The relationship may seem obscure between the Occupy Wall Street movement and the decision in November by the US State Department to delay approval of the Keystone Pipeline project that would pump Canadian oil sands crude as far south as Texas, but a connection exists; oil and gas companies (and all industry) should pay attention.
The Occupy movement has drawn its first significant blood.
Let’s start with the Occupy movement, which spread from Wall Street, New York to hundreds of towns and cities across North America and beyond this fall. Opinions about the right of protesters to camp in city parks is just a distraction from some pretty serious issues to which the so-called “ninety-nine percenters” are drawing attention.
Yes, I know it’s easy to ambush certain non-media-savvy picketers and record them making less-than-coherent statements, then use that to claim, as some media are doing, “Look, these people are idiots!”
But some very articulate voices are emerging. If you don’t know about them, read this article from Yes Magazine:
And (especially) watch the first video clip from this film, which may be the most articulate explanation of what the Occupy movement is all about yet:
My own view of it is thus.
Over the past quarter century people have been told prosperity would come from the removal of trade tariffs, globalization of the economy and deregulation of capital markets. Unfortunately the free-trading dream turned into a nightmare for many as international companies and banks gamed the system to the advantage of a limited number of insiders; a new billionaire plutocracy emerged.
The middle class was gutted as well-paying skilled jobs in the North American manufacturing sector were exported to the developing world. Middle America became a “rust belt” of abandoned factories as companies off-shored production to places where environment and health and safety laws are virtually unknown.
Ironically, unemployed or under-employed North Americans now buy many goods from Walmart manufactured in slave labor conditions in China that used to be produced locally.
And it’s a nightmare in those countries, too. Before he died Steve Jobs was made aware of the appalling conditions in the factory in China that makes iPhones. I don’t know if that awareness led to changes, but it was a grim story. Workers sign away their rights to any constitutional freedoms when they agree to work in the plant, and then spend long hours working under the supervision of armed guards, allowed to talk to no one. The plant is really more like a concentration camp where workers sleep in barracks; the situation only came to the attention of the West when it emerged that depressed workers routinely climb to the top of the building and jump to their deaths.
While North American manufacturers joined the race to the bottom, banks and financial service companies successfully lobbied for deregulation, then turned the investment market into a rigged casino. Thanks to documentaries like Inside Job, most of us are now familiar with the details of the subprime mortgage securities fraud and subsequent 2008 housing collapse which wiped out billions in investments. Derivatives known as collateralized debt obligations (CDOs) and credit default swaps impoverished the middle class while executives at Lehman Brothers, Goldman Sachs, Citigroup and JP Morgan Chase made millions, even betting against the very investments they were selling to their own customers.
Though these companies are now paying hundreds of millions of dollars in “no contest” U.S. Securities and Exchange Commission fines, the deals result in no jail terms for the offenders, and the fines are chump change to Wall Street banks. Some of the subprime mortgage disaster’s culprits maintained secure jobs even in the supposedly reformist Obama administration, most conspicuously Ben Bernanke who was reappointed Chairman of the Federal Reserve, the central bank of the United States.
Finally, people had had enough and took to the streets: a movement was born.
Sometimes timing is everything.
In the very midst of the Occupy protests the highly politicized decision loomed over the fate of TransCanada Pipelines’ proposed Keystone Pipeline System, which would transport synthetic crude oil and diluted bitumen from the Athabasca Oil Sands in northeastern Alberta to refineries in Illinois, a distribution hub in Oklahoma, and refineries along the Gulf Coast of Texas.
Keystone has faced lawsuits from oil refineries and criticism from environmentalists and some members of the US Congress. The US Department of State extended the deadline for federal agencies to decide if the pipeline is in the national interest in 2010, and did so again recently during presidential election season after thousands of people demonstrated in front of the gates of the White House.
It wasn’t lost on Obama’s advisors in the White House that the demonstrators out front were close cousins to the Occupy protestors, and represent part of Obama’s (increasingly alienated) base.
The pipeline proponents’ cause wasn’t helped by media reports of bully tactics being brought to bear against landowners in the pipeline’s path, including threats by TransCanada to confiscate private land even before the controversial project has received federal approval. (As of mid-October the company had 34 eminent domain actions against landowners in Texas and 22 in South Dakota. Some of the landowners gave testimony before for a House Energy and Commerce Committee hearing in May 2011.)
Canadian Prime Minister Stephen Harper has stated that because of the US dithering, Canada will start talking to other potential customers of oil sands crude, notably China and other Asian countries. The Keystone proponents, meanwhile, are considering building the first phase of the project, and changing its route to dampen the controversy.
In the end, whatever happens to the Occupy protesters’ camps or whatever new tactics they espouse, their message is filtering upwards and we can expect a role-back of the deregulation that occurred from the 1980s until recently. And with this tide will come much greater cynicism against multinational corporations and claims that their projects are in the public interest. Many vote-seeking politicians will realign themselves with the skeptical public against the large companies as word spreads that citizens are putting the Main Street back in Wall Street.
This is a tidal change that must be taken seriously. Woe betide the company that ignores the retreating water and those foaming wave crests on the horizon.