New Blog / Corporate Welfare

I’m pleased to announce that I have launched a new Blog, Joe’s Land Blog, in which I will focus on issues that relate to our environment and land preservation causes, as well as my own experiences as a backyard gardener. (In reality, I have launched two new Blogs in the last week, but I’m not ready to tell you about the other one just yet). Over the last ten years or so I have transformed from "apethist" to pseudo-activist in the political arena, with a special interest in the environmental issues affecting the United States. The launching of Joe’s Land Blog is the next logical step for me to try attempt to spread awareness about the dangers facing this wonderful planet of ours.

The first entry at Joe’s Land Blog concerns the Energy Bill currently moving forward through Congress. The House version of this bill contains language that would protect the oil companies from lawsuits regarding the water contamination resulting from the gasoline additive MTBE. (To its credit, the Senate version does not carry such language, which has killed the bill in the past). You can read my comments regarding that issue over at JLB. In this space, I would like to take a moment to comment on the concept of corporate "protection".

One of the greatest embarrassments of American politics and culture is the devotion to protecting corporate profits. Indeed, it is the greatest embarrassment, as practically all the wrongs perpetuated by our governments (e.g. Iraq) and our corporate leaders (Enron, among a very long list) can be traced to the protection of corporate profits. It’s obvious why our elected "representatives" continue to vote on the side of Corporate America, for it is Corporate America’s deep pockets that will fund the next re-election campaign. What is less obvious, is why we the people continue to elect government officials who do not act in our best interests. Well, I guess that one is obvious, too – we really don’t have a choice. People who would represent the people never get to the ballot. The people need to make a grassroots effort to get such candidates on the ballot, and to vote them into office, because those we have today are destroying our country and our (the middle- and lower-classes) way of life.

Take the House of Representative’s desire to protect the oil companies from liability related to MTBE, for example. The standard line is that lawsuits would cut into profitability, and that would result in higher prices to the consumer. Indeed, such lawsuits (or merely proactively cleaning up the damage) will cost in the billions of dollars. Estimates for the cost of the cleanup range from as little as $1.5 billion (American Petroleum Institute) to as high as $89 billion (municipal water utilities). Lawsuits would likely up the price tag, because the lawyers need to get paid, too.

That’s a lot of money for the oil industry to absorb. Prices will undoubtably increase. But consider this: according to the investor information available at Yahoo.com, ExxonMobil recorded $27B in profits over the 12 months ended 3/31/05. If the API figure is correct, ExxonMobil could clean up the damage on its own with just a minor blip on its earnings. That’s just one company. British Petroleum recorded $17B in profits in 2004. Chevron $13B. Royal Dutch/Shell is a private company, so financial information isn’t readily available, but it is between BP and Chevron in size. Say $15B. ConocoPhillips’ profits were $8B for the year.

Between just these five companies (not including many smaller companies, not to mention MTBE manufacturers), one year’s profits of $80B would cover 90% of the most pessimistic cleanup cost estimates. Cleanup, however, would be spread out over many years, mitigating the impact on profitability. This is an industry that could sustain such a cost, and it would recover most of it at the pump, regardless. Insurance companies would also cover much of the cost, resulting increased liability premiums - primarily to the petroleum industry - in the future. Market forces, however, would likely retain some of the cost in the bottom lines of the large corporations, too. The cost of the cleanup, then, is borne by users of gasoline, people who buy insurance, and shareholders of petroleum and insurance companies. In other words, all of us ultimately pay.

If we don’t protect the oil companies, the result is that we all share in the cost of the cleanup. Executives and shareholders of companies who have polluted the water while earning huge profits will pay their share (in lost bonuses/dividends/etc.), and people who use gasoline will pay more at the pump. The people who have benefited from how the oil and gasoline industry bypassed safety and public health in the name of profitability will be the same people paying the cleanup costs. That’s as it should be. Futhermore, Corporate America will have a little extra incentive to make the choice to not pollute in the future, now posessing the knowledge that they will likely be held liable down the road.

Now consider what happens if the oil companies are protected from liability lawsuits. What happens then? For one thing, where is the incentive for them to clean up their acts? It doesn’t exist. Corporations will feel empowered to continue to use products that are known pollutants and possible carcinogens. The impact on the public health is unknown. Whatever the cost, however, it will be borne by the healthcare industry and health insurers, ultimately resulting in increased healthcare costs.

Already you can see the costs being spread from specifically the users of petroleum (which is most of us, but concentrated in the heavier users of gasoline) to the users of healthcare (which is also all of us, but with no relation to how much petroleum we each use). Furthermore, while we can choose to reduce or eliminate the amount of gasoline we use, we can’t really make that choice when it comes to healthcare. Also consider that if public water is affected, our only alternative is bottled water, which costs more than public water or a private well.

I haven’t yet mentioned pollution abatement in this scenario. Eventually I suspect that we will come to our senses and decide that it’s bad to continue poisoning ourselves. At this point we’ll need to clean up the MTBE pollution. Since we have held the petroleum companies and MTBE manufacturers free from liability, we know that they aren’t going to cover the brunt of the costs. Who remains? Water consumers and taxpayers. The costs are moved further from those who have profited from the pollution and spread to those whose primary offense is the need to use water. Then consider that the Bush administration has been doing everything in its power to move the tax burden from Corporate America and high-wealth individuals to the working class.

The people responsible for the pollution earn tons of money as a result, and don’t pay their share into the public coffers. The rest of us pay through the cost of healthcare (and our health itself), the cost of our water and our own tax bills. It’s morally reprehensible. Civic responsibility should not be an afterthought in the pursuit of profits. We don't allow people to simply steal money from somebody else and keep it as their own, we punish them. Stealing our natural resources, making others pay for one's actions, is another form of stealing, and should be punished, not rewarded.

If your elected representatives to Congress are among those who support the bill that protects the oil companies from MTBE liability, please ask yourself exactly how this person is representing you and serving the public good. Then ask yourself why this person was allowed to be elected. It's time to change the system.