Despite Climate Warnings, New Export Rules Open Crude Oil Floodgates

The loosened regulations will reportedly ‘please domestic oil drillers, foreign trade partners, and some Republicans’

By Deirdre Fulton
December 31, 2014
Common Dreams

 

Opening the door to U.S. crude exports is expected to give relief to some domestic drillers who have been forced to sell their shale oil at a discount of as much as $15 a barrel versus global markets as fast-rising domestic supplies overwhelm local demand. (Photo: WildEarth Guardians/flickr/cc)

 

Despite warnings about how such a move could accelerate climate change, the Obama administration has quietly loosened its regulations on crude oil exports, “opening the floodgates” for the shipment of as much as a million barrels per day of ultra-light crude, also known as condensate, to the rest of the world.

The obscure rule change by the Department of Commerce “will likely please domestic oil drillers, foreign trade partners and some Republicans who have urged Obama to loosen the export ban,” Reuters reports. “The latest measures were wrapped in regulatory jargon and couched by some as a basic clarification of existing rules, but analysts said the message was unambiguous: a green light for any company willing and able to process their light condensate crude through a distillation tower, a simple piece of oilfield kit.”

According to Bloomberg:

The guidelines could “open the floodgates to substantial increases in exports,” Citigroup Inc. said in a research note. Total U.S. production of light and ultra-light crude oil now exceeds 3.81 million barrels a day, and exports could reach 1 million barrels daily by the end of 2015, Citi Research said.

…In addition to approving applications, the government also allows companies to “self-certify,” that is, to export their products without seeking the permission if they think the law allows for the exchange.

Officials were quick to point out that most untreated crude is still covered by the existing ban.

“It’s a long way from here to a full repeal of the export ban, and they went out of their way to stipulate that this is not, in their view, crude oil,” Jeff Navin, a former deputy chief of staff at the Energy Department, said in an e-mail to Bloomberg. “But it does show how they’re thinking about exporting at least some of our light products.”

But earlier this year, environmental watchdogs warned that any loosening of the decades-old ban on crude oil exports could lead to the release of billions of tons of additional carbon dioxide in the atmosphere.

“Allowing U.S. crude oil exports will result in increased profits that will in turn result in increased oil production,” read a report (pdf) by Oil Change International, Lifting the Ban, Cooking the Climate. “In the midst of President Obama’s ‘All of the Above’ energy strategy, the ban on crude oil exports is one of the few policies in place that effectively limits oil and gas extraction and protects our climate. The Obama Administration and the U.S. Congress must take a stand for the climate and resolve to leave the crude oil export ban intact.”

As Andy Rowell, of Oil Change International, pointed out in October, the U.S. Government Accountability Office has recommended against lifting the ban, saying greenhouse gas emissions would rise if the ban was lifted—an outcome with serious implications for the climate and environment.

“It is important to remember what the GAO said last week in its report,” Rowell wrote. “It argued that ‘additional crude oil production may pose risks to the quality and quantity of surface groundwater sources; increase greenhouse gas and other emissions; and increase the risk of spills from crude oil transportation’.”

In Pennsylvania, Judge Paves Way for Private Takeover of Public School District

Education analyst says judge’s decision ushers in ‘the death of local control and democracy in York City’

By Deirdre Fulton
December 28, 2014
Common Dreams, December 27, 2014

 

A handful of York City School District students and staff members protested Friday in front of the York County Judicial Center following a judge’s decision to grant a receivership for the district. (Photo: Bil Bowden/The York Dispatch)

 

Control of the struggling York City School District in Pennsylvania has been handed over to the state, effectively paving the way for public education in that county to be provided exclusively by a private company.

State officials had previously said that, if approved for a receivership (as a state takeover is called), they would bring in Charter Schools USA, an ‘education management company’ based in Florida, to operate the district.

According to the York Dispatch:

The decision of President Judge Stephen P. Linebaugh gives all but taxing power to a Spring Garden Township man who has steered the district’s financial recovery process for two years.

David Meckley, who has an extensive business background, has served as the district’s chief recovery officer for two years. His tenure started after the state placed York City in moderate financial recovery status.

…For the past several months, Meckley has advocated for a full conversion of the district’s eight schools to operation by a for-profit charter company called Charter Schools USA.

The Dispatch reports that district teachers, parents, and students have been vigorously opposed to the plan. Following the judge’s ruling on Friday, a group of about 20 students and staffers protested outside the York County Judicial Center.

In a statement, the state’s largest school employee union said Linebaugh’s decision “ignores the will of the community, puts students’ education at risk, and paves the way for a corporate takeover of the city’s schools.”

“The newly appointed receiver’s charter school plan is just as troubling as the last-minute power grab,” said Michael Crossey, president of the Pennsylvania State Education Association. “There’s no real plan at all for more than 1,000 of the school district’s students with special needs. Apparently, they think these students should just enroll in cyber programs if they want to stay in district-operated schools or if a charter school provider can’t educate them. That is just astonishing.”

The PSEA and other organizations said would appeal the judge’s decision; the York County School District itself filed an appeal Friday.

“Be it noted that today’s education ‘reformers’ don’t much care for democracy,” educational policy analyst Diane Ravitch wrote at her blog. “They would rather turn public schools over to a for-profit corporation that siphons off 20 percent in management fees and pays itself outlandish rental fees rather than trust parents and local citizens to do what’s best for their children.”

“Choice?” she continued. “There will be no ‘choice’ for the families of York City. Their children will have to attend a charter school whose headquarters are in Florida. Yes, it is the death of local control and democracy in York City.”

Ravitch notes that “[t]his is what we would expect from the outgoing Corbett administration, which actively promoted privatization.” But it begs the question: “What will the new Tom Wolf administration do?”

Funding Bill Passes; Wall Street Wins; “Kind of Compromise” Obama Loves

‘This bill allows too-big-to-fail banks to make the same risky bets on derivatives that led to the largest taxpayer bailout in history and nearly destroyed the economy,’ argued Bernie Sanders

By Deirdre Fulton
December 12, 2014
Common Dreams, December 11, 2014

 

Speaker of the House John Boehner (R-Ohio) speaking to reporters on Thursday December 11, 2014. (Image: C-SPAN)

 

Update (9:53 PM EST):

The Republican-controlled U.S. House of Representatives passed a controversial spending bill late on Thursday night with a final vote of 219 to 206.

139 Democrats opposed the bill because, as the Huffington Post reports, they “were bitterly opposed to two attached riders that would whittle away at campaign finance rules and roll back provisions in the Dodd Frank Wall Street reform act designed to curb the risky trading at the heart of the 2008 financial crisis.”

The additional ‘Nay’ votes came from 67 Republicans whose opposition centered around their objection to funding contained in the bill that would go towards immigration reform measures recently put forth by the Obama administration.

In a statement opposing the bill ahead of the final vote, Minority Leader Nancy Pelosi, condemned the contents of the rider that will lift the regulations on derivatives trading, saying “This is ransom, this is blackmail. We don’t get a bill unless Wall Street gets its taxpayer-funded coverage.”

Pelosi said the amendment in question, which was literally written by lobbyists with Citigroup (see below), brings back financial services regulation “back to the same old Republican formula: privatize the gain, nationalize the risk.  You succeed, it’s in your pocket.  You fail, the taxpayer pays the bill.  It’s just not right.”

As the Washington Post reported just ahead of the final vote, “The provision was so important to the profits at [the nation’s biggest banks] that J.P.Morgan’s chief executive Jamie Dimon himself telephoned individual lawmakers to urge them to vote for it, according to a person familiar with the effort.”

Though progressive lawmakers, including Sens. Elizabeth Warren and Bernie Sanders, put forth spirited arguments against the nefarious provisions in the bill which they described as “giveaways” to Wall Street financiers and the wealthiest Americans, White House spokesperson John Earnest appeared on MSNBC and championed passage of the bill, saying the funding legislation was “the kind of compromise that [President Obama has] been seeking from Republicans for years now.”

According to Agence France-Presse, the bill’s passage came after a “bruising day of arm-twisting by the White House” directed at Democrats who opposed the bill.

Negative reactions from progressives on Twitter ensued:

Find the complete roll call here.

Earlier:

Despite enthusiastic backing from the White House, the $1.1 trillion government spending bill that opponents have described as “a Wall Street giveaway” is on thin ice on Thursday, facing strong opposition from progressive lawmakers and watchdog groups.

According to The Hill, the bill’s prospects “appeared to be teetering Thursday after House Democratic Leader Nancy Pelosi (Calif.) announced her opposition and the package narrowly survived a procedural vote.”

The House went into recess shortly after 2 p.m. after the debate on the bill had concluded, “something that could signal GOP leaders aren’t sure they have the votes necessary to pass the bill,” The Hill reported. “During a debate on a border measure last summer, Republicans also went into recess and then pulled the bill from consideration. But GOP aides insisted on Thursday the spending bill would go forward.”

At the center of the dispute is a provision, inserted at the last minute by Congressional Republicans, that would relax the regulation of investments known as derivatives. Democrats have demanded that the provision be removed, arguing that would weaken protections that keep the U.S. economy safe, allow big banks gamble with depositors’ federally insured money, and increase the likelihood that floundering banks would get another taxpayer bailout.

While White House press secretary Josh Earnest called the bill “a compromise” that “does fulfill some of the many of the top line priorities that the president himself has long identified,” opponents claim the bill was “literally written by Citigroup lobbyists,” as Senator Elizabeth Warren (D-Mass.) wrote on her website.

On the Senate floor on Wednesday, Warren chided her fellow lawmakers: “Who do you work for, Wall Street or the American people?” she asked. “Nobody sent us here to stand up for Citigroup. It is time for all of us to stand up and fight.”

In remarks he shared with The Hill, Senator Bernie Sanders (I-Vt.) echoed Warren’s rallying cry.

“Instead of cracking down on Wall Street CEOs who plunged the country into a terrible recession, this bill allows too-big-to-fail banks to make the same risky bets on derivatives that led to the largest taxpayer bailout in history and nearly destroyed the economy,” he said.

It’s no wonder Warren referred to the bill as a giveaway “for the rich and powerful,” declared Mary Bottari, director of the Center for Media and Democracy.

Bottari wrote:

The measure is backed not just by Citi, but by all the too-big-to-fail banks who want to continue business as usual, including JP Morgan Chase, which lost a whopping $7 billion recently in risky derivatives trades. FDIC’s Vice Chair Thomas Heonig, a Republican, explains the real reason the banks want the deal: “Most of these firms have broker-dealer affiliates where they can place these activities, but these affiliates are not as richly subsidized.” In other words, the banks could make a lot more money if they can use taxpayer-backed funds to make risky bets in the derivatives markets.

Marcus Stanley, policy director for nonprofit consumer watchdog group Americans for Financial Reform, puts it more simply: “The bill restores the public subsidy to exotic Wall Street activities.”

This progressive roadblock—the Washington Post described it a “liberal Democrats’ rebellion”—could prove problematic for the GOP, which needs a handful of Democratic votes to make up for members of its own party who oppose the spending package because it does not do more to curtail President Obama’s executive actions on immigration.

The Senate is waiting for the House to take action on a funding measure before determining its own next steps, though it is expected to take up the bill on Friday.

A procedural vote earlier Thursday to advance debate on the spending package was narrowly approved in a 214-212 vote—another sign the bill is on shaky ground.