Oil Industry Manufactures Outrage Over Cap-and-Trade

August 19, 2009

With the Waxman-Markey cap-and-trade bill headed for a vote in the Senate sometime after Labor Day, oil and energy companies have embarked on a coordinated series of rallies aimed at derailing the environmental legislation. The campaign is a prime example of what has come to be known as “astroturf” advocacy, in which corporations and interest groups stage faux-grassroots events and letter-writing campaigns intended to project and create populist outrage.

In the coming weeks, Energy Citizens—a group birthed from the American Petroleum Institute—will be holding rallies in 11 states that will serve as both celebrations of the oil industry’s history in those states and as protests against the cap-and-trade system outlined in Waxman-Markey. Greenpeace recently obtained a memo sent by the API to its member companies directing them to ensure high turnout at the events.

“The measure of success for these events will be the diversity of the participants expressing the same message, as well as turnouts of several hundred attendees… our member company local leadership—including your facility manager’s commitment to provide significant attendance—is essential…”

From API memo

Apparently the API would have preferred to keep its involvement at least somewhat secretive though. “Please treat this information as sensitive,” the letter says. “We don’t want critics to know our game plan.”

Though several key API members are on the record as supporting the legislation—both BP and Shell are also members of the Climate Action Partnership, a group established in part to advocate for cap-and-trade—the API’s role in these astroturf campaigns certainly calls their motives into question.

According to the industry, cap-and-trade would cause companies at all levels of energy production to incur higher costs. API claims those costs will lead to increased gas prices which will in turn stunt economic growth and hurt the jobs market. It’s precisely this message that Energy Citizens was created to convey to a public that has never held Big Oil in particularly high esteem: carbon-limiting legislation doesn’t just hurt corporate profits, it also hurts the middle and lower-class workers.

In conjunction with the rallies, the lobbying firm of Bonner & Associates was also retained to carry on a phony letter-writing campaign aimed at congress. Representative Tom Perriello recalls receiving a series of letters purporting to be from members of the NAACP and a Hispanic community activist group called Creciendo Juntos. “They stole our name. They stole our logo. They created a position title and made up the name of someone to fill it. They forged a letter and sent it to our congressman without our authorization,” said Tim Freilich of Creciendo Juntos to the Charlottesville Daily Progress. Bonner & Associates has since admitted to being behind the phony letters and apologized.

Though astroturf campaigns have thus far been successful in derailing the Democrat-backed healthcare reform bill, it remains to be seen whether they will find any traction on the energy policy front. A majority of Americans would like to see some form of climate change legislation signed into law, but according to a May 11 Rasmussen poll, only 24 percent of Americans even know what cap-and-trade is. If the largely despised oil industry can succeed in keeping its role in these campaigns a secret, it could very well succeed in framing the debate on capping carbon emissions.


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  • Samie

    Before all the wackos care about a hybrid site or say weenies this or that or even reference the anti-Christ Al Gore somethings should be said….

    1) We should all realize that at some point petrolatum prices will rise at a fast rate due to less & less new exploration at w/c there is a peak globally in production to meet demand (You can even take envr. concerns out of this discussion) Who cares? Will fast raising petroleum prices due to exploding demand could make our manufacturing, agriculture, & transportation industries collapse.
    2) Are people really that dumb? Yes cap & trade would create, initially higher prices & yes some of those production costs would be passed along to consumers in the form of higher prices.
    2b) Do you want to pay higher prices now or wait tell price goes through the roof creating a large shock to our economy?
    3) Why would people not like a cap & trade scheme if done right. You have companies enforcing rules & market innovations w/ less government involvement as opposed to say carbon tax.
    4) Not all large oil producers are stupid. Some actually get it! Some realize they need to competitively branch out into other energy segments so in the long-run to stay alive. This is a flip from the 90′s when they tried to control rates of alt. products by sitting on copyrights to technologies.
    5) Also cap-&-trade puts higher prices on petroleum products but this is good for oil producers as price to consumers go up (but not at the rate if we do nothing) it prolongs the product & slows down the rate of exhaustion allowing diversification to other substitutes when they mature.

  • Consummate Skeptic

    To Samie:
    Point 1:
    I guess I am one of the dumb Americans. I do not realize that petroleum prices must rise at a fast rate. The only reason for prices to rise at a fast rate that I can see is if the government gets involved to more or less force this to happen. If prices rise due to market conditions (always a possibility in a free market), the people and businesses in the free market can adjust to the change as best they see fit.
    Point 2:
    The consumer pays for everything unless you believe that businesses will remain in existence by lowering their profits to pay for the things that some people want. Businesses exist to create profits. No profits, or too small a profit, and there is no business.
    Point 2b:
    I could argue that the lowest cost overall is to buy a product when it is cheap and look for alternatives as it gets more expensive. Once again, I do not agree with the premise that prices must go through the roof.
    Point 3:
    I disagree with the premise that the government could get anything “done right”. If the desire is to reduce the CO2 from fossil fuels, there is a simple way to do it. Institute a tax on the fossil fuels directly. This hides nothing from the consumer (you know, the dumb people that pay for everything). It allows no political payoffs to favored groups, no complex laws to be “gotten around”. My view is that politicians would rather trade favors from friends and industry supporters (Cap and Trade) rather than be honest with the people by giving the people compelling reasons that taxes should be raised on petroleum based products.
    Point 4:
    On this point I agree somewhat. What the businesses they should get is that they are in business to make a profit regardless of the source. Should they elect to become energy producing companies instead of oil companies, they should be allowed to pursue whatever technology suits them best.
    Point 5:
    This appears to be a combination of other points, with which I agree and disagree.

    A separate comment is that I find the tone of the article offensive regarding the people doing the protesting. The point of view seems to be that if someone is a protester with liberal views they are legitimate. Someone with a conservative point of view is illegitimate and must be a paid stooge. So much for freedom of speech and the alleged “open minds” of liberals!

  • RandalH

    @Consummate Skeptic: “This hides nothing from the consumer”

    You answered your own question. If the system were open and transparent, how would would people like Al Gore be able to skim money and make millions for themselves or their political allies? This scheme is nothing but corruption put into law. They should just be honest and pass a carbon tax and increase other fuel taxes if the goal is to reduce carbon emissions. Otherwise, it’s clear they really want to create an obfuscated Ponzi scheme for their own monetary benefit.

  • Gerald Shields

    Oh no! Here come the wackos!

  • Samie

    To Consummate Skeptic
    Oh this is fun!

    1) How did consumers & the good folks who haul freight across America last year (spring & early summer of 08) react to $4-5 gasoline w/c happened quickly & was not controlled? Sorry to burst your bubble but the petroleum market is one of the least regulated markets out there as we seen w/ the outrageous futures speculation that happened. To not see that our whole economy runs on petro is silly you do pay more for everything when prices rise at abnormal rates. Lets not downplay the adjustment to a shock as somehow easy & almost painless. I ask you are there good alts to some of the energy inputs that we use today & if so can they be scaled up to take over some petro inputs in a matter of only years?

    You are smart enough to realize that a direct carbon tax on consumers would be disastrous & politically speaking would help whatever slash & burn individualistic politics you believe in . Also I ask how could you do it? How is it regulation of millions of people through a consumption tax system is somehow less bureaucratic than letting businesses develop standards & innovate on their own. Also what would you do w/ the government revenue where does it go & you know the money would be spent in ways that adds additional layers of government on to your theory. How would you like a government meter in your vehicle calculating the carbon tax for each mile you drive to work every day. Please, you know your statement is counterproductive bc again politically this allows many to say this would be government intrusion into their lives for actually some legit reasons.

    I am not offended by this article & frankly I’m tired of people not using their brains to form a logical opinion based on some facts & understanding of what they are protesting. Have counter proposals or raise legit questions. Those people in the photo are misinformed, dumb, or knowing very well they are puppets to some backhanded lobbying campaign w/c they could be getting paid by…. Please Please come up w/ real thoughts we all can disagree that’s ok but stop being fearful of what you do not know or believing something a shock jock says is somehow being said through the voice of a god. I thought basic education was meant to in rich our republic to be better informed citizens & to question & evaluate our own thoughts & keep those who benefit the most from lies & distortion at bay.

  • Consummate Skeptic

    Re: Oh this is fun!

    Point 1: Some responded by carpooling. Some responded by whining. I never said that it was painless. You imply that I have some bubble to burst. I do not. I made no statement about regulation specifically. The thrust of my argument, which you dismiss, is that a simple petroleum product fuel tax is more honest than Cap and Trade. I did not attack or defend speculation. You ascribe to me all sorts of motives that I do not have. I will respond to your response, but I, too, am “tired of people not using their brains to form a logical opinion based on some facts & understanding”. I find it interesting that you specifically responded to me with “Oh this is fun!”, but then somehow distorted my opinion to be whatever you wanted it to be in order to attack my position.

    “I ask you are there good alts to some of the energy inputs that we use today & if so can they be scaled up to take over some petro inputs in a matter of only years? “

    My argument, once again was if you believe that C02 needs to be reduced, a simple petroleum product fuel tax is more honest than Cap and Trade. I could offer further opinions in the area of alternative energy sources. However, given your previous response, I may not bother believing that you will resort to similar tactics of distortion of my statements.

    “You are smart enough to realize that a direct carbon tax on consumers would be disastrous & politically speaking would help whatever slash & burn individualistic politics you believe in .”

    I don’t know where you get this from. My argument, once again was if you believe that C02 needs to be reduced, a simple petroleum product fuel tax is more honest than Cap and Trade.

    “Also I ask how could you do it? How is it regulation of millions of people through a consumption tax system is somehow less bureaucratic than letting businesses develop standards & innovate on their own. Also what would you do w/ the government revenue where does it go & you know the money would be spent in ways that adds additional layers of government on to your theory. How would you like a government meter in your vehicle calculating the carbon tax for each mile you drive to work every day. Please, you know your statement is counterproductive bc again politically this allows many to say this would be government intrusion into their lives for actually some legit reasons.”

    I guess that I should be more specific since “a simple petroleum product fuel tax” was not descriptive enough. For example, increase the tax on gasoline and diesel fuel. Increase or create tax per BTU on fuel oil for homes, natural gas everywhere. Again, these are just examples. These taxes would be levied at the point of purchase as they are now. It might be as simple as changing the percent tax paid when a tax already exists, or changing from a fixed tax to a percent based tax. As far as “would you do w/ the government revenue where does it go”, since the thrust of my argument is a fuel tax is better than Cap and Trade, how about taking the money and using towards the deficit? Or, if there is enough, lowering the income tax to help offset the higher energy taxes?

  • Anonymous

    Something must be right with cap & trade if oil companies are outraged!

  • Samie

    Consummate Skeptic
    My apologies honestly I did not get your point in the first comment you made. Thanks for clarifying what you meant. I clearly understand what you are advocating now. Proposing a tax on energy is quite unique according to the conservative ideologies you say you hold & you should be commended for actually having someway to deal w/ current & future issues instead of resorting to fear & misguided info. I always say proposing direct taxes to consumers is dangerous in unfortunately the consumption economy we live in. I think I disagree in that cap and trade should be accepted more among conservative thinkers instead of another added tax on taxpayers w/c tends to be geared towards leftest ideologies. I think anytime you can create situations where markets can address solutions better than government I’m all for it. With cap & trade new businesses will react in developing better technologies to help big polluters offset more carbon emissions & markets will form around new innovations. I don’t see rebates or tax incentives doing this as well as markets can. Also I don’t think consumers would take the necessary steps for global innovation if producers are one step behind. Example is the electric vehicle market w/c many consumers have wanted for quite some time but producers have not to this date mass produced any EVs. Efficiencies also can happen through business as said innovation or scaling of products w/c may not cost consumers much for energy prices as petro prices naturally rise as alternatives fall in price if innovation is actually spurred on…. Also you can tax consumers but honestly does that always mean changed behaviors? There will always be consumer preferences that exceed any attempts to say thinking about trading in a V8 vehicle for a hybrid for personal reasons like social distinctions or ego. So this proves that taxing does not derail behaviors & consumers don’t take the lead as a mass group in demanding reduced C02 consumption w/ their wallets. Also taxes pose interesting discussions about social economics w/c anyone should think about before applying standards to individuals in different economic situations. Why I said those people in the photo could be misguide was regardless of a carbon tax or cap & trade prices will continue to rise. So how do you get businesses & consumers to look at incentives & ways to either reduce energy consumption or purchase products that reduce energy bills. I think thats where we differ. But again thanks for the clarifications

    Samie

  • Mr.Bear

    Correct me if if I’m wrong but we did manage to have free market $4 gas. Explain to me how cap and trade $4 gas is worse.

    And let’s remember how the sulfur dioxide cap and trade program killed refineries and smelters. Oh yeah, it’s been one of the most successful enviomental programs ever and refineries and smelters love it.

    Hmmmm.

  • dixonr

    I call it Cap and Scheme
    What outher country calls billions of bbls off limits.
    We already have falsely high oil prices due to the government severly limiting supply.

  • crut100

    A few points here:

    1. Oil prices (and all commodities for that matter) rose at a completely out of control pace due to wild speculation…NO OTHER REASON. In fact that’s why we have $70+ per barrel oil now. The economy is in no shape to support this kind of price. Get the speculators out of oil and the price will drop and stabilize

    2. Cap & Trade is a disaster and is going to really harm business and middle/lower income American. In states that get the bulk of their enery from coal plant the cost will be enormous. In Indiana, the state in which I live, it is estimated that the average residential consumer will pay an additional $50/month or $600 dollars per year – - that is a LOT of money. Now think about businesses, their bills will go up exponentially more maybe $500 – $2000/month. What is that going to do for our economy? What is it going to do to consumer prices? How about inflation (which is already going to KILL us in the next couple of years), how are these companies to compete in a Global Market (can you say an even larger increase in our trade deficit). This is a recipe for disaster and I hope it get voted down – - and I’m a major league environmentalist!!!

    3. Many people will say “well, get your electric companies off of coal”, but how do you propose that? That would entail building new plants – the cost of which would be passed on to the consumer in significantly higher energy prices and we would end up in the same boat as outlined in #2. This needs to be done gradually no rammed down our throats or it will be a disaster, much like nearly everything done by our “leaders” in Congress.

  • Dan L

    I have a conservative friend who would argue that cap and trade was a better system than a carbon tax. Free market and all…. But when I asked him if he would actually support a cap and trade system, he said “no.”

    Now, I see conservatives criticizing cap and trade, saying a carbon tax would be better. But would they support a carbon tax? No,

    My conclusion: Conservatives are just stalling. Their criticism is not meant to help us find a better way. It is meant to make us chase our own tail.

  • Hal

    Cap & Trade is nothing more than a Cap & Tax bill to make money for Al Gore and Nancy Pelosi! It will not reduce carbon emissions as if that were bad. I don’t know if most people know this but Carbon Dioxide is used by plants and is actually needed by them! From them we get oxygen which is good!
    I’m glad the Oil companies are making a stink. It makes no sense that Obama just gave $10 Billion to Brazil’s oil companies when he and some Democrats won’t allow drilling our OWN oil which would benefit our country. What good does it do to say we want off of foreign oil and then helps drill more foreign oil. Its stupid and wrong. By the way, my Prius NEEDS gasoline to go more than 1.5 miles!!!! Drill here, Drill NOW!!!

  • Hal

    What is astroturf is the idiotic left. You on the left have been had by Gore and his minions. While YOU are working so hard to reduce your “Carbon Footprint”, Gore and his ilk live lives that leave carbon footprints all over the place and in the name of “saving the planet”. Its a classic case of “Do as I say but NOT as I Do”. He is an elitist who is disdainful of the “little people” or “useful idiots” as you are also known. Wake up! You are all being had by a bunch of con men/women.
    Drill here, Drill NOW!!! My Prius runs on GASOLINE and I prefer it to be AMERICAN OIL.

  • DC

    Cap and trade is a flawed concept. All it does is offer the appearance that something is actually being done to address our love-affair with pimritive fossil fuels. With a little “free-market” flavor added in to partially mollify right-wing americans. Cap and trade does little or nothing to address the root causes of where pollution actually comes from. Schemes like this, actually delay and hinder a broader move to less polluting and more advanced technologies. Another thing, american oil companies, dont mind higher prices as such, they do NOT, however like higher compliance costs. I dont remeber the API complaining too loudly when oiil was $150 a barrel do you? The only way to reduce or eliminate harmful pollutants is at there *source*. Cap and trade treats dirty industries and pollution like there just another entry on a stock exhange listing and not as a direct threat to human health and well-being.

    The current dirty energy system, esp in the US enjoys a massive system of hidden subsides(yes, largely paid for by the middle and lower-classes) that reward dirty energy, but often penalize or severely hinder the emergence of cleaner ones. Again captrade does virtually nothing to encourge the demise of dirty industries or foster the growth of new ones. How can it? Direct and heavy taxation of industries that refuse to modernize is the most direct route to control the pollution caused by dirty industry. However, that alone is not sufficent. The flip side of that, goverments(wherever they are), need to take that money and use it encourge and give breaks to cleaner industries that invest in new technology and just as important, create new jobs. If americans actually were in control of the own goverment and not the OilAuto industries, the first thing you should do is elimnate the massive network of hidden subsides the oil industry has created for itself over the last century. Then you would really see the oil industry scream….

  • DC

    I cant help but wonder why Cap and Trade and been embraced as a “free market solution” to the worlds pollution problems, when it was that very same “free market” that pretty much gave industry a blank cheque to produce all that harmful pollution in the first place? If history has and continues to teach us anything, is that the so-called free market always takes the path of least resistance. And since our “free market” has been structured in such a way that the most profitable route is often the most polluting once, thats the path industry has taken. Captrade does not address, in fact, it skirts the primary cause of pollution and essentially ignores the root problem. It further removes us from the reality of harmful pollution by reduceing it to just another listing on a stock exchange somewhere. Also, it does little to encourge the demise of harmful industries nor does it especially encourage the growth of cleaner more advanced ones.

    The only way to tackle the problem of primitive fossil fuel industries and their pollution is direct and heavy taxation of the problem at its source. With the funds being used to encourage the growth of clean alternatives along with new jobs as well.

    Those ladies in the picture need to change there signs to “I’m an energy company shill” or maybe ” I’m a dirty energy citizen”. Either would be a better fit.

  • TD

    Cap and trade has been working in other pollution markets for better than a decade now.

    It has worked extremely well for sulfur dioxide and these emissions are way down, cutting acid rain and other related problems significantly. It is also working for mercury emissions, despite some attempts to water it down. These cap and trade policies have come entirely without the prohibitive economic costs that some were forecasting. The expenses for the sulfur dioxide cap and trade initiatives were far, far below estimates.

    It is quite ironic that cap and trade has become an evil to conservatives who were the original champions of cap and trade as superior to outright regulation and taxation.

    Opponents of cap and trade for carbon dioxide are just trying the same old scare tactics with wild predictions which never turn out to be true.

  • TD

    Cap and trade has been working in other pollution markets for better than a decade now.

    It has worked extremely well for sulfur dioxide and these emissions are way down, cutting acid rain and other related problems significantly. It is also working for mercury emissions, despite some attempts to water it down. These cap and trade policies have come entirely without the prohibitive economic costs that some were forecasting. The expenses for the sulfur dioxide cap and trade initiatives were far, far below estimates.

    It is quite ironic that cap and trade has become an evil to conservatives who were the original champions of cap and trade as superior to outright regulation and taxation.

    Opponents of cap and trade for carbon dioxide are just trying the same old scare tactics with wild predictions which never turn out to be true.

  • TD

    Apologies for the double posting. Problems with the old browser.

  • Danno

    Peak oil. Lead to wild speculation and the raise in gas prices to explore fields that proved to be nowhere near what the oil companies thought they would be. Simple. Mr. Bear is right, but I guess it’s ok to allow private oil companies who manipulate the market to cost you more for gas, then the government. 4$ dollars a gallon, you’ll hit it without cap and trade in two or three years.