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The Kochs Have Bet Big That The Earth Is Doomed | Eric Zuesse

The Kochs Have Bet Big That The Earth Is Doomed | Eric Zuesse.

The Kochs have bet big that the earth is doomed. (And Obama is fighting for them to win that bet).

Forbes magazine noted, way back in 2006, that though the Koch brothers – David and Charles – could sell Koch Industries and live happily ever after (on the proceeds from selling what was then the world’s largest private company), Charles, who actually runs the firm, told them straight out, that selling it would be “literally over my dead body.”

In other words: they won’t do that.

What, then, is such an extraordinary business plan, that keeps them from simply retiring as two of the world’s richest people? The answer seems clear:

Petroleum has been their firm’s base, ever since their dad, Fred Koch, started Koch Industries in 1940 (on the proceeds he had earned mainly during 1929-32 from helping Stalin build the Soviet Union’s crucial oil-infrastructure). However, Koch Industries has been diversifying recently. In 2004, they paid $4.2 billion for Dupont’s fibers businesses, including Dacron and much else. Then, in 2005, they paid $21 billion for Georgia-Pacific, the paper and wood-products manufacturer.

But their chief business continues to be petroleum: not just the pipelines to transport it, but increasingly also the raw oil in the ground, and the dirtier the oil the better. They now own two-thirds of the world’s dirtiest oil: Alberta Canada’s tar sands. And they are lobbying and propagandizing heavily for President Obama to allow construction of the Keystone XL Pipeline (which pipeline they would own 25%) in order for that deeply land-locked Canadian oil to be transported to two of their own Texas refineries, which have been especially adapted for the purpose. Not only would they be deriving about $1 billion per year from operating the pipeline, but they would also be marketing the tar sands, two thirds of which are on land that is owned by Koch Industries. That’s the two-thirds of Alberta’s tar sands oil that the Kochs actually own.

However, one of the world’s biggest banks, HSBC, came out with a study, on 25 January 2013, “Oil & Carbon Revisited: Value at Risk from ‘Unburnable’ Reserves,” which reported that in order for this planet to have even as much as a 50% chance of avoiding the climate’s going haywire, “only around 1,000 Gt [Gigatons] or a third of current proven reserves can be ‘burned’.” Furthermore, “Embedded ‘carbon’ in coal is three times the amount bound in oil and over four times that in gas.” This report acknowledged that, “It is clear that reduced usage of coal [whose usage is soaring in China and already causing massive health-problems in Chinese cities] is the key to stabilising and eventually reducing annual carbon emissions. However, we believe that reductions in oil demand … can be delivered more quickly than coal through improvements in transport fuel economy.” In other words: forcing a reduction in oil-use is absolutely essential, in order for our descendants not to lose the planet quickly.

On page 16 of that report was a stunning calculation, titled “Break-evens for selected high-cost oil projects,” and the researchers actually calculated there the price that a barrel of oil would need to fetch on the global market in order for each type of petroleum to be able to be produced without the sellers losing money on that oil. For “Deepwater” projects, it ranged from $49.40 up to $64.00. On “Heavy oil,” it was $54.70. And on “Oil sands” (Alberta’s oil, the dirtiest in the world), it was $75.50.

In other words, the Koch brothers (via their private firm) own two-thirds of the world’s dirtiest petroleum, which consequently is so costly to process, that it becomes utterly worthless at a global per-barrel price of $75.50. All other oil would still be profitable at that price, but not the oil that now constitutes the biggest speculative (and by far the riskiest) portion of the Koch brothers’ (or of Koch Industries’) massive investment portfolio.

Whereas other oil companies have focused on the lowest-cost petroleums to get to market, the Kochs have focused instead on the highest-cost petroleum to get to market. They bought it cheap, because it’s so dirty and land-locked.

Their business-plan (other than diversifying into non-petroleum industries) is simple: Drive their costs to produce their filthy oil down from the existing $75.50 per barrel, in order to make it more competitive (since they own two-thirds of the estimated 874 billion barrels of this stuff).

How can they drive that cost down? Right now, President Barack Obama is negotiating, behind the scenes, through his U.S. Trade Representative, to get Europe to weaken its anti-global-warming standards, so as to enable the world’s dirtiest oil to become more price-competitive.

On 24 September 2013, Kate Sheppard at Huffington Post bannered “Michael Froman, Top U.S. Trade Official, Sides With Tar Sands Advocates,” and she reported that the Obama Administration was threatening Europe with retaliation at the World Trade Organization if Europe didn’t eliminate its distinction between high-CO2 oil and regular oil – between tar-sands-derived oil, and ordinary petroleum. The U.S. Trade Representative told Congress that the issue he had here didn’t concern climate change, but only “inadequate transparency and public participation in the European Commission’s regulatory process.” Then, Sheppard herself asked one of his aides, who simply reiterated that by saying, “The United States shares the EU’s objective of reducing greenhouse gas intensity, but we have raised concerns with respect to inadequate transparency and public participation in the European Commission’s regulatory process.” Sheppard, at least as far as her news report indicated, asked no follow-up question, such as: “‘inadequate’ in what way; and how can you even be talking about that since the issue here is global warming?” So: the President and his Representative have not been confronted publicly on this matter.

Barack Obama’s public statements against global warming were belied by his actions in private, and yet his hirees, such as the U.S. Trade Representative, Michael Froman, formerly a Managing Director of Citigroup, were turning the table and accusing the EU of “inadequate transparency” – as if the future of this planet weren’t the issue, and a vastly more important one.

If President Obama can force Europe to lower their anti-global-warming standards in order to enable the Kochs to export their super-dirty oil to Europe via the Kochs’ Corpus Christi Texas refineries, then a significant portion of the existing cost-disadvantage of the Kochs’ super-dirty oil (as compared to cleaner oil) will be absorbed ultimately by the planet itself, in the form of added global warming. “These refineries have a combined crude oil processing capacity of about 300,000 barrels per day. While one potential purpose of the KXL Pipeline for Koch Industries could be to provide access to Canadian tar sands for its Corpus Christi refineries, this benefit appears relatively insignificant compared to their massive potential profits from producing tar sands crude oil.” (See page 11 there.) In other words: President Obama is negotiating behind the scenes in order to transfer these harms onto everyone else, so that the benefits will go to the Kochs for their having paid dirt-prices for each and every one of the two million acres of tar sands they own. (That’s on page 7.) Consequently, there would be, for the Koch brothers (as stated in the report’s Executive Summary), “$100 billion in potential profits due to KXL.” Their destroying this planet would thus be very profitable for them.

Apparently, this is the business plan that they are so eager to pursue that it’s more attractive to them than simply retiring: Instead of their being each tied with the other as being the6th-wealthiest person on this planet, they’d probably be by far the wealthiest two people of all individuals on Earth. (The report estimates that their joint existing fortune of roughly $80 billion will be enhanced by yet another $100 billion, for a total of $180 billion, or $90 billion apiece.) Apparently, the Kochs are doing this for sheer status. (They couldn’t possibly consume all their wealth even if they wanted to.) It thus seems that their motivation is basically similar to that of their father’s great benefactor, Stalin. His status was based on communist values; theirs is based on fascist values; but the motivation is status, just the same.

And Barack Obama, against whom the Kochs bundled more campaign cash than any other two people, for Mitt Romney and for Republicans in Congress and in the state houses, is fighting against the European Union, in order to assist the Kochs to achieve this, their dream. Perhaps that’s the only thing in this story that doesn’t make sense, but it is certainly the case, up till now. And (if there is another thing that doesn’t make sense) the massively ignorant American public wants them to win.

Obama’s excuse for trying to force Europe to buy the Kochs’ filthy oil might be called ludicrous. However, since this excuse proves that he is a hypocritical liar, and the stakes that are involved here are enormous for the entire world, it is, instead, tragic, if is not outright catastrophic.

Perhaps Obama, too, is chiefly driven by status. Then, all of this insanity on the part of the elite might make sense – in an insane sort of way. Maybe status-addicts are actually the type of people who most tend to rise to the top, anywhere. Hitler, Stalin, Capone, Koch, Obama, Bush: what’s the difference, really, other than their “personality”?


Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

Pipeline safety incident rate doubled in past decade – CBC News – Latest Canada, World, Entertainment and Business News

Pipeline safety incident rate doubled in past decade – CBC News – Latest Canada, World, Entertainment and Business News. (source)

Pipelines regulated by the federal government — which include some of the longest lines in the country — have experienced a swell in the number of safety-related incidents over the past decade, documents obtained by CBC News suggest.

In recent months, a spate of oil and gas spills both from train derailments and pipelines have raised questions about what mode of transport is the safest.

The pipeline industry has touted its record as it seeks support for numerous controversial projects across the continent, including TransCanada’s Keystone XL to the U.S. Gulf Coast and Enbridge’s Northern Gateway to the B.C. coast.

However, according to figures from a National Energy Board (NEB) data set obtained under access-to-information by CBC, the rate of overall pipeline incidents has doubled since 2000.

By 2011, safety-related incidents — covering everything from unintentional fires to spills — rose from one to two for every 1,000 kilometres of federally-regulated pipeline. That reflects an increase from 45 total incidents in 2000 to 142 in 2011.

Pipeline watchers like Pembina Institute associate Nathan Lemphers suggest the rise may be a worrisome sign of aging infrastructure.

“The pipelines that are in the ground are getting older and in some cases there’s more products flowing through them so you’re going to see increasing incidents and increasing defects in those pipelines unless they’re properly maintained,” Lemphers said.

The NEB documents give detailed information about 1,047 pipeline safety incidents from Jan. 1, 2000 until late 2012.

The federal regulator oversees any pipeline that crosses provincial or international borders, which includes about 90 companies that own about 71,000 kilometres of pipelines. The data does not include smaller pipelines monitored by provinces.

The National Energy Board attributes the rise in incidents to heightened awareness among companies about what they need to report.

“We’ve been out there talking with industry associations and the companies themselves to ensure that they are fully aware of what the reporting requirements are and I think that’s why we’re seeing an increase right now,” said NEB’s business leader for operations, Patrick Smythe.

Leaks, spills triple

Each company overseen by the NEB must report safety issues including the death or serious injury of a worker, fires, explosions, liquid product spills over 1,500 litres and every gas leak.

Among the other findings based on NEB’s pipeline database is that there’s been a three-fold increase in the rate of product releases spills and leaks — ranging from small leaks and spills  to large — that have been reported in the past decade.

hi-pipeline-oil-yellow-flagB.C. saw the most reported incidents for a single province, followed by Alberta and Ontario (John Rieti/CBC)

More than four reportable releases happened for every 10,000 kilometres in 2000, or 18 incidents in total, according to NEB data. By 2011, that rate had risen to 13 per 10,000 kilometres, or 94 incidents.

Those numbers include any oil or natural gas releases companies are required by law to report.

Carl Weimer, executive director of U.S. advocacy group Pipeline Safety Trust, says each small leaks may not  be significant on its own, but taken together they provide a better picture when looking at safety trends.

“It shows how really carefully they are taking care of the pipelines,” said Weimer.

British Columbia experienced the most pipeline safety incidents for a single province, with 279 recorded events from 2000 to 2012 in the data set. Alberta came in second with 244 incidents, followed by Ontario with 146.

The community with the highest number of incidents in its vicinity is the remote town of Norman Wells, Northwest Territories, which has seen 71 events.

NEB concerned about severe incidents

CBC News turned the NEB data set into a user-friendly map that allows Canadians to explore pipeline incidents using filters such as the nearest community, year, company, pipeline or substance spilled.

It provides an unprecedented bird’s eye view of safety issues plaguing pipelines over the past decade and also gives users the ability to drill down into the details of each report.

NEB’s Smythe says that the regulator has not seen an alarming increase in the “significant, serious or major incident over the last little while.”

Recent documents published by the NEB show that they have expressed some concern over rising numbers.

“Notwithstanding the safety record of NEB-regulated pipelines, the board has noticed an increased trend in the number and severity of incidents being reported by NEB-regulated companies in recent years,” one 2012 report states.

Another 2011 document citing the same concern also notes the need for NEB to “enhance data collection” in order to tackle that problem and other troubling trends in the industry.

It goes on to say that a reduction in the numbers ultimately “depends on actions taken by the industry.”

Brenda Kenny, president of the Canadian Energy Pipelines Association, which represents major companies, says there’s an industry-wide commitment to “get to zero incidents.”

“We’re driving that out very hard through our risk-based management approach at the industry level that involves a lot of best practices, integrity, management, technology and these indicators,” said Kenny.

“The Canadian pipeline industry is one of the very safest in the world second to none in terms of actual results,” said Kenny.

Pipelines have faced unparalleled attention in recent years as global demand fuels a production boom across the continent, resulting in a rise in pipeline proposals.

“Pipelines were very much out of sight out of mind until recently,” said Ian Goodman, a U.S. energy consultant who works with regulators and community groups across North America.

The pipeline debate is not generally “front-page news day after day … the way it now is. That’s a new development.”

If you have any pipeline-related stories, please email us at pipelines@cbc.ca.





Whistleblower lawsuit says CN is cooking its books – CBC News – Latest Canada, World, Entertainment and Business News

Whistleblower lawsuit says CN is cooking its books – CBC News – Latest Canada, World, Entertainment and Business News. (source)

A whistleblower lawsuit in the United States is accusing CN Rail of fudging its numbers to increase executive bonuses and to make it appear to be North America’s most efficient railroad for investors.

Tim Wallender, a former CN trainmaster based at the company’s Harrison Yard in Memphis, Tenn. has filed a lawsuit under the U.S. Sarbanes-Oxley Act — which was passed into law to protect whistleblowers following the Enron scandal in the early 2000s.

CN is asking that Wallender’s claims that it routinely reported fraudulent efficiency statistics to shareholders and customers be thrown out. CN claims he repeatedly reported train movements falsely and got fired for it.

Wallender, 42, does not deny fudging the numbers but insists he was ordered to by his boss.

tim-wallender.jpgTim Wallender filed a whistle-blower lawsuit against CN in August claiming he was fired trying to expose a ‘pervasive fraud’ within the company. (CBC)

He alleges in his suit that his managers made large bonuses, and the company was able to promote itself as being 20 to 25 per cent more efficient than its competitors, by creating favourable statistics that “were based on a persistent and pervasive fraud.”

None of these allegations has been proven in court.

“My (general) superintendent was always talking about how he had carte blanche to do whatever he had to do to make it work in Memphis,” Wallender told CBC News in an interview in Mobile, Ala. where he’s now working for a different railroad. “He would talk about how him and [then-CN vice president] Keith Creel were so tight and how they talked every day and he had permission to do whatever he needed to do.

“What do I do? — that’s my livelihood, this job. Without it I have no insurance, no pay, no benefits, nothing. “

Wallender outlines how to misreport ‘efficiencies’

Wallender claims he and other lower-end employees were asked to tamper with “dwell time” statistics — an industry measure of how long freight trains sit in a yard — to make it appear that trains moved quickly. The crucial reporting time was 5 a.m., and if trains arrived later their dwell time clocks would not start until the next morning.

The goal, Wallender alleges, was to get trains out of the yard just before 5 a.m., or have them arrive just after, either by moving the train so it could trigger time-stamp sensors, or by adjusting the clock in the company computers.

They also reported cars were either broken or delivered to the customers — so they would be taken off the clock — when in each case they would still be in the yard, he claims in his lawsuit.

Another trick was to move a train onto a ghost or dummy track which did not get monitored on the company’s computer, he claims.

“I’m telling you everybody knew about this,” said Wallender, who originally hails from Wisconsin. “It’s a common practice. I know it happened in Chicago, Champagne, Memphis, Jackson — it happened all over the U.S.”

According to CN documents related to the case, the company did audits of the Memphis yard — three times before Wallender’s dismissal in September 2012 — and indeed found several employees were falsifying efficiency records.

“I am extremely disappointed to learn about these reporting infractions,” wrote Creel in a February 2012 letter. The letter acknowledged other reporting scams at CN, not listed above. “It cannot and will not be tolerated. We have an obligation to our customers and shareholders to continue our pursuit of ‘service excellence.'”

But Wallender says Creel’s letter was just “lip service” to the idea that the company cared about accurately reporting its efficiency ratings to the stock market.

“The allegations in this matter are unfounded and factually incorrect,” said Creel, who is no longer with CN. “I have, and always will, hold all employees to the highest ethical standards and the facts in this case will reflect that.”

Wallender ‘disciplined’

Because of a December 2011 audit, Wallender was to be disciplined. He brought a tape recorder with him to the meeting with his boss, general superintendent Andrew Martin.

“I was supposed to be [suspended] for two days, lose two days’ pay, and [they were going to] put a letter in my file,” recalls Wallender.

CBC has obtained a copy of the recording in which Martin can be heard saying: “I’m suspending you for two days, but I’m suspending you for two days to put you on your off days… I have to draft this letter. I’m going to give you a copy of this letter. I ain’t gonna never send it” to human resources.

“He never told me to stop,” said Wallender, echoing arguments in his lawsuit.  “He just said ‘Don’t be so perfect on the report next time.'”

A complaint against Martin from another railway worker in the summer of 2012 led to the investigation that led, Wallender claims, to his demise at CN.

Wallender handed over emails of the instructions he had received to fudge CN’s numbers, and his audiotape of his discussion with Martin, to CN’s human resources investigator.

He recalls telling the investigator: “I’m done lying. If I get fired for this, which I expect to do, at least I can walk away with my head up, that I got fired for telling the truth.”

He was fired the following month, CN claims, for continuing to fudge the numbers. After his dismissal, he pointed out to his bosses how others were continuing to fudge the numbers, and his access to CN’s computers was cut off.

Wallender’s lawyer, Bill McMahon of the Chicago law firm Hoey & Farina, said Martin got a slap on the wrist after the review, “and continues to be employed at CN. The only person who got terminated, who lost his job, is the man who came forward with the concrete irrefutable evidence of the statistical manipulations of efficiency ratings in the Harrison yard.”

CN’s response

CN told CBC News yesterday, in a three-page email from spokesman Mark Hallman, that CN “collects data to make informed business and operational decisions. The notion that CN would condone any misreporting in that context is untenable.”

CN ignored many of the CBC’s requests, including a question about why their computer software is so easily manipulated to change data, but they did say that through their auditing process CN has found “only a limited number of reporting issues which did not affect the integrity of the data that the Company has reported to the rest of the rail industry.”

Although it boasts of its dwell time and train speed on its website and heralded a five-percent drop in dwell time in this week’s third quarter report to the market, CN says its “operating metrics such as yard dwell are performance indicators that are not included in any part of CN’s audited financial reports that are sent to shareholders and securities regulators.”

Hallman added that the Montreal-based company’s “decision to terminate Mr. Wallender was fully warranted given his history of misreporting, management’s repeated admonishments for such misreporting, and Mr. Wallender’s brazen disregard and continued misreporting of data even after he was ordered to cease such practices. Mr. Wallender’s termination illustrates the seriousness of CN’s approach to insure data integrity.”

Former CN employees back Wallender claims

However, two former employees of the Memphis yard have come forward to CBC to back up some of Wallender’s claims.

toby lehmanToby Lehman quit CN this past year and alleges he witnessed minor derailment cover-ups and improper manipulation of company records. (CBC)

Toby Lehman, a former CN yardmaster in Memphis, put in the aforementioned complaint about Martin because he and others were constantly being harassed to falsely report the efficiency statistics of the yard, such as by inputting false arrival and departure times. When nothing was done for three months, he sent a complaint further up the chain of command, and an investigation commenced that, he believes, led to Wallender’s dismissal.

“I apologized to Tim — he was just backing me up with his evidence,” said Lehman, who has since left CN for another company. “Even after Tim got fired,” the manipulation of the train’s arrival and departure times continued, said Lehman.

A former clerk at the Memphis yard, Sara Welch Wood, also jumped to Wallender’s defence, saying employees shouldn’t be made to choose between their jobs and doing the right thing.

She remembers the fear that went through the office if employees didn’t find a way to make cars disappear so they wouldn’t be on the 5 a.m. report.

“There were a lot of different times that I didn’t want to deal with the hassle of getting chewed out,” recalls Wood, 30, who is now a nursing student. “At 4:45 those cars were miraculously gone. There were several times I’d show them at a different yard,” though they were still at Harrison in Memphis, she said.

“I felt bad because I knew I was lying about it. So you’re in between making your supervisors happy and lying. That was one of the reasons it was such a stressful job. It never feels good to lie.”

In his lawsuit, Wallender alleges that “Creel — whose compensation substantially depends on a high price for Canadian National’s shares — protected Martin from discipline, gave a green light for Martin’s misconduct, and gave Martin carte blanche to continue the misconduct that protected and increased the value of his stock options.

Martin, who remains the general superintendent of the Harrison Yard, did not respond to messages.

Wallender’s lawyer, McMahon, said the victim in this case is just not Wallender, who suffered the indignity of being fired, losing his income and his health insurance for himself and his daughter who is suffering from a chronic illness, but all employees of CN.

McMahon said that what the U.S. has learned from the Madoff, Enron and Worldcom scandals is that the “real victims that we know from this type of corporate malfeasance are the employees, their families and the people that rely upon these corporations to accurately and professionally manage their businesses in order to provide a job.”

Wallender got a job with another railroad in the southern U.S. where he is happy to accurately report figures on the company’s efficiency, but he wishes CN well. “There are a lot of good people there. The problem I had with all the cheating is you can’t fix anything unless you know it’s broken.

“And by us hiding everything, nobody knows it’s broken.”

If you have any information or tips related to this story, contact John Nicol or Dave Seglins.




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