Reforming FERC
I recently spoke at a symposium titled Improving RTO-Operated Wholesale Electricity Markets hosted by the American Public Power Association. My presentation highlights that household electricity prices are far higher in those states where prices are set in restructured power markets, when compared to those families in states where prices are set by state regulators. That’s because the federal government, through the Federal Energy Regulatory Commission, fails to effectively regulate rates. I’ve written about recent problems by FERC in protecting consumers.
- Tyson Slocum is Director of Public Citizen’s Energy Program
The chapter of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling’s report released last week regarding the root causes of the Deepwater Horizon explosion confirm Public Citizen’s long held criticisms of the oil industry.
The commission cited failure of management and an industry culture that puts profits over safety as key causes of the explosion that killed 11 workers and resulted in the dumping of five million barrels of oil into the Gulf of Mexico.
Today, the commission presented the remainder of its findings, coupled with recommendations aimed at mitigating the effects of the spill and ensuring that a crisis of this magnitude does not happen again. Public Citizen applauds the commission’s diligence in providing a comprehensive array of reforms that adequately address and characterize the regulatory and funding gaps surrounding oil and gas activities and Gulf restoration.
We can no longer afford to have oil companies calling the shots on energy policy. Increasing offshore drilling will do little to lower prices and would only further jeopardize the safety of workers and the environment unless significant changes are made. We support the commission’s efforts to bolster safety and environmental standards and commend the commission’s commitment to restoring the Gulf region.
In a document released today, Public Citizen compiled the preliminary recommendations presented by the commission staff last month, and where applicable, compared those to administrative actions that have been taken and reforms passed by the U.S. House of Representatives in August – reforms that died when the congressional session ended in December. The Obama administration and the experts on the commission agree about the changes needed to both make the industry more accountable and to safeguard workers and the environment from the dangers posed by oil and gas drilling.
Public Citizen applauds the commission for emphasizing the need to solicit citizen input in the restoration process and ensure citizen oversight of oil and gas activities. We also are pleased that the commission supports the use of fines generated by Clean Water Act violations for ecological recovery and restoration in the Gulf.
Now, to save lives, the environment and the Gulf economy, Congress must take up and pass the previous session’s House bill and adopt the commission’s recommendations.
Note: For Public Citizen’s analysis of the commission’s recommendations, go to
http://www.citizen.org/documents/OSCRecommendations.pdf
Beware Drill Baby Drill
Gasoline prices are rising, averaging 41 cents higher a gallon than last year, so once again we are hearing the familiar refrain that this means we need to drill more.
Not surprisingly, we are hearing this from incoming Republicans who will now be running the U.S. House of Representatives. They are eager to find any excuse to support the agenda of the oil industry, which is to have increased access to land for drilling purposes and to preserve lucrative tax breaks and subsidies.
Beware.
We cannot drill our way to low prices. And as we have seen with past price spikes, the industry’s tax breaks serve only to pad their profits, not keep prices down. In the name of deficit reduction, Congress is about to consider cutting services that provide benefits to tens of millions of Americans. There is no excuse for even considering cuts to vital services to poor and working Americans while the oil industry continues to claim more than $5 billion a year in tax breaks.
Market speculation almost assuredly has played a role in rising gas prices. We haven’t yet reregulated these markets, and we need to.
Despite the BP disaster, Congress still hasn’t passed a spill bill that would require offshore drilling to be safer for the environment, protect workers or ensure that oil companies – not the American taxpayer – are financially responsible for oil spills. Lawmakers should be focusing on that instead of throwing more bones to the industry.
As prices rise, lawmakers also should consider a windfall profits tax. The money should be used to pay for clean energy, energy efficiency and mass transit. If we invested adequately in such alternative energy sources, we wouldn’t have to hear that familiar refrain when oil prices go up.
Yesterday Public Citizen’s Energy Program Director, Tyson Slocum, debated a Fox News anchor on whether climate change is real:
http://video.foxbusiness.com/v/4475725/what-happened-to-global-warming
Enjoy!
-Tyson Slocum
Opponents of public health, environmental and public interest protections routinely complain about the high costs of such rules. Calculations of cost are typically inflated, but perhaps even more consequential is that benefits, including straight monetary benefits, are routinely ignored.
A recent Heritage Foundation brief, “Red Tape Rising: Obama’s Torrent of New Regulation” is a case in point. The brief claims that 43 federal rules issued in FY2010 will cost $26.5 billion, but fails to acknowledge any benefits.
More than a third of the Heritage Foundation’s cited $26.5 billion is attributable to new fuel economy standards ($10.8 billion over a 5-year period). Until we transition to electric cars, improved fuel economy is one of the most vital means available of reducing carbon pollution and combating climate change. But improved fuel economy is a clear winner for Americans without even tallying the carbon-reducing benefits. Consumers will save far more on gasoline than they may pay in increased vehicle prices.
The Overwhelming Benefits of Fuel Economy Regulations
Heritage Foundation claims that federal fuel economy regulations signed into law by President George W. Bush and implemented by the Obama Administration constitute a burdensome cost to the economy are false. The federal Corporate Average Fuel Economy (CAFÉ) program – in place since 1975 – has been remarkably successful requiring manufacturers to supply Americans with safer, more fuel efficient vehicles. These more efficient vehicles have saved motorists billions of dollars and reduced our need to import millions of barrels of oil. With crude oil now hovering at $90 a barrel, the Bush Administration initiative to reduce our reliance on oil and save consumers money is needed now more than ever. Read more…
Last week the Oil Spill Commission released its preliminary findings in a two day meeting held in Washington D.C.
Findings confirmed that the Macondo well blowout was an avoidable accident. And that escalating series of issues leading up to the blowout were the result of BP’s prioritization of cost cutting over safety.
Specifically, the Commission’s investigation team found that most of the mistakes and oversights that led to the blowout were the result of management failures by BP, Halliburton, and Transocean.
Key findings include:
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- BP, Transocean, and Halliburton failed to communicate adequately. BP did not share important information with its contractors, or sometimes even within its own team. And contractors did not share important information with BP or each other;
- Halliburton and BP management processes did not ensure that cement was adequately tested before pumping. Halliburton didn’t have sufficient controls in place to ensure that its personnel tested cement in a timely manner or rigorously vetted test results. BP personnel did not ensure that Halliburton completed testing before pumping cement, despite recognizing problems with timeliness of Halliburton’s cement testing;
- BP and Halliburton employees knew that the cement job would be difficult but did not adequately communicate these issues to the rig crew;
- Neither the BP well-site leaders nor the Transocean crew consulted anyone on shore about anomalies in the negative pressure test;
- If these challenges and anomalies had been better communicated, the Macondo blowout could have been prevented.
The findings made clear that there is plenty of blame to go around for the worst oil spill in U.S. history, but the analysis provided on the key actors’ deplorable safety culture and history of violations and accidents begs the questions: Why were they permitted to drill at all?
BP
BP’s history of cost-cutting and resulting problems across all business segments and over many years suggests systemic corporate culture issues.
Accident History:
- Grangemouth Refinery complex –2000
- Forties Alpha Production Platform –2003
- Texas City Refinery –2005
- Thunder Horse Platform -2005
- Prudhoe Bay Pipeline -2006
- Deepwater Horizon -2010
- Texas City Refinery (again) -2010
- BP pipelines across Alaska –2010
BP safety lapses appear to be chronic; its systems safety engineering and safety culture still need improvement.
Halliburton
Halliburton is the largest company in the global oil field cementing business, which accounted for 11% of the company’s business, or $1.7 billion in 2009.
For all of its experience, Halliburton prepared cement for BP, one of its major clients, that had repeatedly failed laboratory tests. And Halliburton managers on shore let its team, Transocean, and BP continue with a cement job without timely and positive stability results.
Halliburton was also the cementer on the Montara well that suffered a blowout in August 2009, off the coast of Australia.
The accident inquiry confirmed that cementing problems led to the blowout.
While specific cementing problems at Montara were different from mistakes at Macondo, in both cases management processes by the operator and Halliburton failed to ensure the crew achieved a good cement job.
Transocean
In February, the UK Health & Safety Executive accused some of the company’s offshore managers “of bullying, aggression, harassment, humiliation, and intimidation” [towards their staff] according to Upstream, an industry trade journal that had seen a copy of the report.
Early in 2010, Transocean contracted Lloyds Register to review its safety management and safety culture after “a series of serious accidents and near hits within the global organization.”
Of the four North American rigs that Lloyd’s visited, the Deepwater Horizon was the highest performing with scores solidly in the twos and threes on a five point scale.
“[A] fundamental lack of hazard awareness underpins many of the issues in the North America Division.”
Transocean Supervisors and rig leaders themselves believed: “The workforce was not always aware of the hazards they were exposed to . . . ”
“[F]rontline crews are potentially working with a mindset that they believe they are fully aware of all the hazards when it is highly likely that they are not.”
Information courtesy of Oil Spill Commission Staff
Allison Fisher is the Outreach Director for Public Citizen’s Energy Program
New Offshore Drilling Off Limits
Today’s Decision by Obama Administration to Reinstate Moratorium on Offshore Drilling Is Welcome News
Statement of Tyson Slocum, Director, Public Citizen’s Energy Program
With today’s announcement that a large swath of the Gulf of Mexico will be closed to drilling for the foreseeable future, the White House reverses a bad decision it made six months ago to open a huge, environmentally sensitive area – the eastern Gulf of Mexico and the Atlantic seaboard – to offshore oil drilling and exploration. A mere three weeks later, the worst environmental disaster in U.S. history occurred when BP’s oil rig exploded in the Gulf.
We applaud the Obama administration for this commonsense decision and its long-awaited recognition of the fact that the BP disaster was indeed a game changer for offshore oil drilling. By maintaining the moratorium on drilling in these areas for at least the next five years, the administration takes its first official step in acknowledging that offshore drilling is too hazardous to be part of the solution to America’s energy challenges.
The announcement comes just a day before the president-appointed oil spill commission convenes for the final time before releasing its report on Jan.11. We hope that the commission’s recommendations are consistent with today’s revision of U.S. oil drilling policy. Among the recommendations we would like to see is the establishment of Regional Citizens’Advisory Councils – that will give Gulf Coast communities a real voice in the energy industry decisions that affect their lives and homes.
Support the establishment of Gulf Coast Citizens’ Advisory Councils by signing this petition to the Oil Spill Commission
The Power of Subpoena
This week concluded the presidential commission hearings on the BP Deepwater Horizon oil spill. The Oil Spill Commission will meet once more for final deliberation in early December before going behind closed doors to craft its report on the worst oil spill in the history of the United States. No small task. But a task made that much more challenging by the fact that the entity has been denied subpoena power.
During the course of the two day hearing held in Washington, D.C., the commission’s chief counsel, Fred Bartlit regularly highlighted the data gaps that subpoena power could have helped fill in.
Chief counsel Bartlit’s plea – “Subpoena, that’s damn important” – pointed in part to the possibility that the spill commission may never resolve a fundamental question: How a band of experienced roughnecks on a muddy drill floor missed critical warning signs and failed to control a rush of oil and gas that hit the rig with the force of a 550-ton freight train. But instead of testimony under oath to resolve fundamental questions, the commission has had to rely on the “full cooperation” of the corporations involved in the rig explosion – BP, Transocean and Halliburton.
Why have these companies been munching on their carrots of cooperation, while ultimately avoiding the stick of “swearing the truth and nothing but the truth”? Their republican beneficiaries in the Senate have deemed subpoena power as just another vehicle for shakin’ down the oil industry.
Meanwhile the corporations involved in the sequence of events that let to the April 20th explosion on the Deepwater Horizon rig have been working with the Commission and its counsel to deconstruct the event, unfortunately much of their role has been pointing the finger at the other guys.
“The disputes between Transocean and BP and Halliburton as to who said what when, and who has the responsibility for that, this is where subpoena power would be helpful,” said Bartlit. “It’s hard to resolve that unless I can sit people down in a room and cross-examine them and find out what’s believable and not believable.”
Bartlit went so far as to ask the represents from the three companies whether or not they would be willing to press the Senate on granting the commission subpoena power – they weren’t empowered to respond at that time.
In the final analysis, the American public needs to know that all the facts were represented – not just to have faith in the set of recommendations prescribed by the Commission, but to avoid further demoralization of a populace already scathed by political posturing that puts party before progress.
Allison Fisher is the Outreach Director of Public Citizen’s Energy Program
Elections and Energy Policy
Listen to Energy Director, Tyson Slocum, David Robert of Grist and Andy Karsner of Manifest Energy debate what the midterm election results mean for national energy policy on the program EnergyNOW.
Post-Election Analysis
Elections are about choices. In American politics, imagery and rhetoric often trump factual and substantive analysis of legislative achievements. The historic electoral coup by Republicans in the House is clearly rooted in real unrest by American voters – insecurity fueled by profound economic hardship, and a lack of comprehension by voters of what benefits record government spending and new regulations have for working families. American campaigns rarely reflect the tenor of the Lincoln-Douglas debates but rather are defined by bite-sized rhetorical tricks promoting false choices between too much- or too-little government involvement in society and the economy.
Thanks to Citizens United, a record amount of corporate and special interest money flooded our airwaves, eagerly exploiting voters’ legitimate fears and thereby helping to define the 2010 election on terms that benefit the narrow interests of these corporations – often at the expense of benefits for working families and environmental and climate protection.
As a result, the big winners in last night’s election are the nuclear, coal and oil industries, who will see a far more advantageous financial and regulatory climate for their shareholders and investors in the next Congress. Losers are support for renewables, and those Americans who understand that the science of climate change requires us to aggressively combat global warming. The one outlier is the successful campaign in California to preserve that state’s first-in-the-nation climate change law (61% of Golden Staters voted “no” to repeal the climate law) – because voters were presented with a clear choice: protect the environment vs. support the agenda of a handful of out-of-state oil companies. The California success story of electoral support for climate change, I believe, serves as a model for obtaining national support for clean energy, energy efficiency and action on climate chance: present voters with clear, stark choices (corporate interests vs the people’s interests) and we just might have a chance. Continue on the muddled path of Waxman-Markey/Kerry-Lieberman of energy/climate policy via corporate accommodation, and enviros will continue to lose in the marketplace of ideas and elections (another bright spot for electricity consumers is the election of Richard Blumenthal to the open Connecticut Senate seat. As the state’s Attorney General, Blumenthal regularly sued the Federal Energy Regulatory Commission over that agency’s failure to protect consumers from power company price-gouging. He’s one of the few who understands FERC and will be a welcome consumer advocate in the Senate). Read more…
