implications of the administration's trade agreements on fossil fuel extraction in the US and a few notes on other energy & the environment news of the past week...
last week, in reporting on the push in the Senate to overturn the 40 year ban on crude oil exports, we stated that if there's one policy change that will bring fracking back with a vengeance, it would be to allow domestic drillers to sell their crude overseas, and then cited the two trade deals currently being negotiated in secret by the Administration as the greatest threat that that might come about, because not only will these agreements allow for oil and gas exports, they effectively mandate those exports, giving the signatories equal claim to our oil and gas resources as our own citizens, and superseding domestic energy policy and protections currently in place...it was pure coincidence that a draft chapter of one of those secret agreements, the Trans Pacific Partnership (usually just "the TPP"), being negotiated with Japan and 12 other countries was released by Wikileaks this past week, with the NY Times acting as their media agent in the US...
the Wikileaks page to access the document is here, and the purpose of the chapter they released is to establish the means by which a multinational corporation can get compensation from a signatory government if one of that government's laws interferes with the corporation's profits...it sets up a supra-national court under the World Trade Organization's Dispute Settlement Body, whereby foreign firms can sue governments and obtain taxpayer compensation for whatever "expected future profits" that the government's law encumbered...the adjudication of these disputes would not be by elected officials of any of the signatory governments, but by a tribunal of international trade attorneys representing the multinational corporations....in effect, this trade agreement, and the similar trade agreement that we are negotiating with Europe, gives these world trade tribunals trump power over federal, state or local financial and environmental regulations, patent law, labor laws and worker safety rules, public health, anti-smoking legislation and drug laws, or any law that could be construed as interfering with corporate profits...
now, none of this is really new...even though congress has been kept out of the loop, this secret agreement has been in the works for 5 years, and rumors of the associated investor-state dispute settlement mechanisms have been kicked around the blogosphere for at least a couple of those years...as early as June 2012, these provisions led this agreement to be referred to by Lori Wallach at the Nation as 'NAFTA on steroids', a characterization that has stuck with many of the others who've written about it since...in fact, i thought these provisions were so well known that when i first saw the initial article about this in the New York Times this week, i wrote my favorite trade correspondent asking "did the NY Times just find this out?", not realizing that Wikileaks had actually released a new chapter about the creation of this mechanism and these tribunals...FYI, an earlier TPP chapter on the environment released by Wikileaks is here...
it's worth noting that similar investment protection mechanisms have also been applied under other trade agreements as well...under a trade agreement between Hong Kong and Australia, Philip Morris Asia successfully sued the Australian government over a law mandating plain cigarette packaging; under a Netherlands / Czech trade agreement, the Czech Republic was sued for refusing to bail out an insolvent bank that a Dutch investor had an interest in, and in an example the most relevant to our situation, Lone Pine Resources, a mostly Canadian fracker incorporated in Delaware, sued the government of Quebec under NAFTA for potential profits lost when they banned fracking under the St Lawrence River...under the provisions of this chapter of the TPP, the state of New York could be sued by the natural gas leaseholders in the Southern tier of the state who've been economically encumbered by the state fracking ban, Pennsylvania frackwater disposal operations could sue Ohio after being shut down for causing earthquakes in Trumbull county, and California oil companies could sue the counties who passed fracking bans last November...
even our northeast Ohio frack free group discussed this agreement as early as April and May of 2013, when the Sierra Club released a statement on Japan's participation, warning that this trade pact would result in automatic exports of natural gas to countries in the trade bloc, at a time when Asian prices were five times US prices, hence raising domestic prices and resulting in an explosion of fracking for gas for gas in our area...despite recent lower gas prices overall, not much about that has changed since; as of this week, Japanese LNG (Liquefied Natural Gas) import prices were at $13.77 mmBTU, and European Union natural gas import prices were at $8.27 mmBTU, while benchmark US natural gas prices at Henry Hub in Louisiana were $2.64 per mmBTU, and well head prices in some parts of Pennsylvania were below $1.50 ...you don't need to be a Harvard MBA to understand that US companies that are now shutting down rigs at those low domestic prices would ramp up drilling for the chance at unrestricted exports to those countries at their prices, and that when they're able to command more than 5 times as much overseas as here, domestic shortages will develop until such time as US gas prices rise to meet the international market...so not only will this agreement negate our environmental regulations, it will also be the impetus for higher domestic prices for oil and gas and increased fracking in even the thinnest bands of shale that have been ignored up till now...
as it stands now, the TPP is still being negotiated by the 605 corporate advisers to U.S. Trade Representative Michael Froman and their counterparts from the other 12 nations, and as of Thursday Froman was quoted as saying "we can close this out in a very small number of months."...one stumbling block with Japan, New Zealand and possibly other countries is the possibility that any signed agreement might be altered once congress gets a look at it....to avoid that possibility, Obama has asked congress for "trade promotion authority" aka TPA or "fast track", wherein congress would allow the trade agreement to be completed and signed without any knowledge of what's in it...although Democrats in congress held this up last year, fast track has been used in the past to pass other agreements, such as NAFTA, so it's not out of the question...right now, the Republican leadership is lining up behind giving Obama the go-ahead, while some fringe tea party Republicans and progressives in Congress such as Sherrod Brown have voiced opposition...so fast track appears to be the line in the sand...if Obama gets that, a majority vote to approve the agreement without debate will likely be relatively easy...if he doesn't get fast track, then what's in the trade agreements will be exposed for public debate, and once it becomes known what's in it, it will be nearly impossible to pass with the 2/3rds vote needed for a trade treaty...so this is the time to call or write your senators and congressmen, if you're into that sort of thing, and demand they have a full hearing on these trade agreements, so we can find out what's hidden in the other 24 secret chapters written by the multinationals that have not yet been seen by congress or the public....because we strongly suspect that if these agreements pass, we'll be transitioning into a new era where governments are completely subservient to the global corporate oligarchy in a way that will make what we've seen with Citizen's United seem like child' s play in comparison...
......................
a few quick notes on the other news of the week....as far as we know, there were just two derailments involving fossil fuels this week, and neither of them resulted in an explosion or loss of human life...in the first derailment incident, a train hauling methanol derailed outside of Valley Mills in central Texas, and a dozen cars, including 5 of the methanol tank cars, left the tracks, and two of those started leaking....ten nearby homes were evacuated, and Hazmat teams were called in to handle the cleanup...we have been unable to determine if the cars that leaked were the old DOT-111s or the newer, “safer” CPC-1232s...later, 27 cars of a coal hauling train derailed next to I-76 near Hudson Colorado and dumped tons of coal, making a terrible mess...cleanup crews were still working on the BNSF tracks a day and a half later when three cars of a 23 car Union Pacific train carrying fertilizer jumped the track nearby and damaged another 200 feet of Weld county track...
also as far as we know, there was only one fracking related oil spill this week, and once again it was in North Dakota, where a failed valve resulted in the release of 630 gallons of oil & 29,500 gallons of brine on to the site of an injection disposal well..both were said to be contained on the site, and all but five barrels (200 gallons) of the oil was recovered...
we had previously discussed West Virginia's plan to lease their land under the Ohio River for fracking, and hat deal has apparently been completed, as the Norwegian oil giant Statoil has agreed to pay an average price of $8,732 per acre to drill and frack under 474 acres of state-owned land under the river in Marshall and Wetzel counties; as you'll recall, the state boundary is on the Ohio side of the river...on the plus side for Ohio, Chesapeake Energy, who drills more wells in Ohio than the next 5 Utica shale operators combined, is cutting their 2015 capital spending budget by $500 million due to low prices for natural gas and liquids; that means they'll operate 25 to 35 rigs in 2015, down from the 64 rigs they ran in 2014..
it was only two months after gasoline prices fell following the Thanksgiving day OPEC meeting that American car drivers managed to return to their old gas guzzling driving habits...the latest report from the Department of Transportation found that vehicle miles driven increased by 4.9% to 237.4 billion vehicle miles in January, over January from a year ago...this means that the 85 month American driving hiatus brought on by high oil prices in 2008 has ended and we have now set a new record for driving, covering 3.050 trillion miles on U.S. highways in the 12 months ending in January...in a similar vein, 40% of the increase in American's consumption of durable goods in the 4th quarter was for recreational vehicles and equipment..
US oil production saw the smallest increase in two months this week, as our oil production for the 3rd week in March averaged 9,422,000 barrels per day, up from the 9,419,000 barrels a day rate of the prior week, and 15% higher than the 8,190,000 barrels per day that we produced in the 3rd week of March last year...nonetheless, our inventories of crude oil in storage reached yet another record, increasing by 8.2 million barrels from the previous week to 466.7 million barrels, 22% more than the 382,471 barrels of oil stored commercially in the US in the 3rd week of March a year ago, and more than 25% over our 5 year average...the weekly Petroleum Status Report (62 pp pdf) also showed that US crude oil imports averaged 7.4 million barrels per day last week, down by 104,000 barrels a day from our imports in the 2nd week of March, and that in the four weeks ending March 13th, US crude oil imports averaged over 7.3 million barrels per day, just 1.0% lower than the same 4 week period last year...
in the week just ended, the count of rigs drilling for oil in the US fell by 12 to 813, while the number of active gas rigs fell by 9 to 233...with two miscellaneous rigs still active, that left the rig count as reported by Baker Hughes at 1046, down 21 from the week of March 20th and representing the least number of rigs shut down in any week since the week of December 5th...of those that were idled this week, 17 were engaged in horizontal drilling and 4 were vertical drilling rigs; over the past year, American drillers have stacked 761 rigs, and they're now operating 829 horizontal rigs, 399 less than a year ago, 148 vertical rigs, 240 less than a year ago, and 92 directional rigs, 122 less than the same week last year ...this week's shutdowns were widespread; of the major basins, only the Niobrara Chalk, which stretches over 5 states under the Rockies front range, saw as many as 3 rigs idled, while of the states, only Texas, Oklahoma, Louisiana and Alaska saw as many as 3 rigs idled, while only Pennsylvania and Kansas added a rig...north of the border, Canadian drillers shut down another 20 rigs, leaving them with just 120 rigs active..that's down from the 300 rigs they were running just 3 weeks ago...this week they idled another 12 oil rigs, leaving them with just 18, while they shut down 8 of the 110 gas rigs they ran last week, leaving 102...the Canadian rig count is now down 178 rigs from a year ago, with oil rigs down 137, and gas rigs down 41...
.........
additional references:
Wikileaks releases Trans-Pacific Partnership investment chapter
Thoughts About the Trans-Pacific Partnership - Joe Firestone
Trans-Pacific Partnership Seen as Door for Foreign Suits Against U.S.
Corporate Sovereignty Provisions Of TPP Agreement Leaked Via Wikileaks: Would Massively Undermine Government Sovereignty -
TPP vs. Democracy: Leaked Draft of Secretive Trade Deal Spells Out Plan for Corporate Power Grab
The secretive TPP scam -
TPP Corporate Insiders - (a list of 605 corporate advisers who have been allowed access to the TPP text, while the public and members of congress have been kept in the dark)
Thoughts About the Trans-Pacific Partnership -- Yves Smith
The New York Times Covers the TPP: A Commentary -- Joe Firestone