Letter to The Advocate: Gulf oil, gas value exaggerated

On February 23, The Advocate published my Letter to the Editor written in response to an article the paper published asking leaders of the anti-deep water drilling moratorium leaders to explain how tax collections were up and unemployment down in the state and in the markets where the moratorium was predicted to spread economic calamity.


Here's the text of the letter:

Advocate Capitol news bureau reporter Michelle Millhollon’s Feb. 15 article on reality not conforming to the hysteria generated by critics of the deep-water drilling moratorium served a valuable purpose beyond forcing those critics to confront the facts that their scare campaign against the moratorium was a hoax perpetrated against the people of this state.

The oil and gas industry, its lobbyists and public officials dependent on the industry for political funding fanned the anti-moratorium hysteria.

The signs of the hoax can be found in the lawsuit filed to overturn the moratorium a month after it was declared.

When 37 companies joined Hornbeck International in the suit against the moratorium, it looked like an industrywide revolt against the moratorium.

The reality was that those 37 companies were owned or controlled by two prominent Louisiana Republicans, Boysie Bollinger and Gary Chouest. Bollinger controlled 21 of the companies, Chouest 16.

Gov. Bobby Jindal directed state Attorney General Buddy Caldwell to file an amicus brief in the case in which Caldwell and his attorneys lied to Judge Martin Feldman.

On page four of that June 20 brief, in his “Statement of the Case” Caldwell declared: “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.”

The only problem with the statement is that it was not true. The Louisiana Workforce Commission weekly reports on new unemployment claims never mentioned the moratorium at any time during the spring and summer of 2010 because thousands of jobs were not lost. In fact, new unemployment claims fell through most of the summer.

Lobbyists such as Don Briggs, of Louisiana Oil and Gas Association, can be forgiven; after all, they are paid to spin stories so as to put their clients in the best light. But those supposedly independent organizations that joined in fanning the fears last summer — Greater New Orleans Inc., the Greater Lafayette Chamber of Commerce, the LSU Center for Energy Studies — have had their credibility seriously damaged.

Public officials who were active players in this hoax — Gov. Bobby Jindal, then-interim Lt. Gov. Scott Angelle and Caldwell — must also be held accountable. Either they were knowing participants in this hoax or their industry patrons duped them.

All of this raises the possibility that we might have all been victims of a larger, longer-running hoax.

In light of the moratorium’s failure to cripple our economy, could it be that the economic importance of the offshore oil and gas industry to the state has been vastly overstated all these years?

Who can we now trust to give us an honest answer on this?

Mike Stagg
independent IT consultant
Lafayette

Exposing a Hoax: New unemployment claims in Louisiana, April 5 to September 3

Opponents of the Obama administration's moratorium on deep water drilling have bemoaned the economic impact of the pause on employment in Louisiana. In June, Governor Bobby Jindal ordered that an amicus brief be filed in the lawsuit against the moratorium. In that brief, the governor's attorneys claimed that thousands of jobs had been lost to the moratorium at that point (less than a month after it was imposed) and that thousands of jobs were threatened by allowing the moratorium to stand.

The feared job losses have not come. And, Louisiana Workforce Commission (LWC) weekly reports show that Jindal's brief was wrong about the thousands of jobs that the governor's attorneys claimed had already been lost due to the moratorium by late June. Did the Governor and his attorneys not know what LWC's weekly reports were showing? Or, was this like his berms project, where (in that case the scientific) evidence was willfully ignored?

On page 4 of the state's 17-page brief, Jindal's attorneys declared:

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)

Every Friday, the LWC issues a news release containing the number of new unemployment filings and puts the number in context: LWC compares that week's number to the previous week; compares the number to the same week of the previous year; provides a four-week moving average; and provides a total number of active unemployment claims in the state and compares that number to the previous year, and a four-week moving average for total claims.

Nowhere in the LWC weekly reports issued between the Department of the Interior's declaration of the moratorium (May 27) and the June 20 court filing by Jindal's attorneys is there any mention of any impact on new unemployment claims filings related to the moratorium. Other issues are mentioned at times, like seasonally increased claims resulting from the end of the school year or a transportation equipment disruption which led to a one-week spike. But, the moratorium is not mentioned in that period of time.

Nor has it been mentioned in any of the LWC weekly reports issued since the Jindal court filing.

In fact, based on the numbers generated by the LWC — not the rhetoric coming from Jindal, top LWC management, and other opponents of the moratorium — the deep water drilling moratorium has been a non-event in terms of Louisiana employment.

Follow the Numbers

What follows is a listing of the numbers in each weekly report issued by LWC, starting on April 5 and running through September 3. This provides information on new unemployment claims in the weeks leading up to the Deepwater Horizon explosion, through the May 28th imposition of the moratorium, through the dates of the court hearings, through the Rally for Economic Survival, up to the most current report issued by LWC.

A link to each announcement is included. The image at the top of this page charts the numbers for new claims and the moving average.

The weekly reports make clear that there has been no surge of job losses attributable to the moratorium. In fact, while other causes for new unemployment claims are mentioned in some reports, the LWC reports are notable for what they do not mention — the deep water drilling moratorium.

It also needs to be noted that since July 2, the number of people collecting unemployment benefits in Louisiana in 2010 has been lower than the number of people collecting benefits in 2009.

If the deep water drilling moratorium was causing unemployment in Louisiana, these are where the numbers would first appear.

LWC April 5 report: New claims — 4,120; four-week average — 3,988 (This report was filed on the Monday after Easter based on numbers from the previous week).

LWC April 9 report: New claims — 3,689; four-week average — 3,908.

LWC April 16 report: New claims — 4,661; four-week average — 4,067.

LWC April 23 report: New claims — 3,989; four-week average — 4,115.

LWC April 30 report: New claims — 4,982; four-week average — 4,330.

LWC May 7 report: New claims — 4,574; four-week average — 4,552.

LWC May 14 report: New claims — 4,480; four-week average — 4,506.

LWC May 21 report: New claims — 4,584; four-week average — 4,655.

LWC May 28 report: New claims — 4,645; four-week average — 4,571.

LWC June 4 report: New claims — 5,166; four-week average — 4,719. (LWC: "The largest over-the-week increases in initial claims were in educational services and health care and social assistance industries as part of the usual summer seasonal pattern.")

LWC June 11 report: New claims — 5,188; four-week average — 4,896. (LWC: "The largest over-the-week increase in initial claims was in the health care and social assistance industry as part of the usual summer seasonal pattern.")

LWC June 18 report: New claims — 4,902; four-week average — 4,975.

LWC June 25 report: New claims — 4,450; four-week average — 4,927.

LWC July 2 report: New claims — 4,456; four-week average — 4,749.

LWC July 9 report: New claims — 4,750; four-week average — 4,640.

LWC July 16 report: New claims — 4,533; four-week average — 4,547.

LWC July 23 report: New claims —5,237; four-week average — 4,744. (LWC: "The largest over-the-week increase in initial claims was due to a temporary shutdown in the transportation equipment industry.")

LWC July 30 report: New claims — 4,395; four-week average — 4,729. (LWC: "The largest over-the-week decrease in initial claims was in the transportation equipment industry.")

LWC August 6 report:  New claims — 4,109; four-week average — 4,569.

LWC August 13 report: New claims — 4,305; four-week average — 4,512.

LWC August 20 report: New claims — 3,987; four-week average — 4,199.

LWC August 27 report: New claims — 4,149; four-week average — 4,138.

LWC September 3 report: New claims — 4,120; four-week average — 4,140.

While the LWC leadership is an active participant in the politically driven, anti-moratorium hysteria, the numbers the commission produces on a weekly basis tell a starkly different story. The numbers don't have a dog in this fight. They are just the numbers; they don't have a political agenda.

The LWC numbers are saying that the impact of the moratorium has been negligible.

Why the Job Loss Claim Matters 

Judge Martin Feldman, who ruled on the request for the injunction two days after Jindal's attorneys filed their brief, signaled in his decision that the economic impact of the moratorium weighed heavily in his ruling.

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 Feldman's ruling PDF).

 The Times-Picayune, which has steadfastly opposed the moratorium, cited the role of the economic impact of the moratorium on the development of Judge Feldman's ruling.

But, what if the job losses were imaginary, or worse, part of a hoax?

There can be no doubt that a total shutdown of deep water drilling would have a significant economic impact on Louisiana. But, that is not what has been proposed, despite the fact that this is precisely how some opponents of the moratorium have tried to frame the issue. What has been proposed is tighter safety, environmental and liability regulation on an industry that has called the shots in the Gulf of Mexico for several decades. The moratorium was used to allow new rules to be set and to determine what had gone wrong on the Deepwater Horizon.

The suit against the moratorium, though, was not brought by the companies that own the leases and are responsible for the drilling activity in the Gulf. That would be the big oil companies.

Instead, the suit was brought by essentially three groups of service companies who have bet their respective banks on deep water drilling. Those are Hornbeck Offshore Services, and companies controlled by the Bollinger and Chouest families.

These companies and those families have gotten rich helping the energy companies exploit the Gulf and Louisiana's offshore waters. In their view, no ecological or environmental cost has ever been too high a price to pay to enable them to continue their work.

Not even the largest oil spill in U.S. history.

What is equally tragic is that most of Louisiana's political class feels exactly the same way about the price the state pays for the few thousand jobs, the pittance of oil revenue (compared to, say, third world countries), and political contributions through which the industry controls the state.

The Jindal Tragedy

No politician exemplifies this craven attitude more so than Bobby Jindal. Confronted with the ruin of Louisiana's seafood industry, Jindal sided with the Bollingers, the Chouests, the Louisiana Oil and Gas Association and others in the 'no price is too high' crowd.

There was a moment after the Deepwater Horizon explosion where Jindal nearly appeared to appreciate the importance of Louisiana's coast. It proved fleeting. When he began prattling publicly for permits to build berms, it was nearly over. Any and all thoughts that Jindal cared about Louisiana's environment (other than as a backdrop for press conferences) were obliterated on June 20 when his attorneys added his voice to those of his patrons' voices in challenging the moratorium. Jindal was back 'home.'

The irony is that this so-called reformed governor is more deeply committed to protecting the interests that have dominated this state for decades than any governor in modern history, including Edwin Edwards. Edwards first came to office in the 1970s while oil and gas were still booming and jobs in the industry were plentiful.

Jindal is governor at a time when the industry has pulled its best jobs out of the state, leaving a few thousand drilling jobs. The refineries are still here. Today, the oil and gas industry in Louisiana has the distinct look and feel of a colonial power. A few tokens are thrown to the locals in the form of jobs and money for politicians, but the wealth is shipped out of state.

President Obama recognized that the interests of Louisiana and the interests of the industry are separate and distinct. He chose the interests of the state in allowing the Department of the Interior to proceed with the moratorium.

Jindal, who dreams of replacing Obama in the White House one day, either does not grasp that divergence, or he does get it but does not have the courage to act on that knowledge. Either way, it's a pretty damning assessment of the governor who is supposed to be the smartest guy in the room.

Yeah, the Frickin' Moratorium is Killin' Us — NOT!

The "End Is Near Rally" in Lafayette a week ago was a veritable doom and gloom fest, complete with charts and predictions from economists that the Obama administration's moratorium on deep water drilling means the end of Louisiana, economically speaking.

The moratorium was declared in late May and has been slugged out in the courts since then, but it has been in effect now for two months. The impact of the forced shutdown of 28 deep water drilling rigs in the Gulf of Mexico should be reverberating through Louisiana's economy by now.

The End should be at our door, kicking and beating to get in.

Well, a funny thing has happened on the road to Armageddon — nothing.

The latest numbers released this week from various sources show that Louisiana's oil and gas industry is doing quite well, thank you, and the overall employment in the state is improving. Hell, even businesses along the coast supposedly headed for extinction are doing pretty well.

Two months into "The End of the World", the drilling rig count in Louisiana this past week is up three from the week before, to 187. That figure can be found here. It is worth noting that the Louisiana Oil and Gas Association was the prime mover behind the "End is Near Rally" in Lafayette. The videos are still on their website and will stay there, I'm quite certain, until after the fall elections, which is what this propaganda campaign is all about.

Then, the Louisiana Workforce Commission (which at the Rally, included gasoline station workers on its list of industries directly affected by the moratorium) on Friday released its latest unemployment claims numbers. Lo and behold, new claims for unemployment in Louisiana fell last week, two months into the moratorium.

Drilling activity up. New unemployment claims down.

If the moratorium is not, in fact, killing Louisiana, what does that say of the claims made by LOGA, Governor Jindal, Scott Angelle, and others at the rally about the dire consequences resulting from this attempt to prevent further destruction of Louisiana's wetlands and the Gulf of Mexico?

The event was orchestrated. The numbers were massaged. The media's attention was grabbed. And people who trusted these people were scared witless.

All in a days work for political operatives seeking to divert attention from the ecological, cultural and economic damage caused by an industry is still trying to hide the true nature of their operations here from the people they've grown accustomed to abusing.

But, the slow train of the truth is catching up to them. The attempt to convince the people of this state that the perpetrators of the crime in the Gulf are somehow the victims is failing. The industry and their front men are being exposed as the charlatans that they are.

Fear-Fanned Loathing In Lafayette

Wednesday, July 21, 2010, will go down as the high-water mark of in-state efforts to end the Gulf of Mexico deep water drilling moratorium imposed by the Obama administration in the wake of the Deepwater Horizon explosion and subsequent blowout.

About 11,000 people turned out at the Lafayette Cajundome for the "Rally for Economic Survival." Getting that many people to turnout for anything other than a sporting event in Louisiana takes some doing. But, the 'doing' that got them there reveals that opponents of the moratorium are engaged in blatant and obvious fear mongering, and have frittered away what little credibility they had on the issue with the lies and distortions included in statements made leading up to and during the event.

Make no mistake about it, what happened in Lafayette on Wednesday was an anti-Obama political rally organized by the oil and gas industry and fronted by Governor Bobby Jindal and his hand-picked interim Lieutenant Governor, Scott Angelle. Angelle was among friends, having run the Department of Natural Resources until Jindal elevated him this spring. Republican Lieutenant Governor candidate Sammy Kershaw provided entertainment (not sure if he just sang or if he read from his federal tax liens, too).

There was steady buildup leading up to the event. In Lafayette, the Greater Lafayette Chamber of Commerce lead the drive to build attendance. Ultimately, all of Lafayette's mainstream media fell in line, becoming virtual (if not outright) partners in the promotion of the event. The Daily Advertiser ran a front page editorial calling for an end of the moratorium on the day of the event. ABC affiliate KATC's station manager delivered an on-air editorial calling for an end to the moratorium. Radio stations did live remotes from the event.

Lies, Damned Lies and Statistics

This buildup was based, in fact, on a carefully orchestrated distortion of what the moratorium is, then building a statistical house of cards atop those distortions. The Louisiana Oil and Gas Association (LOGA), and its president Don Briggs, were prime movers in the effort to ramp up the climate of economic crisis that helped produce the turnout in Lafayette. Briggs is a long-time player in the Lafayette business community, serving on the board of the Lafayette Chamber. LOGA and Briggs have long-standing ties with the Lafayette Economic Development Authority (LEDA) and the LSU Center for Energy Studies, both of which produced economic reports painting horrific stories of the potential impact of a six-month moratorium.

The advisory council for the LSU Center for Energy Studies gives the distinct impression that this is an advocacy group hiding inside academia. This must be where the industry gathers when Lafayette's Petroleum Club is booked. It is not surprising that the rally included a presentation from the Center and the picture painted was bleak.

Do you think they would have been allowed to make a presentation that said anything different? No. Only the finest store-bought statistics were allowed at this privately-funded propaganda event.

The premise of all the pre-event propaganda and the presentations made during the rally is that the Obama administration has shutdown all drilling in the Gulf of Mexico — not just deep water drilling — and that the moratorium will become permanent.  This might be good short-term politics, but it is not supported by the facts.

And while companies like Diamond Drilling have made a big show about moving two rigs out of the Gulf of Mexico to other drilling locales, the fact is that decisions on when and where to drill in permitted waters are made by the big oil companies — not by the drilling companies, not by the service companies, and not by lobbying groups.

What are the big oil companies thinking? They plan to resume drilling in the Gulf of Mexico once the moratorium is over and new rules are promulgated. That announcement was made on the same day as the rally, but strangely did not get much press coverage in south Louisiana.

Governor Bobby Jindal has been milking the BP Gulf Gusher for all the political gain he can get from it, having spent almost three months on the coast chasing down cameras and microphones for opportunities to criticize the federal response to the industry-caused disaster. With a presentation made at the rally, Jindal has apparently put the Louisiana Workforce Commission to work in advancing his political agenda.

The thrust of all of this is that economic ruin will result from the moratorium. To paint this picture, the impact of the oil and gas industry must be inflated and the discrete segments within the industry must be ignored.

Enter the Louisiana Workforce Commission. In a presentation on the rally website (see graphic), the commission includes people who work at "Gasoline Stations" to ramp up the employment numbers of the industry in the state. According to the June employment report issued by the LWC, this adds 18,600 workers to the "industry" payrolls. That means convenience store cashiers and clerks are considered part of the energy industry.

It is also worth noting that, according to the LCW's official job statistics for June (page 8 in the PDF), those 18,600 gasoline station workers out number all of the people engaged in oil and gas drilling and extraction in Louisiana. That is no quirk due to the moratorium. This has been the case in every report this year.

Are gasoline station workers affected by the moratorium? No. But, it heightens the purported importance of the industry of the state's economy and, thus, fits nicely within propaganda objectives of the conference organizers.

Off The Deep End

People say things in unscripted moments that they later sometimes regret. So, in an attempt to provide opponents of the moratorium the kind of fairness they will not provide supporters of the moratorium, this segment will focus on the prepared written statements by Rally organizers which The Daily Advertiser published on the morning of the event.

Reading these, it becomes clear that truth was among the first casualties in the ramp up for the rally.  These otherwise staid community and business leaders have been scared witless by what they have been told about the economic impact of the deep water drilling moratorium. They are spouting gibberish based on lies they've been sold.

The statement by Don Briggs is a clear example of how the facts are conflated and mixed to create a potential outcome that has no basis in reality. Here are the first two paragraphs:

Louisiana's oil and gas industry has a more than $70 billion annual impact. The industry supports more than 15 percent of household income in the state — $12.7 billion annually.

The continuing moratorium on offshore drilling affects many more people than the 320,000 working jobs in Louisiana supported by the oil and gas industry. As a result, it also affects far more than the 58,000 Louisianans working in extraction, refining and pipeline jobs.

Reading the first paragraph, one is left with the inescapable conclusion that the deep water drilling moratorium is going to wipe out the oil and gas industry in Louisiana. Someone apparently forgot to tell the industry. According to a chart on LOGA's website, there were 184 active drilling rigs in Louisiana last week. This is almost two months into the moratorium. Baker Hughes, Inc., which provides its own count, said there was more drilling activity in Louisiana last week than there was a month ago.

If anyone knows this, it is Mr. Briggs. After all, it is his job and that of his organization to know the Louisiana oil and gas industry. Drilling activity has surged in the Haynesville Trend area of northwest Louisiana. Yet, Mr. Briggs insists on pretending that the deep water drilling moratorium threatens the entire industry in the state.

This fundamental dishonesty undermines legitimate concerns about the economic impact of the moratorium. Yet, this failure to be content with the facts is rampant in the public statements and presentations given in support of the rally and against the moratorium.

Then there is the matter of the jobs. Briggs' second paragraph would lead one to believe that the moratorium on deep water drilling threatens to wipe out, at the very least, all of the jobs related to "extraction, refining and pipeline" work. The Louisiana Workforce Commission's Monthly Employment Bulletin does not break out jobs according to the categories Briggs uses, meaning there is no ready way to verify his numbers other than, you guessed it, relying on the estimates of industry groups like LOGA— a sponsor of the rally and among the leading industry opponents of the moratorium.

Another moratorium opponent given space in The Daily Advertiser is Ovide N. Mercure Jr., Controller of Frederick's Machine and Tool.

Mr. Mercure writes:

Our accidents are tragic and our mistakes are costly, so we work hard to ensure they don't happen. The industry is one of the most heavily regulated in existence. Penalizing an entire industry for the failures of a single company will be catastrophic for your families and neighbors.

Actually, the deep water drilling industry was among the least regulated deep water areas of operation in the world. Operating under rules made during the Bush/Cheney years, the industry wrote their own rules in the Gulf of Mexico. In fact, many of the safety rules the industry said it did not need to use in the Gulf of Mexico are safety rules they are required to meet in deep water drilling operations in the North Sea and other locales.

We heard two things repeatedly throughout the 85 days that the well gushed uncontrollably into the Gulf: 1) the best minds in the industry were helping BP try to deal with the blowout; and, 2) the various approaches used to try to cap the well had been used successfully in shallow waters but "never before at this depth."

Rob Guidry, President and CEO of the Greater Lafayette Chamber of Commerce, claims the win, though, for most outlandish statement when he wrote in The Daily Advertiser, the following:

President Barack Obama has placed economic sanctions on Louisiana, and eventually the United States, beyond those imposed on Iran!

Obama's moratorium on oil and gas drilling is already negatively impacting the jobs of our families and friends. Tens of thousands more jobs will be lost on a daily basis as the irrational moratorium continues.

A temporary moratorium on deep water drilling is worse than U.S. sanctions on Iran? Proof please! Have assets been frozen? Have accounts been seized? Have companies been banned from doing business in Louisiana?

Mr. Guidry is a good man, but he's got a head full of bad information.

Some of those ideas might be coming from Mr. Briggs who sits on the Lafayette Chamber's Board of Directors. Or they might have come from David H. Welch, the President and CEO of Stone Energy, and chairman of the Chamber's Board of Directors. According to Forbes magazine, Mr. Welch is a man with deep ties to deep water drilling, BP. He's also got extensive ties with the energy industry as a whole, serving as a director of the National Ocean Industries Association. It's just a simple twist of fate that this year the Lafayette Chamber would be headed by a man with such a deep history with BP and its various North American operations.

Return to Business As Usual ASAP!

What the rally and the push to end the moratorium are about is an attempt by the oil field service industry and the political leaders dependent upon them for campaign financing to get back to business as usual in the Gulf of Mexico just as quickly as possible. Interestingly, organizers did not meet their goal of getting 15,000 people to attend. Some local television stations were predicting 20,000 attendees with spillover being shuffled into the Cajundome Convention Center next door. Didn't happen.

That means getting back to destroying Louisiana's coast at the alarming, but less conspicuous rate of a football field every 38 minutes. The people who are making the push are careful to preface their call with the obligatory nods of acknowledgment to the 11 workers lost in the original explosion on the Deepwater Horizon and the damage all of the resulting gushed oil is causing to the coast, to fisheries, to fishing families, etc.

But, really, what the push is about is saying that their right to wreck the Gulf and our coast trumps the interests of all others. Nothing is more sacred than their right to make money off what is essentially a colonial extractive operation where workers are expendable and the comparable pittance in royalty money and taxes directed to property owners and the state is part of the cost of making people in other parts of the world wealthy.

Oil and natural gas are essential parts of our economy. But, the BP Gulf Gusher is a defining moment that demands that we change the way we live — the way we power our homes, our vehicles, and our way of life. There is no such thing as cheap oil any more. What happened to BP can happen to other companies drilling in such deep water where margins for error are so tight and unforgiving.

The Rally for Economic Survival at the Cajundome was the last gasp of an old order trying with all its might — by hook or by crook; with conflated facts and distorted data — to cling to an era that has ended. The world will never be the same as it was before the explosion on the Deepwater Horizon.

What has happened since then in terms of economic and ecological damage proves that we cannot — as a state, as a nation, as people who believe we are bound to be responsible stewards of our state and our environment — allow anything approaching a return to business as usual.

As was just demonstrated by the killing of climate control legislation at the federal level, the energy industry will fight policy changes fiercely. But, we can be stronger. Whatever policy they can buy or block in Washington and Baton Rouge, we can circumvent by making changes in our own lives. Getting solar panels. Reducing energy consumption. Getting more efficient vehicles. Riding bikes. Pushing for high-speed rail.

Change has arrived in Louisiana and that the BP Gulf Gusher brought it. The politicians don't get it yet.

But, that's the way it always is.