Sunday, August 29, 2010

HOAX!: Moratorium job loss projections deceived a Judge and the Public



Three months into the the U.S. Department of the Interior's moratorium on deep water drilling and it is abundantly clear that the doom and gloom prophesied by opponents of the moratorium have not materialized.

The Louisiana Workforce Commission's (LWC) latest report shows record employment in the state in July, with falling unemployment in every metro market, including the Houma and Lafayette markets — the areas that opponents of the moratorium said would be devastated by the pause in deep water drilling.

The Louisiana Oil and Gas Association (LOGA) shows drilling rig activity holding steady in the range of about 185 rigs.

The Lafayette Economic Development Authority (LEDA) web site offers users the opportunity to examine drilling rig counts over time. In April of this year, LEDA's site shows that there were 75 more drilling rigs active in Louisiana than there were in the same month last year (April is the most recent month available in the LEDA site).

Even the Associate Executive Director for the LSU Center for Energy Studies (LSU CES), David Dismukes, has had to climb down from his predictions of gloom and doom and admit that the job losses the center predicted have not materialized.

Interestingly, all of the above parties were players in the drum beat leading up to the Rally for Economic Survival that opponents of the moratorium organized in Lafayette in July. LOGA was the prime organizer of the event. Presentations by the Louisiana Workforce Commission (PDF) and the LSU Center for Energy Studies (PDF) drove home the supposed dire consequences of the moratorium.

But, at the same time the Louisiana Workforce Commission study was being bandied about on stage in Lafayette, the weekly employment updates from the Commission were reporting falling numbers of new unemployment claims. This trend has continued all summer.

The LWC presentation at the rally was propaganda, pure and simple.

In the three months since it was declared, it has become clear that the moratorium has not had anything remotely near the devastating impact predicted by the oil and gas industry, its apologists and paid hangers on. It has also become clear that the LWC and the LSU CES played key roles in what amounts to a hoax that has been perpetrated against a federal court and the public regarding the moratorium on deep water drilling and its impact.

How do we know this? Steady drilling rig counts. Record employment. Low claims for new unemployment. And court documents.

Confecting A Hoax

To most outside observers, the worst oil spill in U.S. history justified a pause in deep water drilling activity until the causes of the disaster could be determined and new rules promulgated to govern the industry going forward. This is precisely the intent behind the deep water drilling moratorium issued by the Department of the Interior Secretary Ken Salazar on May 28.

What Salazar and the Obama administration did not immediately appreciate is that the moratorium threatened the web of offshore service companies in Lafourche and Terrebonne parishes. Those companies, especially those headed by Gary Chouest and Donald Bollinger, have become the financial muscle behind the rise of the Republican Party in Louisiana.

In fact, when Hornbeck Offshore filed suit against the moratorium, they were joined by 37 companies controlled by Chouest (16) and Bollinger (21). The fight against the moratorium in Louisiana was political from day one. The Office of the Governor filed an amicus brief on June 20 with the court in support of Hornbeck, Chouest and Bollinger. Bobby Jindal has been the beneficiary of the political largess of Chouest and Bollinger and has displayed a certain extravagant gratitude using public dollars — particularly to Chouest.

The anti-moratorium hoax appeared fully formed in the Jindal administration's amicus brief (PDF) on the case. In that filing, the state-endorsed purveyors of gloom and doom for the anti-moratorium forces were in place — the LSU CES and the LWC.

The state's brief points first to LSU CES as the source of its concerns about job losses. In the brief, the State of Louisiana, citing the center, claimed:
The impact of the moratorium is neither speculative nor remote. According to the LSU Center for Energy Studies, within only five months the moratorium will result in the direct layoff of 3,339 Louisiana workers and the loss of an additional 7,656 jobs indirectly in the State. (page 3)
The brief then puts the Louisiana Workforce Commission to work on behalf of the anti-moratorium effort.
The Louisiana Workforce Commission (LWC) administers Louisiana's unemployment compensation system, its workers' compensation program and its workforce programs, including job training and work search services. Because of the moratorium, many thousands of Louisiana workers have lost their employment and many more are at risk of losing it in the near future. All of the programs administered by LWC have been and will be heavily impacted by its effects. (Emphasis added)
There's only one problem with these claims. They are false.

According to a news release issued by the LWC on June 18, new unemployment claims were falling not rising, as would have been the case if the moratorium were having the impact declared in the state's court filing. Here's the lead paragraph of that release:
Initial claims for unemployment insurance (UI) for the week ending June 12, 2010, decreased to 4,902 from the previous week’s total of 5,188. Initial claims were below the comparable week ending June 13, 2009, figure of 5,139.
The LWC release from the following week also contradicted the assertions in the state's court filing:
Initial claims for unemployment insurance (UI) for the week ending June 19, 2010, decreased to 4,450 from the previous week’s total of 4,902. Initial claims were below the comparable week ending June 20, 2009, figure of 6,113.

The four-week moving average of initial claims decreased to 4,927 from the previous week’s average of 4,975.
So, the state — through the Office of the Governor as represented by the State Attorney General — was making claims in federal court that it should have known were false.

Those false claims served as a significant reason that Judge Martin Feldman ruled against the moratorium:
The effect on employment, jobs, loss of domestic energy supplies caused by the moratorium as the plaintiffs (and other suppliers,  and the rigs themselves) lose business, and the movement of rigs to other sites around the world will clearly ripple throughout the economy in this region. (Page 22 of the ruling PDF.)
The argument that played so well with Judge Feldman would prove equally effective when it went public in support of the anti-moratorium rally in Lafayette.

Creature Comforts

The LSU Center for Energy Studies (LSU CES) is, to put it mildly, a creature of the oil and gas industry. The Center's has an Advisory Council that "provides research direction and guidance and frequently assists the Center in securing finances." The phrase 'bought and paid for' comes to mind.

The Advisory Council is comprised of a who's who of Louisiana energy company executives, including officers from the Louisiana Oil and Gas Association and the Louisiana Mid Continent Oil and Gas Association, the Louisiana Chemical Association, the Louisiana Association of Business and Industry, and interim Lt. Governor Scott Angelle.

Would it be a stretch to imagine that someone on the Advisory Council suggested that the Center take the lead on producing the worst case scenarios that would serve as the basis for the anti-moratorium fight in Louisiana? Would it then be advantageous for the various members of the Advisory Council to begin parroting those 'findings' through their various communications channels to their members and the media?

That certainly appears to be what took place.

The moratorium was issued on May 28. Statistics from LSU CES were cited in the state's court filings on June 20. Those figures became a staple of the anti-moratorium propaganda thereafter.

Political Workforce

The Louisiana Workforce Commission offers a stark example of how the Jindal administration has politicized the upper level management of some state agencies. The proof is in the data that continues to flow from the LWC and how that data has regularly contradicted the claims being made publicly by the LWC's leadership as part of the heavily orchestrated political opposition to the deep water drilling moratorium.

The clearest public display of how Jindal has politicized the LWC can be found on slide two of the commission's presentation used at the Rally for Economic Survival. That slide ("Industries Directly Impacted by Moratorium") includes the questionable use of two employment categories — "Chemical and petroleum merchant wholesalers: includes bulk stations and terminals" and "Gasoline stations."

An argument could be made that there might be some slowdown in business at bulk stations and terminals if, say, the oil and gas industry was completely shut down (which is clearly not the case). But, under what set of circumstances could the moratorium possibly affect people working at gasoline stations?

The only reason these two categories were included in the presentation were to enable moratorium opponents to inflate the size and importance of the oil and gas industry in Louisiana. Including the gasoline station workers (does that include cashiers at, say, Exxon, Shell, Chevron, Valero stations?) ads 18,000 workers to the rolls of the 'potentially' affected.

This distortion was essential to the creation of a climate of fear needed to, at the very least, get 11,000 people to turn out for a political rally against the moratorium.

Follow the Money

The first threat of layoffs resulting from the moratorium was made by Edison Chouest Offshore at Port Fourchon on June 4. The first rally against the moratorium that Jindal attended took place in an Edison Chouest facility at Port Fourchon on June 10. The second event took place at the Gulf Island Fabricators facility in Houma on June 24. Gulf Island Fabricators just happens to be the company building Chouest's LaShip facility that Jindal has supported with state funds.

Jindal was the featured speaker at the Rally for Economic Survival. That was no accident considering the role he and his office have played in orchestrating the politically driven response to the moratorium.

Gary Chouest, though, has maintained an active role in the campaign through the dispersing of campaign contributions to Republican members of Louisiana's congressional delegation.

Contributions from individuals associated with Edison Chouest Offshore are make that firm the largest single contributor to Sixth District Congressman Bill Cassidy, according to the campaign finance website OpenSecrets. Cassidy of Baton Rouge called the deep water drilling moratorium, "a jobs moratorium."

Chouest Offshore-related contributions to An "Joseph" Cao rank that firm at the top of the freshman Republican's contribution list.

Chouest Offshore-related contributions ranked second among all contributors to Senator David Vitter's current campaign, again according to OpenSecrets.

The Chouest/Vitter connection should not be a surprise considering the fact that Chouest pumped $100,000 in to the Vitter-founded Louisiana Committee for a Republican Majority in 2006.

Other than Jindal, no Louisiana politician has benefited more from the anti-moratorium furor than Vitter. It provided him a forum to discuss something other than his own sordid past and/or those of his staffers. In leading the fight against the moratorium at the federal level, Vitter spared no effort to ramp up the potential damage (Cassidy cites Vitter as the source for the claim of 150,000 families affected by the moratorium while Vitter cited Cassidy in radio spots.) nor to demonize President Obama.

Donald Bollinger has also been active on the campaign contributions front, but less so than Chouest.

The Fig Leaf

Interim Lt. Governor Scott Angelle has provided cover for the deeply partisan nature of the anti-moratorium effort. Angelle is a Democrat by party registration but, like Jindal, is most interested in pursuing his own ambition.

Angelle was appointed secretary of the Department of Natural Resources by Governor Kathleen Blanco in 2004 and was reappointed by Jindal in 2008. In addition to heading that department, Angelle has acted as a legislative liaison for Jindal in each session of the Legislature. He's also raised money for Jindal, having arranged an over night hunt for thus far unnamed donors earlier this year at a hunting lodge owned by a prominent Louisiana Democrat.

Because this is not an election year, the identity of Angelle's guests at the hunt will not be known until Jindal's campaign files it annual report on this year's activities after the first of the year. Angelle was still DNR secretary at the time. If the campaign party included members of the industries supposedly regulated by DNR, it will raise ethical flags. Of course, the Ethics Governor™ has so screwed up the state's ethics code when it comes to campaign finance, it is unlikely that anything could happen to Angelle even if it were proven that he took Tony Hayward with him out into the marshes of Cameron Parish.

Angelle's stint at DNR earned him some good friends in the oil and gas industry. Some of that friendship was the product of the St. Martin Parish native's winning personality. Some of it might have been related to the haphazard way his department tracked royalty payments the industry owed the state.

Nonetheless, Angelle has been an effective public face on the anti-moratorium farce. He has attack and mocked President Obama at every turn. He wowed the crowd at the anti-moratorium rally in Lafayette with a stump speech he'd been perfecting for at least a month before that event. He also led the effort to get thousands of people to sign a petition calling for the end of the moratorium.

All of that effort was made possible by the fear generated by the claims of the damage that the moratorium would inflict on Louisiana — none of which has come true.

The Circular Citing Squad

Angelle inadvertently revealed the self-fulfilling nature of the gloom and doomers when he testified on August 17 before a meeting of the U.S. Senate Committee on Small Business and Entrepreneurship conducted by Senator Mary Landrieu. At that meeting in Lafayette, in prepared remarks Angelle cited numerous anecdotes from businesses about the supposed impact of the moratorium.

He cited a litany of businesses reporting sales being down in anticipation of the impact of the moratorium. Since the moratorium has had little or no economic impact in terms of jobs or drilling activity, Angelle was really testifying about the effectiveness of the hoax that he, Jindal and the industry have inflicted on the people of south Louisiana.

None of their predictions have come true. Yet, that has not stopped the grandstanding and political opportunism, nor the spreading of their particular brand of fear.

Consider this fact. The disgraced financier Alan Stanford allegedly scammed $8 billion from people through a Ponzi scheme involving IRAs. An estimated $2 billion of those losses came out of Louisiana, primarily in Lafayette and Baton Rouge. Those losses became known last year. The impact is hitting home this year.

The Stanford scam is hitting Louisiana harder than the moratorium. Yet, there is no Republican political gain to be scored by going after a criminal whose activity took place under the noses of the Bush/Cheney edition of the asleep at the switch Securities Exchange Commission.

The politics of fear is something about which Republicans are well-versed on the national level. The anti-moratorium hoax is a clear display of its power in state politics. As the deception becomes apparent, will those who perpetrated this hoax — Jindal, LOGA, Angelle and their allies — pay a price for it?

Louisiana faces some very tough choices. As the impact of the moratorium proves minimal, will the leaders who ran that fear campaign have the reservoirs of credibility to lead us through these challenges? Or, will they resort to gimmickry, trickery and deception — as  they have done with the moratorium — to accomplish political objectives that leave us diminished as a state?

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