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Wednesday, October 17, 2012

The Tar Sands, China, Enron & the Fall of the US Dollar: A Frog Overview


We here at How to Boil a Frog recently took a break from badminton and margaritas to fit together the pieces of the real world (as opposed to the fictional world being discussed in the US presidential debates - you know, the one where global warming doesn't exist).  As usual, it still seems to be about energy, at least until someone repeals the laws of thermodynamics.  And we happen to be in British Columbia, where the Dutch Boys and Girls of Activism are busy sticking their fingers into oil pipelines to plug the Dyke of Global Catastrophe (to mix several metaphors).  Our report on the current situation as we see it:

The lesson that all oil companies learned from the Exxon Valdez was: don’t own the tankers.  So oil tankers are all now owned by foreign-flag numbered companies that go bankrupt and disappear anytime there’s an accident.  That’s why the taxpayers of BC -- and no company who mines or transports tar sands oil -- would pay for an oil spill cleanup in Vancouver waters (which could cost
up to $40 billion). 

The pipelines don’t own the tankers, and the oil companies don’t own the pipelines.  Enbridge wants to build the Northern Gateway pipeline, but it’s pretty much dead at this point unless Prime Minister Stephen Harper is willing to send out troops and go to war with the First Nations bands that have vowed to get in the way of the bulldozers (over 131 so far, including our own valiant Tsleil-Waututh). 

 So the Canadian government is making, as teenagers do, some poor choices.  But the co-villain of the piece – and this is quite a scandal – is Kinder-Morgan.  Bill Kinder and Rich Morgan are ex-Enron executives, who retired with billions while Ken Lay went to jail for fraud, even though they were the architects of that whole shell corporation scam.  They took Enron’s pipeline assets and made them into Kinder-Morgan Energy Partners, now one of the largest pipeline companies in North America

 In 2005, they bought BC's Terasen Gas for what was originally reported to be $5.6 billion, but ended up being $6.9 billion, and stopped all maintenance and repairs for the 365 days they were required, as a foreign firm, to hold the company before selling it.  They then flipped the company and kept the TransMountain pipeline, which is what they wanted. Specifically, they sold the water & utility services for $125 million a few months after buying Terasen, then sold the natural gas distribution part to Fortis BC for $3.7 billion at the beginning of 2007.  So what they ended up with – the pipeline – was apparently worth $3.1 billion to them.  Still, they paid less than BC’s taxpayers paid for the Gateway to China.

 This is the scandal part:  Emma Pullman’s investigative reporting has uncovered ties, in 2005, between Harper and then-Transportation Minister Kevin Falcon.  The implication is that the $5 billion that BC taxpayers paid for the Gateway Project – ostensibly to build bridges and widen highways for those poor super-commuters – was actually used to build infrastructure for the Kinder-Morgan pipeline, so that they could ramp up oil shipments to China.  So BC taxpayers are already $5 billion in the hole on this pipeline deal.  Wonder what the ROI will be?

 The long-term plan is playing out. Kinder-Morgan now plans to more than twin the pipeline, and increase shipments of tar sands "dilbit" (it's not actually oil yet) through Vancouver Harbour to 750,000 barrels per day – 3 times what the Valdez spilled.  Here’s their 2011 sales pitch to investors.  They’re also planning a spur, midway down the pipeline, that would go up to Kitimat, and either supplement the Enbridge pipeline or render it moot.  That spur would carry an additional 400,000 barrels per day, total 1,150,000 barrels per day from the tar sands, most of it for China, which just started to denominate oil sales in yuan, breaking Kissinger’s 1971 deal with the Saudis that has kept the US dollar afloat, and allowed the US to export its inflation, for over 4 decades.  This could be the end of the US economy, and clearly Harper got the memo 7 years ago and set all of this in motion. 

Expect Canada to start taking yuan for tar sands oil – the new global reserve currency.  Expect the next US president to have difficulty creating “North American energy independence” when they can no longer tap the tar sands.  Expect the tar sands to have an ecological meltdown long before it gets to 2 million barrels per day, disappointing all of these plans.

So How to Boil a Frog nominates billionaires Bill Kinder and Richard Morgan as the poster boys of global catastrophe in Canada, notwithstanding that they’re Americans.  Enbridge, with all the sound and fury it has attracted, has essentially become a decoy for the Kinder-Morgan pipeline, and Harper will try to ram through that expansion even if he has to suspend civil liberties to do it.  He’s working on it.

As a result, those who want today's children to reach middle age will have to do anything and everything to block the Kinder-Morgan pipeline, as part of the larger blockade of the tar sands.  Of course, there will also be attempts to transport tar sands dilbit by rail and truck, and the government is already planning other pipelines through Eastern Canada, in addition to Keystone XL.  But Kinder-Morgan is what WE here in BC can stop, on our little piece of ground.  Big protest in Victoria next Monday as part of that.  Will you be there?