Big Oil’s Iranian Scare Tactic

On nearly every level, this is a terrible bill. And Senator Inhofe and his co-sponsors likely understand this fact.

Republican bill uses Iran as bogeyman to benefit Big Oil donors and neuter environmental law

By Jed Morey
Twitter: @jedmorey

This column originally appeared onwww.LongIslandPress.com

A couple of weeks ago, Sen. James Inhofe (R-OK) put forward a bill (S.965) with the title “Iran Sanctions Implementation Act of 2013.” It’s a ridiculously worded and speciously reasoned piece of legislation that calls for the expansion of domestic oil production in an effort to overtake and choke off Iran’s remaining crude oil supply. According to the bill, “by expanding oil production in the United States by 1,250,000 barrels per day” (the amount Sen. Inhofe estimates to be the current level of Iranian crude oil exports), “the United States will displace all oil exports from Iran on the world market.”

Inhofe accomplishes this in the bill by granting the president of the United States authority to “designate any area of Federal land that the President determines appropriate as an ‘Iranian Oil Replacement Zone,’” and that “Each Zone shall include any area of Federal land necessary for the transportation… of the oil produced in that Zone.” Moreover, Inhofe’s legislation would grant exclusive management of these zones to the individual states, thereby circumventing the federal agencies designated to protect and manage these territories. Finally, as a kicker, he exempts the entire act from both judicial review and environmental oversight under the National Environment Policy Act (NEPA) of 1969.

On nearly every level, this is a terrible bill. And Senator Inhofe and his co-sponsors likely understand this fact. But before we delve into the rationale behind floating a bill with almost no chance of succeeding, let me explain why it is so off-target.

First off, it’s important to know that this is not how the global crude oil market operates. By making the assumption that increased U.S. oil production can displace another country’s production ignores market fundamentals. As Gene Guilford, an expert in the field of energy policy, explains, “The Saudis, Libya and Iraq have already increased their output to some extent for this purpose. The excess crude oil production capacity that exists in the Middle East to take the place of Iranian production for export is already available.”

To most of us, the crude oil and gas market is a complex world. From drilling and transporting and buying and selling, it’s a murky realm of oil barons and commodities traders that speak a different language. But election cycles provide enough of a window inside to inform most Americans of this basic fact: The oil business is booming.

“We’re basically bursting at the seams with supply,” says Michael Masters, president of Masters Capital Management, an Atlanta-based hedge fund that specializes in the commodities sector. When oil prices spiked in 2008 and the derivatives market began to unravel, Masters provided important congressional testimony that gave U.S. lawmakers insight in to the inner workings of the commodities business. U.S. production has been so robust in recent years that Masters says, “I imagine in the second half of this year we won’t import any oil.”

This is a sentiment shared by Guilford, who talked about the remarkable turn of events in the U.S. fossil fuel industry. “In 2007 we were talking about peak oil,” says Guilford; “today we speak of the very real potential of the U.S. being the world’s leading crude oil producer by 2015 and U.S. energy independence.”

When I asked Masters specifically about Inhofe’s notion of displacing Iranian oil, he said, “It’s sort of a ridiculous theory because you’re not going to take it out of the market.”

In fairness, sanctions on Iran have lead to a serious decrease in Iranian crude oil exports. It’s estimated that Iran exported nearly 4 million barrels per day when President Obama took office. Today that figure is estimated to be anywhere between Inhofe’s proposed 1.25 million and 2 million per day. Either way, it’s a precipitous decline. But the decline has less to do with the supply of oil and more to do with pressure the U.S. brought to bear on those who purchase Iranian oil. So the question of whether or not the U.S. has the strength to convince the few remaining Iranian oil customers has less to do with availability and more to do with diplomatic ability.

To the extent that this is possible, the United States doesn’t necessarily hold all of the cards.

Because oil is a commodity that is traded globally it is obviously most responsive to price. According to Guilford, “Iran’s customers may well not care about alternative sources that are more expensive than Iran and that is one very likely reason Iran still has customers.” Knowing that Iran’s customers include nations such as China and South Africa, Guilford naturally questions our ability to drive the final nail in Iran’s coffin through sanctions asking, “Does the U.S. have the diplomatic ability to convince Iran’s buyers to pay more in order to isolate Iran?”

Nevertheless, this opens an important dialogue about the nature of sanctions themselves. There is no question that U.S.-lead sanction policy has been extremely effective in isolating Iran and wreaking havoc on its economy. Kate Gould, a lobbyist for Middle East Policy at the Friends Committee on National Legislation, believes that sanctions sometimes have the opposite of the desired effect by serving to “punish civilians, embolden hardliners and foreclose diplomatic options.” She explains her economic position saying, “We’ve seen huge growth in the black market, which is controlled by the Iranian Revolutionary Guard, so Iranians become dependent on going through these channels instead of legal channels.” Gould is quick to point out that despite decades of crippling sanctions against Iraq, “Saddam Hussein never missed a meal.”

Despite the backward logic inherent in Inhofe’s rationale, the bill currently has 11 other cosponsors, all Republican. Most hail from states with large swaths of federal land such as Arizona, Utah, North Dakota, North Carolina, Idaho, Kentucky and Missouri. Not surprisingly, Sen. Inhofe’s top campaign contributors between 2007 and 2012 are from the oil and gas industry, with Koch Industries being his single-largest donor.

Not surprisingly, the idea of manipulating federal regulations regarding drilling rights and ceding these rights to individual states is dangerous territory for the environmental community.

“Senator Inhofe would auction off America’s national parks and public lands to big polluters just so we could mimic Iran’s all-oil energy policy,” blasts Athan Manuel, Director of the Sierra Club’s Lands Protection Program. “We’d be better off embracing job-creating clean energy projects that protect our wild legacy and our future rather than selling off our nation’s crown jewels to the highest bidder.”

Legislative affairs specialists for the Bureau of Land Management (BLM), which controls the largest amount of federally protected land, did not respond to my request for an interview as of press time.

But Gould believes Inhofe’s bill is little more than a Trojan horse for U.S. oil and gas companies to gain access to land that is currently difficult to obtain.

“I think it’s a political stunt to try to disguise getting around environmental laws with sanctions,” she says, adding that sanctioning Iran, “generally has broad bipartisan support.”

Guilford sees it this way as well, but takes more of an academic approach to Inhofe’s proposal. He calls the “goal of increased domestic production a sound idea,” but says the “removal of judicial review and NEPA” would have “opposition that is only exceeded by those trying to stop the Keystone pipeline.”

The chances of Inhofe’s bill making it out of committee and eventually becoming law are slim. To put it into perspective, of the 3,716 Senate bills proposed between 2011 and 2013, only 449 (12 percent) made it to the floor. Of those, only 71 were enacted, or less than 2 percent. The fact that this particular bill was referred to the Senate Committee on Energy and Natural Resources, led by Sen. Ron Wyden (D-OR), means it will almost assuredly die in committee.

So why go through the machinations of compiling the language and amassing support for a bill that is practically dead on arrival?

The best way to view Inhofe’s bill is as a trial balloon—a way to test the effectiveness of certain angles and particular language.

“Perhaps for some the theory would be that U.S. domestic energy security isn’t reason enough to increase current production,” muses Guilford, “so the issue needs to be recast into a foreign policy and security debate about shutting down the remainder of Iranian production.”

Gould puts it more bluntly, saying it’s, “using the Iran bogeyman to advance an extreme agenda on another issue.”

No matter how you slice it, all roads lead back to Big Oil.

The Original Occupy

Americans maintain a somewhat outdated vision of Canada as a nation of tree huggers and environmentalists. To wit, unlike every other industrialized nation in the world, Canada has regressed on climate change initiatives.

Ah, the Great White North. America’s attic. Uncle Sam’s hat. The land of self-deprecation, Tim Hortons donuts and ice fishing. Less notably, it is the land of my birth. Although I became a U.S. citizen in the fifth grade, my Canadian roots were always a source of pride, despite precluding me from ever becoming president.

It has always amazed me how little we Americans think of our sister nation to the north. With the occasional exception of the tabloid coverage that accompanies “Bieber Fever,” the media here are devoid of Canadian news. Perhaps it shouldn’t be surprising there hasn’t been a single article devoted to the indigenous Idle No More movement that has taken hold in Canada. As we witnessed during the early days of Occupy, corporate media are indifferent to dissent unless it’s displayed in a faraway nation by throngs of angry Arabic men. (Congrats again on winning Best Picture, Ben.) Recall that it took weeks for any established media to begin covering Occupy in any meaningful way, and when they finally did, they were largely dismissive of it.

Yet the American news media do spend a good deal of time and ink discussing the relationship between the United States and China. Any news of civil unrest in China is worrisome to corporate America because of our obsession with our mutual economic interests. After all, we are the global champions of human rights so long as we’re not stripped of our fundamental economic right to slave labor.

Missing from this equation is the fact that China is America’s second top trading partner. The first is Canada. Yes, the land that calls its one- and two-dollar coins “loonies” and “toonies” is our number one trading partner on the planet. This is why the lack of coverage of the Idle No More movement is rather astounding given that our economic interests are involved. Not only have Canadian Indians disrupted commerce, they are providing the strongest resistance on the Canadian side to the controversial Keystone XL Pipeline project that would run from Canada through several U.S. states.

In December of 2012, four Canadian activists named Jessica Gordon, Sylvia McAdam, Sheelah McLean and Nina Wilson founded Idle No More to protest the Canadian government’s passage of C-45—a massive omnibus bill containing anti-environmental provisions that might surprise many Americans. Since December, native people across Canada have disrupted major events and even gained international attention from a hunger strike waged by Attawapiskat Chief Theresa Spence. Protestors have closed off roads, blockaded bridges, cut off a road to a De Beers diamond mine and generally raised hell by attacking this bill for moving Canada further away from the path of sustainability.

Americans maintain a somewhat outdated vision of Canada as a nation of tree huggers and environmentalists. To wit, unlike every other industrialized nation in the world, Canada has regressed on climate change initiatives. In January, Global Legislative Organisation (GLOBE), an environmental NGO, issued its third report on the legislative initiatives of 33 nations. Of the 33 countries, which include China and the United States, GLOBE gave 32 of them credit for making progress in enacting and adopting beneficial environmental legislation. The only nation to go backwards? Canada.

John Kane, a native activist and writer who hosts a show on Indian affairs on WWKB-AM in Buffalo, says that Idle No More “is about water, land and sovereignty.” Like many who have observed Canadian politics of late, Kane laments that the dominion has been besieged by a warped conservative agenda, characterizing Canadian Prime Minister Stephen Harper as a “cross between Bush and Cheney.” Relations between the tribes and her majesty’s government, strained as they are, worsened as C-45 set off alarms among tribal leaders almost immediately.

“Harper initiated a suite of legislation,” says Kane, “that would lower the threshold to invade native lands and take streams, rivers, minerals, you name it.” Reading between the lines of a “jobs act” in the bill, Kane says that “job creation” is a euphemism for “the opportunity for other countries like China to participate in mineral extraction.”

Idle No More intersected with other activist movements in February when its members joined the massive rally in Washington, D.C., organized by the Sierra Club and 350.org, to call for President Obama to continue the U.S. obstruction of the Keystone XL Pipeline project. An estimated 30,000 to 40,000 protestors descended upon the National Mall. Michael Brune, head of the Sierra Club, was even arrested at the rally, breaking the organization’s longstanding prohibition against civil disobedience. (The rally was also woefully under-reported by corporate media.) President Obama is clearly important in the process and the U.S. has to clear far more regulatory hurdles to move the Keystone project forward. But the pressure to begin construction is coming more from the Canadian government than anywhere else. The Harper administration, with tremendous support from Canadian petro companies, is hell-bent on exploiting the Alberta tar sands, no matter how environmentally catastrophic the process is.

“This is an area the size of Florida,” says Kane. “The bottom line is Canada can make a lot of money by raping Alberta.”

Idle No More goes beyond the Keystone Pipeline. This week I spoke with Yoni Miller, who is the president of Occupy Wall Street—an intentionally ironic title as Occupy continues to be an amorphous, leaderless and volunteer movement. I reached out to him because the Occupy outlets were among the relatively few areas to obtain any information outside of native publications. Regarding C-45 and the potential toll on native territory, Miller said, “We all know it’s more than that—it’s about the ongoing and existing process of colonialization.” He also believes the tribes have better insight to environmental issues because of “their unique relationship to the land.” 

On Jan. 5 of this year Yoni was invited to Akwesasne, the Mohawk territory that straddles the St. Lawrence River between New York and Ontario. For several hours Iroquois members of Idle No More shut down the Seaway International Bridge between the U.S. and Canada—an experience Miller called “humbling.” When I asked him whether he felt Occupy had fueled any of the confidence in Idle No More, he was reluctant to take anything away from what had been accomplished.

“It may not have been possible without the energy from Occupy,” he said, but then quickly added, “but these people were activists before we were even born.  Indigenous resistance has been going on since 1492. It’s what makes this different.”

Both Occupy and Idle are relatively quiet at the moment. But John Kane and Yoni Miller independently expressed the same sentiment that spring is the season of awakening and that both groups will be on the move. Perhaps they will jolt the mainstream media from their hibernation as well, though I doubt it. These particular bears appear to be idle, forever more. 

 

Illustration by Jon Moreno