Archive for the ‘Money and Politics’ Category

This week National Journal reports that former Senators Byron Dorgan, D-N.D. and Trent Lott, R-Miss “are working together on a blueprint for energy legislation” through their role as co-chairs of the Bipartisan Policy Center’s Strategic Energy Initiative, and plan to release it in January. NJ notes that “their effort could gain traction: Both are held in high regard by their former colleagues, and the BPC is a serious player in the energy debate.

What NJ fails to mention is that both Dorgan and Lott are also lobbyists getting rich taking special interest money from a who’s who of major energy corporations, which raises the question: will their energy blueprint serve as yet another veiled, sophisticated sell for their high priced energy corporate clients? When does their respected “high regard” begin and their shilling for their corporate clients end?

Lott’s Breaux Lott Leadership Group represents ExxonMobilEntergy, GE, energy trader Goldman Sachs, National Propane Gas Association, Plains Exploration and Shell Oil. In addition, the Breaux Lott group is a subsidiary of lobbying giant Patton Boggs, so you should also include PBs list of energy clients: ATP Oil & Gas, the Mining Awareness Resource Group, Oil States International and the oil giant TOTAL.

Dorgan co-chairs Government Relations for Arent Fox, where his corporate energy clients include oil companies Denbury Resources & Noble Energy.

I’m sure there will be some good recommendations in the Lott-Dorgan energy report. And I’m sure there’ll be policies that will be controversial. At the end of the day, we just don’t know what made it into the blueprint because of policy merits or the special interest paycheck.

Tyson Slocum is Director of Public Citizen’s Energy Program. Follow him on Twitter @tysonslocum

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Failing to derail Obamacare before most of its benefits become abundantly clear– and dear– to Americans, Republicans have now intensified their attack of President Obama’s other landmark achievement, namely Wall Street reform.

Texas Republican Rep. Jeb Henserling’s WSJ column (July 25) is part of a sprawling GOP attack on the Dodd-Frank Wall Street Reform Act. In July alone, the assault included more than a dozen congressional hearings. The common theme of all: red tape wound around bankers from this law is stifling the economy.

For starters, Dodd-Frank remains largely unimplemented. Public Citizen documented that 80 percent of the rules stemming from Dodd-Frank aren’t in force.

Then there’s the issue of trusting bankers off the leash.  Rep. Henserling demonstrates impressive bravery in his defense of this industry. In the last few months, JP Morgan erased 20 percent of shareholder value with a $6 billion trading loss its CEO admitted was a “terrible mistake.” HSBC admitted to laundering money for Mexican drug lords and Middle East terrorists. Barclays admitted to fixing the world’s leading interest rate index. Peregrine Financial declared bankruptcy after stealing customer funds. Capital One snookered credit card customers.   Financial speculators drove up the cost of gasoline to $4/gallon. Standard Chartered did $250 billion in business with Iranian banks despite sanctions forbidding it to do so. The list goes on and on.

That’s quite a rogues gallery Rep. Henserling serves.  Wall Street campaign contributions may be the liquor behind his courage. Wall Street accounts for $831,000 in cash deposits into Henserling’s re-election efforts since the Wall St crash of ’08. That doesn’t include the hundreds of thousands of more dollars into his leadership PAC.

In his article, Rep. Henserling revises history by claiming misguided government policy promoted  the high risk lending that inflated the housing bubble, not rogue banking, which caused the 2008 financial crash.  His evidence: Government sponsored securitizers bought 70 percent of the high risk loans. He fails to note that these loans accounted for a small percentage of failed mortgages.  Private securitizers account for the lion’s share of the problem. Yes, reform of government securitizers deserves urgent reform. Republicans, including Rep. Henserling, control the House. Yet this body has yet to produce any reform legislation.  Rep. Henserling claims speciously they’re waiting for President Obama.  (Why would they do that, if they consider so ill of his Wall Street reform act? )

Henserling claims existing banking law, well enforced, might have prevented inflation of the housing bubble, and that regulators did enjoy “the authority to prevent Wall Street from taking outsize risks.”  Fair point. Indeed, the regulators appointed by Republican President George W. Bush let Wall Street run wild, and ignored their own tools to arrest recklessness.  Much of that recklessness derived from the measure championed by fellow Texan Sen. Phil Gramm to join commercial and investment banking.

In many ways, the new Dodd-Frank law restates and reauthorizes regulatory power to combat recklessness.

The Volcker Rule, which Henserling decries as complex, aims to prevent bankers gambling with taxpayer-insured money.  A strong Volcker rule would have saved JP Morgan shareholders  from the gambling loss.

Dodd-Frank introduces transparency and price competition in the derivatives trading arena. Such transparency will help ensure consumers have access to competitively-priced energy commodities,  which will come at the expensive of runaway profits that the banks have made in these “dark markets“. The LIBOR scandal demonstrates traders willing to lie (for the price of a bottle of Bollinger champagne). Each dollar of bank derivative trading profit is a dollar that doesn’t go to real businesses attempting to hedge their risk.  Real economy firms who use hedges support derivative reform, such as the gas station owners organized as the Commodity Markets Oversight Coalition.

The Consumer Financial Protection Bureau, which Henserling inexplicably claims would have prevented the creation of the ATM, just returned $140 million to snookered customers of Capital One.

Dodd-Frank isn’t perfect. That’s because bankers blocked key reforms or added rotten provisions when Congress made this sausage. Henserling claims it didn’t truly solve the too-big-to-fail problem.  Bankers successfully blocked a key provision to cap the size of banks.  Even mega-bank creator Sanford Weill, former CEO of Citigroup, now acknowledges the banks should be broken up.

Since Wall Street crashed the economy under a Republican president, Rep. Henserling apparently feels compelled to produce this hash of history and analysis  in service of his political party. But Americans reeling from past and present Wall Street problems deserve better.

Tyson Slocum directs Public Citizen’s Energy Program. Follow him on twitter @tysonslocum. Bart Naylor is Public Citizen’s Financial Policy Advocate. CongressWatch intern Camille Lacour also contributed.

http://www.sanders.senate.gov/imo/media/image/oilmoney2.jpgWe have a powerful new tool to take on the fossil fuel industry and level the energy playing field.

Last week, new legislation was introduced by Sen. Bernie Sanders and Rep. Keith Ellison that would repeal $113 billion of tax-breaks, handouts and subsidies for the fossil fuel industry over the next 10 years.

View the list of subsidies the End Welfare Pollution Act, if passed, would repeal.

Federal subsidies and tax credits can be beneficial for short-term support of emerging technologies that help society as a whole.

Unfortunately, the mature fossil fuel industry is subsidized at nearly six times the rate of renewable energy. And unlike renewable energy incentives, which periodically expire and require Congress to approve extending, the fossil fuel industry has dozens of subsidies permanently engrained in the tax code from decades of successful lobbying.

With the burning of fossil fuels increasingly destabilizing our climate, why do we keep subsidizing the problem?

Eliminating fossil fuel handouts will go a long way toward advancing solutions like new innovations in the clean energy sector.

We can’t afford to keep throwing gobs of money at the fossil fuel industry.  Support the effort to end welfare to polluting industries.

The Obama Adminitration’s announcement a while back to “streamline” the permitting process for 7 major electricity transmission lines in an effort to “create jobs” and promote wind energy is proble"power lines"matic. While the projects would benefit proposed wind farms, the fact is that existing coal-fired and nuclear power plant infrastructure appear to be the big winners. And at least two of the projects get to charge consumers hundreds of millions of dollars in rate incentives authorized by the Energy Policy Act of 2005 under the expectation that investors needed the extra money because of the implicit difficulty in getting the necessary approval to build.
A recent analysis by Roger Bezdek in the February 2012 issue of Public Utilities Fortnightly argues that new transmission needs to link proposed new large scale, centralized renewable energy projects (mandated through a proposed federal Renewable Energy Standard, under Bezdek’s assumptions) “could enable expansion of coal-fired generation by the equivalent of about 30 new coal plants by 2020,” mainly because the added transmission, coupled with coal’s continued price advantage, will make more existing coal capacity available, since “utilization of the existing coal fleet is currently about 72 to 74 percent. However, this can be increased to about 85 percent if there’s enough transmission to transmit the added coal generation to the load at nights and weekends.” Now, Bezdek’s analysis is not specifically applied to the “fast-tracked” 7 transmission projects, but you get the idea.
For a swirling debate that often pits the Chamber of Commerce and multinational corporations against Obama on regulations, it seems strange that Obama’s proposed gutting of transmission siting regulations has received a collective yawn from environmentalists and many in the pro-regulation community. These days it appears as though Obama governs through press release, wrapping any initiative with “jobs” or “green energy” no matter how tenuous the claim. Touting transmission line projects as vehicles to “create jobs” is not efficient, and a close analysis of the transmission lines clearly show that coal-burning power plants will be the big winners.
Siting towering, multi-state transmission lines has been the traditional job of states. But with NIMBYism giving rise to NOPE (Not on Planet Earth) – due mainly to millions of new people now living in broad swaths of These United States where once only cows and tumbleweeds reigned, as evidenced by an increase of population density of 105% between 1950 and 2010 (from 42.6 people per sq mile to 87.4), it can get awfully difficult for corporations to build large projects sometimes. Not that that’s a bad thing. Unlike China, which can forcibly remove 1.3 million people to make way for giant energy projects at the drop of a hat, here in America we have the 5th Amendment protecting us.
In contrast, we ought to be focusing on YIMBY (Yes In My Backyard!) microgrid projects serving rooftop solar.
The Energy Policy Act of 2005 supposedly granted the Federal Energy Regulatory Commisison (FERC) new “backstop” authority to site transmission lines, in Section 1221, but only if states “withheld approval for more than one year.” But in 2009 the 4th Circuit rejected FERC’s interpretation of this authority. Courts also struck down FERC’s Section 368 authority to establish National Interest Electric Transmission Corridors that would have usurped existing state authority. However futile FERC’s efforts have been, Section 1221 of EPAct 2005 designated the Department of Energy as the “lead agency for purposes of coordinating” transmission projects on Federal lands. And it is this Section 1221 authority that Obama is utilizing with these 7 projects, as all cross major chunks of the public’s land.

In advance of today’s U.S. Senate vote to repeal tax credits for the 5 largest and most profitable oil corporations, the American Petroleum Institute (API) launched another campaign to mislead consumers that closing tax loopholes for the oil industry will result in higher gas prices.

The print and radio ads, which ran in Missouri, Massachusetts, West Virginia, Virginia, North Carolina, Maine, and Nevada, tell voters to contact their US senators and urge them to reject new taxes that could raise gas prices.

As in previous PR campaigns the oil industry uses fear and dubious claims to scare consumers into supporting policy that is good for Big Oil and bad for the American people.

View the print ad 5 Reasons the API ad campaign misleads the American people:

1) The price of oil – not US corporate tax policy – determines gas prices

Repealing these special oil company tax breaks means the owners of the companies – shareholders for publicly traded corporations – pay those taxes. Oil companies won’t pass higher corporate taxes on to consumers in the form of higher gas prices. And repealing these special tax breaks won’t be a disincentive to produce oil in the US, as the high price of oil provides all the incentive oil companies need to drill. According to Energy Information Administration, the cost of crude oil made up about 76% of the cost of gasoline in December, 2011.[i] The remaining factors that determine gas prices are federal, state, and local excise and sales taxes on gasoline sales, refining profit margins, and distribution and marketing expenses.[ii]

Industry financial documents filed with the Securities and Exchange Commission, show the average cost to produce a barrel of oil was $11 in 2010. The average price these companies received for a barrel of oil was $72.[iii]

2) The measure the Senate considered would  also extend clean energy credits and reduce the deficit.

The Senate bill calls for using the tax savings -$21 billion – from repealing the giveaways to fully fund a number of critical clean energy incentives, including the extension of the renewable energy production tax credit, the efficient new homes tax credit and the efficient appliances tax credit. Additionally, this bill would extend the cellulosic biofuel producer credit, allow for the inclusion of algae in biofuel incentives and expand the investment tax credit to offshore wind. [iv]

Extending these credit would cost $11 billion. The remaining saves of $10 billion would go toward deficit reduction.

3) Oil industry tax credits have not lowered gas prices.

Some of the tax credits used by the industry have been in place since the 1910s and 1920s. One of the more significant credits, the Domestic Manufacturing Deduction, was amended to include the oil industry in 2004, even though nowhere else in the tax code is oil extraction considered manufacturing. These tax breaks have not suppressed prices. By 2008, prices had risen to an average of $3.26 per gallon and are climbing again despite oil industry incentives.

4) Oil industry cherry-picks data.

The independent analysis cited in the ad refers to a report authored by the Congressional Research Service.[v] The report examines the potential impact of the administration’s 2012 budget proposal regarding the oil and gas industry. Specifically, it reviews 12 provisions that would raise tax liability for the oil and gas industry. The Senate bill in question includes five of those provisions. Even so, the report concludes that  repealing the tax credits outlined in the proposed budget could affect gas prices, but provides no estimate of how much could be passed on to consumers.

A memo from the Congressional Research Service to U.S. Sen. Harry Reid (D-Nev.) on the exact tax changes proposed in the current Senate bill states, “If the proposed changes in tax policy result in increases in the price of gasoline, it would generally be through an increase in the price of oil. However, the price of oil is determined on world markets and tends not to be sensitive to small cost variations experienced in regional production areas. In the recent market environment, with the price of oil averaging approximately $90 per barrel over the period December 2010 through February 2011, and the current price over $100 per barrel, prices are well in excess of costs and a small increase in taxes would be less likely to reduce oil output, and hence increase petroleum product (gasoline) prices.”[vi]

5) High gas prices are a pain for many households, but are a gold mine for the oil industry.

The ad attempts to appeal to the plight of the family facing high gas prices, but high gasoline prices only make the oil industry more profitable. So if the Senate bill really would boost gas prices, why would the industry oppose it? In fact, this bill doesn’t have anything to do with gas prices. It is about the industry maintaining favored tax status to maximize profits that are used to buy back stock, issue dividends and pay well-heeled lobbyists to press the industry’s case before lawmakers.

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