There are some small pipelines that could get the oil to the Oklahoma, Colorado, and Wyoming refineries, but none that would bring it all the way down to the refineries in Texas.  (There are also existing pipelines that bring tarsands oil to Illinois refineries.)

So maybe the solution is to send tarsands oil to Oklahoma, Wyoming, Colorado, and Illinois, and forget about trying to send it to Texas.  It would seem that this solution, using existing pipelines, would be sufficient, and that is the solution that is currently being used.  But there are two related problems with this solution.  First, the market in the western United States can only absorb so much crude.  Canada is producing about 3 million barrels per day.  All that crude sitting in the western U.S. is starting to lower the price of gasoline.  The lowest gas prices in the U.S. right now are in Wyoming, Colorado, and Oklahoma.   This is because that’s as far as the pipeline goes.  The oil companies in those states are filling storage tanks as fast as they can, rather than sell the excess at lower prices. Shipping it to the markets in the eastern U.S. is impractical for the same reason that it is impractical to ship to Canada’s eastern markets.

Now we have plan C.  Build a pipeline from Canada right down to the refineries in Texas.  You might wonder how this would solve the problem.  After all, Texas is still in the western U.S., and it’s even farther from the population centers and industrial markets in the east.  To understand the logic behind Plan C, you have to understand a little about the oil market. Read more…

The proposed XL Pipeline is a pipeline that would bring Canadian tarsands oil across the Midwest and into Texas.  In a previous post I pointed out some of the environmental harm that comes from the tarsands operation itself – in other words, the local harm that is being done in Alberta, Canada by the mining operations there.  The pipeline would add to this harm and bring it to the U.S.  The proposal is for a pipeline through some very sensitive habitat, through property owned by people who don’t want to sell, and over aquifers that provide drinking water for two million people and irrigation water for 27% of the country’s agriculture.  But when I discuss this issue with people, two issues keep coming up.  People often see construction of this pipeline as a way to lower gas prices and as a way to decrease dependence on oil purchased from countries less friendly than Canada.  I guess the idea is that suddenly the benevolent oil magnates are fighting for us, the little guys, while environmentalists are getting in the way.  Let’s take a closer look. Read more…

BEAT has been arguing that the biggest environmental problem we face is corporate influence in government.  It’s the one issue that makes all other issues intractable.  A recent  Supreme Court decision that ruled in part that corporations are people has made the situation much worse.  But now, the U.S. Supreme Court is set to hear a case in which Royal Dutch Petroleum will argue that the law by which it is being sued for aiding the Nigerian government in torturing and executing the people of Nigeria does not apply to them in part because it applies to people, not to corporations. Royal Dutch Petroleum is being supported in this contention by Exxon, Coca Cola, BP, and the U.S. Chamber of Commerce.  Make up your mind Pinocchio.  Do you want to be a real person or not?

In the past year or so, there’s been a lot of discussion about the Alberta tar sands project and about the proposed XL Pipeline that would carry oil from that project to Texas.  My wife Jane and I were concerned enough to travel to Washington D.C. to participate in two demonstrations aimed at stopping this pipeline.

News photo from Huffington Post

Why all the fuss over this project?  Let me try to explain.

First, you have to understand the context in which this project occurs.  The world is running out of oil.  The icon of the Texas oil baron was created in the 1950s when the United States was producing 9 or 10 million barrels of oil per day.  Even with the subsequent discovery and exploitation of the large Alaskan reserves, the U.S. as a whole is now producing only about half that amount.

With the high price of oil, believe me, if we could wring more oil out of U.S. oil fields, we would.  It’s just not there.   And if this isn’t bad enough, our energy demand is still increasing.

So when our neighbor to the north says they have an oil reserve that represents about 75% of North American oil reserves, everyone takes notice.  But let’s put the size of this Canadian reserve in perspective.  It’s projected that the Alberta tarsands can produce about 900,000 barrels of oil per day.  Granted, this is a lot of oil, but it represents only about 1% of the world supply.  It’s also very expensive to extract – much more expensive than the kind of oil that comes out of oil wells.  If we weren’t running out of oil, we would never even consider mining this expensive-to-mine petroleum source.  So we should first dispel any hope that this oil reserve is going to lower prices at the pump .  Those prices are determined on an international market and by whatever executives in the oil industry decide they would like to have as a profit.  The Alberta tar sands oil will have no effect on gas prices and will not significantly postpone the depletion of the world’s oil reserves. Read more…

In my last blog, I pointed out that the wages of the average worker in this country have been dropping precipitously since 1980 despite increased worker productivity, that corporate profits have been soaring, and that CEOs are keeping these record profits for themselves with little to no sign of any “trickle down” to workers.

Of course, you might say that this is just the way capitalism works.  In the United States everyone is free to make their own future.  We are admired by those in other countries because here one can climb from the bottom of the heap and become the CEO of a major corporation.  But just how true is that?  Here is a graph showing the likelihood of climbing out of poverty in different countries.

Maybe we used to be the land of opportunity, but those at the top have worked hard at locking in their favored positions and locking the rest of us out.  And exactly who are these poor people?  More and more, they are the most vulnerable among us.

So how did we get here?  What prevented this from happening during the post World War II boom and what has changed since then?

One of the strongest forces in keeping the wages of workers commensurate with those of top executives was the labor union.  Organized labor was very effective starting in the 1930s and was very influential in creating the American middle class.   Unions lobbied for higher wages, stronger benefit packages, and for social-justice issues such as civil rights, fair housing, and increased aid to education.  Labor unions were a force to be reckoned with and were listened to in Washington.  As a matter of fact, they had at least as strong a voice as corporate lobbyists.

For a number of reasons, union membership has been declining since the late 1950s. Part of the reason is the country’s transition from a manufacturing economy to a service economy.  Part of the problem was also an image problem caused in part by a number of corruption scandals involving labor leaders in the 1970s.  Whatever the reason for the decline, by the time Ronald Reagan took over the presidency, the unions were weak enough for his administration to deal a body blow.  He made the air-traffic controllers an example of what could happen to a union if management just said no.  He let corporate executives know that if they aggressively attacked unions, the federal government would not interfere.  And he fostered the perception that unions were greedy, corrupt, anachronisms and were counterproductive to economic progress.

With advocates for labor safely incapacitated, corporations were free to start taking a larger share of the profit pie despite increased worker productivity.

Notice how CEO compensation rises and hourly wages fall as union membership declines.

But if you are a CEO, it’s not enough to take a bigger piece of the pie.  Wouldn’t it be great if the pie itself were bigger too?  But how do you manage that?  Of course the old fashioned way would be to work harder and be smarter, but it turns out that there are shortcuts.

CEOs know about investments and returns on investment.  They know that if they take some of their new-found cash and put it to work, they can make it grow.  So where do they invest it?  Here’s a graph of recent political contributions to federal election campaigns.

If you’re thinking that the average person can’t be donating that much money to candidates, you’re right.  Here’s where the money is coming from.  Note the part of the pie that comes from corporations and trade groups.  Note how small a piece comes from labor and individuals.

So what do corporations get for their investments?  Here’s a graph of corporate taxes over the past 60 years.

In a recent speech, Vermont Senator Bernie Sanders made the following points.

1)      Exxon Mobil made $19 billion in profits in 2009.  Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS.

2)      Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.

3)      Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.

4)      Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.

5)      Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.

6)      Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.

7)      Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.

8)      Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.

9)      ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2006 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.

10)  Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.

So the government has helped corporations to cut their payroll expenses by curbing labor unions and has helped corporations cut their tax bills, but this hasn’t satisfied corporations or their CEOs and the rest of the 1% of the population who hold half of the nation’s wealth.  They are now looking for their recently purchased legislators to cut another one of their expenses; the expense of having to comply with environmental regulations.

In my next blog I will show how all of these economic and political factors are at the root of most of our environmental problems.

It has never been easy advocating for the environment, but these days it’s especially difficult for BEAT. It seems that every regulation protecting the environment is under attack. Every attempt to clean up environmental pollution is met with resistance. Protecting rare and endangered species annoys the real-estate industry and the lobbies representing developers. Trying to extend the bottle bill means doing battle with the bottling industry. And of course any attempt to get PCBs out of the Housatonic River is met with the full force and money of GE and its well funded allies. Almost every time we meet resistance in protecting the environment, there’s a corporation or well connected business interest standing in the way. Why is it so difficult to protect the environment and the health of all of us? How did we get to the point where we allow and sometimes encourage corporations to endanger our health and that of wildlife? It turns out that this is not primarily an environmental problem. Bear with me while I start down what might at first seem like an unrelated path. But the path I want to take really is the path that leads to the answer.

In 1979 the American worker’s average hourly wage was equal to $15.91 (in 2001 dollars). By 1989 it was at $16.63/hour. That’s right. In ten years, wages went up 70 cents an hour. Over the next six years, wages rose by 8 cents to $16.71. Compared to inflation, wages have not fared well over the years. Here’s a graph showing a year-to-year comparison of wages from 1925 to the present.

Notice that wages in effect dropped suddenly around 1980, and have never recovered. Employers have replied to demands for higher wages by saying that only higher productivity could justify higher wages. Do they have a point? Here’s a graph of American worker productivity over the last 65 years.

So workers are becoming more productive and are getting paid less. Of course that doesn’t necessarily mean that the profits of corporations are going up. But they are. Here’s a graph of recent corporate profits.

So corporations are making larger profits than ever, and they are not passing them on to workers. Where are all the profits going? Here is a graph of the ratio of CEO compensation to worker compensation. In other words it shows how many times greater the CEO’s paycheck is than the average worker’s paycheck.

Notice that CEOs are paid about 300 to 500 times what their workers are paid. The CEO of WalMart makes more in one hour than his average worker makes in a year. Here’s what this ratio looks like in other industrialized countries.

The result of all this is that the wealthiest 1% of Americans now own more than half of all the nation’s wealth. And in case your smiling and thinking that you are part of this elite group, let me be the first to tell you that you aren’t even close. The top 1% of Americans earn on average $1,117,000 a year.

It’s interesting that since 1979, the economies of the U.S. and of the industrialized European countries have grown pretty much at the same rate. However, industrialized European countries do not have the same disparity in pay between CEOs and workers, and as a result, European workers do not have the same wage stagnation as American workers. The European worker has been allowed to share in the economic benefits that have accrued since 1979.

So things are good for the ultra-wealthy. But the question is, can they maintain the status quo? Can they protect the wealth they have accumulated? Can they maybe continue the acceleration into the economic stratosphere? Sure they can. This is where bipartisan cooperation comes in. By bipartisan I mean both government and corporations. Next time: how government created this mess and why it won’t fix it. And yes, all of this does relate to environmental advocacy. In fact, I believe it is the most important environmental issue facing us on the local, state, national, and international levels. I’ll get to that.

I saw this video on YouTube.  Please watch it to the end.  What a testimony to the value of helping wildlife!

A recent story on an environmental page has me concerned.  The story on “Climate Progress” was making the point that small hydro generating stations could be viable if it weren’t for all the red tape imposed by regulatory agencies.  Most of the regulatory agencies cited were state and federal environmental regulatory agencies. I’ve heard the same arguments made for industrial wind power and biomass plants.

I think we need to be careful here.  After all, these are the same arguments made by conservatives who favor offshore drilling and drilling in the arctic.  It seems to me, that if a technology is not economically viable unless environmental regulations are waived, then it’s just not economically viable.  Let’s not put ourselves in a position whereby our strongest allies are the oil industry advocates.

Last October, DuPont, the same chemical company that invented chlorofluorocarbons, began marketing a new, “environmentally friendly” lawn chemical called Imprelis.  You may not have heard of it because only licensed professionals can apply it to your lawn.  Hooray!  An environmentally friendly herbicide!  Well, that’s how it was marketed anyway.

In late May, the reports started coming in.  Trees were dying where Imprelis was applied.  And not on a small scale either.  Imprelis was snapped up by landscapers and lawn chemical companies in amazing quantities.  For instance, The Columbus Dispatch reports that “Industry sources estimate that 75 percent of central Ohio landscapers and golf courses switched to Imprelis this year.”

From Iowa to the east coast and as far south as Georgia, trees are dying, and the “environmentally friendly” herbicide Imprelis is the chief suspect.  After spraying  Imprelis on hundreds of lawns in Michigan, Matt Coats of Underwood Nursery says his company began receiving angry calls.  “The customers are calling: ‘My trees are dying, what’s up?’  Underwood said. “We’ve never experienced anything like this.”

Property owner and Underwood client Teddy Peace complained that 8 of his 50 trees have been damaged.  He’s holding the Underwood Nursery financially responsible.  The nursery is insured, but $500 deductible per incident means that reparations have already cost Underwood $150,000.

Matt Coats told the New York Times, “We’ve made 1,000 applications and had 350 complaints of dead trees, and it’s climbing. I’ve done nothing for the last three weeks but deal with angry customers.”  One lawn-care worker called this the Katrina of the landscaping industry, and it’s just beginning. Read more…

As I’m writing this, my country is dangerously close to defaulting on its debts for the first time in its history.  Standard and Poor says that if this happens, it will lower the country’s credit rating from AAA to D.  We’re in hard economic times and we have to make some tough decisions.  Legislators have decided that one program we can afford to cut is the Environmental Protection Agency. They say EPA’s regulations are costing money and slowing the economy.  The fact that these regulations save lives and protect our health doesn’t often come up in their arguments. If we really do need to cut a federal program, I have a better one to target – General Electric. Read more…