Exxon Knew

Exxon Knew

Exxon Knew is a vehicle used by a conspiracy of 17 democrat Attorneys General to attack Exxon-Mobile in the courts.  The idea is that Exxon in the 1970s did a few studies on the impact of oil and natural gas production on worldwide temperatures, found a correlation, and buried it for the last 40 years as their business destroyed the world’s climate.

Of course no such thing happened. For its part, a few scientists employed by Exxon did take a look at possible impact of their business on global temperatures in the 1970s.  But they found nothing.  They published their results and went on to the next event.

The plan by the democrat Attorneys General is to drag Exxon–Mobile through the state and federal courts system, using the legal process as punishment.  Punishment in this case is the cost of tens to hundreds of millions to billions of dollars to defend itself from what is essentially a fishing expedition.

Attorneys General from 13 red states, generally all oil producing states, wrote a letter to the democrat participants warning that the same technique could be used against the organizations, groups, and government employees that are running around claiming man-made global warming due to CO2 emissions.  They suggested that allowing the public debate to continue would be the best solution.  One of the signatories to that letter was Governor Bill Walker’s Attorney General Craig Richards.

Imagine my surprise (h/t Super Dave Stieren) when KTUU announced last week that Walker’s new Attorney General Jahna Lindemuth had filed an amicus brief in support of the Exxon Knew fishing expedition.  Lindemuth’s mealy-mouth explanation is that while the issue is not man-made global warming due to CO2 emissions, rather “… ensuring states have the ability to investigate consumer fraud.”  This is a complete reversal of Walker’s previous position.

A reasonable person would wonder why the change in course?  Why now?  What is Walker up to?

One explanation comes from Stieren who believes that Walker is going to do everything humanly possible to force the producers into court where they will be fighting for their corporate lives with the State of Alaska over providing natural gas for Walker’s white elephant, the natural gas pipeline that is not sufficiently grounded in economics for the experts (the producers) to want to build.

If you look around, he may be correct.

For instance, the State abruptly rejected this year’s production plan for the North Slope.  This is the plan that all well work and continuing maintenance is based upon.  This rejection was enough of a hammer to force British Petroleum to grudgingly agree to talk about supplying natural gas for a pipeline.  If you talk to people who work on the Slope, the entire field is being slowly shut down while the State dilly-dallies approving the plan.  If something breaks, it is simply being shut down rather than repaired.  Going to be difficult to get more (or continuing) oil in the pipeline doing this.

There is a very real possibility that the Commissioner of DNR is going to find the producers in default of their production leases if they don’t provide gas marketing details demanded by the State as part of BP’s development plan.  It is something the producers have refused to do, because they claim they would be breaking the law if they did.

It used to be that both political parties in this state believed that the Golden Goose of production out of Prudhoe was something to be cared for, cherished, and expanded.  That time is long gone.  We now have a coalition of democrats, greens, unions, and other rent seekers who put Bill Walker in office that looks at the producers as an enemy or a sheep to be fleeced rather than the economic partners they have been for over 40 years.

I fear that Walker’s attempt to strong-arm the producers into participating in the natural gas pipeline will invite them out of the State of Alaska.  When they go, where will the jobs for us, our children and grandchildren come from?  Resource development?  Hardly, as we can’t log, mine, or drill due to environmental, NIMBY, and BANANA concerns.  We can’t farm fish, because we are protecting commfish jobs.  Interesting isn’t it, that we are not so interested in protecting oilpatch jobs?

The democrats and unions will tell you that tapping into the Permanent Fund will solve the entire problem.  But it won’t, as Walker is going to use it to backstop his $65 billion white elephant.

Finally, consider the lesson we are teaching investors about Alaska.  We have a major industry that has worked well with politicians on both sides of the political divide for decades, which is now being targeted for destruction in a time of a worldwide glut of their product.  Even if we manage to reinstall sanity in Juneau next session, we will have taught the producers that it only takes a single election of a bat-guano crazy administration to send everything right down the toilet once again.

This is hardly a stable environment for their shareholders and I expect them to go elsewhere unless large, permanent changes are made in our regulatory and political environment.

Alex Gimarc lives in Anchorage since retiring from the military in 1997. His interests include science and technology, environment, energy, economics, military affairs, fishing and disabilities policies. His weekly column “Interesting Items” is a summary of news stories with substantive Alaska-themed topics. He is a small business owner and Information Technology professional.