Beam me to Planet Gore !
Posted on 11/09/2008 1:24:27 PM PST by thinkingIsPresuppositional
ConocoPhillips' Push for Global Warming Regulations Could Lead to the Next Government Takeover
by Tom Borelli
Bad decisions by CEOs are at the core of our economic crisis.
Throwing caution to the wind, chief executives in the financial industry took enormous risks by placing huge bets on financial instruments based on mortgages. Abandoning common sense and basic economic principles, CEOs failed to execute proper risk management by contemplating the consequences of a downturn in the housing market.
The harm caused by incompetent CEOs extends well beyond shareholders – it also threatens the conservative principles of limited government and free markets.
Failures of this magnitude frequently result in calls for increased government control. This crisis has led to a huge expansion of government through the Emergency Economic Stabilization Act of 2008, which allows the Secretary of Treasury to purchase up to $ 700 billion of distressed assets from banks.
Buying “toxic securities” is only part of the plan: the federal government recently announced it will use part of the bailout booty to take equity positions in the nation’s banks.
CEO mismanagement is not restricted to the banking industry. CEO response to global warming alarmism provides ample examples of poor judgment, naive assumptions and disregard for their fiduciary responsibility to shareholders.
ConocoPhillips, for example, the third-largest integrated energy company and second-largest refiner in the United States, is allowing its global warming policy to put its business at risk.
Because its business is fossil fuels – exploring, refining and transporting oil and natural gas to supply the energy needs of society – it is surprising that ConocoPhillips is participating in the United States Climate Action Partnership (USCAP) – a coalition of companies and environmental activists lobbying for cap-and-trade legislation to address global warming.
The profit motive for ConocoPhillips under cap-and-trade is murky at best, since the goal of the policy is to reduce the use of fossil fuels. The company’s global warming stance raises more questions, as the company is increasing its “carbon liability” by making investments in Canadian oil sands – a source of oil that generates three times as much carbon dioxide through its production than conventional oil.
In announcing a partnership with EnCana Corporation, a Canadian energy company, ConocoPhillips CEO James Mulva said, “The upstream partnership also will provide a secure and stable source of oil supplies that can be refined into gasoline, diesel and other petroleum products needed by U.S. consumers, as well as a significant market for Canada’s abundant oil sands resources.” He added, “This venture builds on our current and planned heavy-oil expansion work at both Wood River and Borger, and provides a stable, long-term supply to our U.S. refineries.”
Mulva’s oil sands strategy is a sound business strategy since it provides a stable and secure oil source from North America. Yet this strategy conflicts with his global warming policy and is meeting strong resistance from Mulva’s USCAP coalition “partners” at the Natural Resources Defense Council (NRDC). NRDC refers to oil sands as “dirty fuels” and, more important, it is putting its words to action.
In August, NRDC joined a lawsuit against the U.S. State Department to block a pipeline that would transport oil derived from oil sands to the U.S. The organization claims Secretary of State Condoleezza Rice failed to contemplate the health and environmental impacts of oil sands in the U.S. before the Department issued a permit.
NRDC also blocked the expansion of a refinery owned by ConocoPhillips and EnCana Corporation in Roxana, Illinois, by successfully challenging a permit from the Environmental Protection Agency. Citing the expansion as an environmental risk, an NRDC attorney said "It is going to cause vast increases in CO2 emissions; it's a huge issue that you have to confront."
Clearly, global warming alarmism is harming ConocoPhillips business, but Mulva – apparently taking a page from the banking CEOs’ playbook – seems disconnected from reality.
With the mortgage crisis fresh in our minds, we can’t simply assume Mulva understands or even cares about the consequences of his actions. Confusing the motivations of adversaries like NRDC and ignoring the consequences of feel-good policies are major signs that shareholders should be concerned.
While Mulva is fiddling, the board of directors is allowing ConocoPhillips’ investment in oil sands to burn. Frequently, corporate boards just rubber-stamp CEO decisions. Even worse, some boards are infiltrated with members who place a personal social agenda over shareholder interests. In fact, former EPA Administrator William K. Reilly is a board member for ConocoPhillips. He also serves as a director for DuPont.
Recent events clearly show that wayward CEOs threaten shareholders and free markets. If Mulva has his way, we will be paying significantly higher energy prices and our economy will be burdened under the weight of a massive regulatory regime to control fossil fuel emissions.
Energy companies beware. If the government can take over banks because they failed to execute their primary responsibility to lend money, it could also take over oil and utility companies if they fail to produce reliable and affordable energy.
Thomas J. Borelli, PhD. is the editor of FreeEnterpriser.com, a shareholder activist and a senior fellow at the National Center for Public Policy Research. The opinions expressed are his own.
First, they make it unaffordable with regulatory taxation, then they take it over in the name of fairness. Sounds like a gangster game plan. From the new "thugocracy".
Likely more boards of more companies than I'd dare imagine. A snapshot of our power elite. Pray for the country.
Interesting article.
Hey, it’s a good idea. Just think of it, the gov’t could take over Exxon and get all their excessive profits.
And how will these refineries be transferred to the government? By simple outright seizure w/o compensation? Isn’t there an amendment in the Constitution to prevent that? After Kelo v. New London that amendment wil likely be considered moot in a few years by the new administration.
The disturbing thing is the likelyhood of these CEO’s to roll over when the government grabs, if it dares. After all, it’s the stockholders’ money, not the CEO’s. With one exception. There’s a refinery near St. Paul that is privately owned. And the owner has read Atlas Shrugged.
What would Charles Koch do?
Your point is excellent, but it is worse than that. Democrats in Congress, via the CRA, FORCED lending institutions to make loans that the institutions knew would never be repaid. In order to try to protect themselves from defaults, the industry created various strategies, including packaged mortgage investments and credit default swaps.
Did some people in the industry know that the packaged investments and swaps were a house of cards? I suspect that most of them didn't actually understand the risk.
The problem is one of leadership. Congress created the whole problem with their scheming and scamming. The government is the role model for the private sector. Clinton's budgetary shenanigans begat Enron. Congress’ mortgage scam begat the housing bubble and subsequent economic collapse.
It is disingenuous to blame CEO’s for being incompetent without blaming Democrats for being crooked.
Maxine Waters has already said the government was going to take over the oil companies.
Maybe it’s time Atlas finally shrugged. Then, all of the Obamessiah’s plans go down the toilet with his faithful flock. But, that’s just a dream.
Carbon footprint standard for all products drawn up by Government
By Louise Gray, Environment Correspondent
Last Updated: 3:01pm GMT 28/10/2008
The world’s first standard to measure the carbon footprint of every product in our shops will be launched tomorrow by the Government in an effort to end the continuing confusion over “eco-labels”.
Plan for carbon footprint on every label
Organic air-freight food to be stripped of status
At the moment there are more than 300 “eco-labels” on the market, from the organic standard to food miles, all of which are confusing and exasperating to customers.
The label will be on all products in the same way recycling information is
In an effort to simplify green labelling schemes and give the consumer the confidence to choose food which is genuinely environmentally friendly, the Carbon Trust, Defra and the British Standards Institute will this week launch the world’s first standard for measuring a product’s carbon footprint.
The document, known as a Publicly Available Specification or PAS 2050, will tell producers how to calculate a product’s carbon output, from the raw materials, through manufacturing and consumption, to the waste produced.
It will enable companies to estimate the amount of CO2 in grams used in the life of a product and therefore its potential impact on global warming.
The results will be displayed as a carbon footprint label, much like the number of calories, is currently shown on food.
Although it is a voluntary scheme and it is up to individual companies how they display the labels, big corporations like Walkers Crisps, Boots, Innocent and Tesco have already signed up. Coca Cola, Cadbury, Co-op and a range of smaller companies are looking into the scheme.
Eventually it is expected the label will be on all products in the same way as nutritional content is widely displayed.
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Environmental groups praised the scheme for ending confusion and giving consumers who want to cut their carbon footprint a reliable label to make informed choices.
But consumer groups just said it was one more label to worry about and that it failed to take into account the environmental impact of products in other ways such as through chemical fertilisers.
Dr Graham Sinden, a technical manager at the Carbon Trust who helped to develop the PAS 2050, said that it would help producers to reduce their carbon footprint through understanding the carbon used in each stage of the product.
He said: “The value of this project is that when people look at these numbers there is some confidence there that a process was followed and the result is not just a random choice but a real reflection of the carbon impact of this product.”
But Lucy Yates, principal policy advocate at Consumer Focus, the Government’s own consumer watchdog, said companies should be careful about “overburdening” consumers with information.
What industry has government ever taken over that has been improved?
Anwser: NONE
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