Louisiana Energy

For decades, Louisiana has been relied on for cheap energy as wealthier eastern states avoided the environmental hazards associated with offshore oil drilling, preferring to let that risk be assumed by its out-of-sight, out-of-mind poor southern cousin.

The federal government has in the past forced Louisiana to sell its oil and natural gas at below-market rates for decades so the east coast could stay warm without having to disturb their pristine coastlines with ugly offshore oil platforms. [1] Former Louisiana governor Edwin Edwards, a man who got his start as a lawyer negotiating oil leases in Crowley between local residents and oil companies unable to converse in the native French-Cajun dialect, repeatedly warned both the Nixon and Carter administrations of the dangers in not confronting OPEC while fighting their policies of subsidizing cheap energy at the expense of Louisiana revenues. [1] Neither heeded his advice and we got first, long gas lines from OPEC embargoes and price controls, then, plummeting oil revenues from OPEC members, whose cheating on their quotas drove oil prices low and bankrupted independent oil producers, all the while whipsawing state budgets to create boom and bust economic cycles.

Say what you will about Edwards, but history has proven him correct on his warnings about OPEC and the need for a coherent domestic energy policy. Edwards chafed at being forced to sell Louisiana energy below market rates by the federal government, and continuously fought against this unfair policy in an effort to bolster state revenues and improve the lives of Louisianans. [1] In his first address to the legislature as governor in 1972, Edwards stated “Louisiana has 28% of America’s gas reserve, 80% of which is shipped to other states and furnishes 25% of the nation’s supply, but the price of our gas by governmental edict is about one-half market price.” [1]

He also complained that federal policies placed Louisiana’s coastal environment at risk while allowing wealthy eastern states who benefitted from our energy to forgo this risk without proper compensation to Louisiana. [1] Edwards’ feelings on this matter were documented in his official biography Edwin Edwards: Governor of Louisiana which states “In Congress, Edwin burned as East and West Coast states refused to help America’s energy needs by banning offshore drilling to maintain their own pristine coasts. Why would they drill when they could force Gulf Coast states to sell for half price and bear the environmental risks?” [1]

The risks to Louisiana’s coastal environment were realized with the explosion of Transocean’s Deepwater Horizon offshore oil platform on April 20, 2010 and subsequent release of millions of barrels of crude oil into the Gulf of Mexico. An embarrassed Obama administration vowed to hold British Petroleum (BP), lessee of the Deepwater Horizon platform, accountable for all damages and forced BP to establish a $20 billion fund to cover the economic loss caused by the spill. Kenneth Feinberg was placed in charge of paying out claims from this fund to coastal residents who suffered economic losses stemming directly from the oil spill.

Feinberg’s claims of independence from BP were recently challenged in court, where a federal judge ordered him to cease and desist from claiming independence from BP since his law firm is paid $850,000 a month by BP to administer the $20 billion claims fund. Feinberg has been under fire for the slow pace of payouts, and recently claimed that only half of the $20 billion fund will be needed to recover from the spill. Feinberg claims the slow pace is due to the effort needed to weed out bogus claims and insure the payout process is not abused, while also claiming that the payout system is actually too generous. These sentiments are understandable when one realizes Feinberg works for BP and is interested in protecting their interests over those of coastal residents he sought to calm with claims of independence and impartiality. BP is even accused of refusing to properly compensate oil spill cleanup workers in an effort to further reduce their expenditures and move forward.

Bogus claims? I’m shocked, I tell you shocked, that there are bogus claims. Of course there are some bogus claims! In this litigious society, where court judgments are often viewed on the same level as lottery payouts, I’d be surprised if there weren’t any.  But, most of the claims are from hard working people who are losing their jobs and businesses, and who were told they would be compensated for their losses in a timely manner by both BP and the Obama administration. Now we find the payout system is rigged in BP’s favor at the expense of the powerless who are suffering. And people wonder where cynicism comes from.

The Obama administration, in an attempt to minimize further embarrassment, has ordered Feinberg to pick up the pace in the claims payout process. Feinberg is feeling the heat with the announcement of new rules for claims payouts. Meanwhile, the administration continues its de facto deepwater drilling moratorium in defiance of federal judges who have ordered them to grant new deepwater drilling permits. Obama’s claims of holding BP accountable for the disaster ring hollow in light of his administration’s efforts to destroy Louisiana’s economy with the illegal and ill-advised drilling moratorium overreaction coupled with misleading oil spillage statistics provided by administration officials during the disaster.

To recap, Louisiana has in the past been forced to sell its energy at below-market prices to subsidize the energy needs of eastern states unwilling to risk environmental damage from offshore drilling [1]; Louisiana suffers an environmental catastrophe with the Deepwater Horizon explosion; BP’s act of contrition in establishing the $20 billion payout fund is negated through control of the supposed independent administrator; the Obama administration continues to defy federal judges in an effort to destroy Louisiana’s economy with his misguided offshore drilling moratorium; and hard working Louisianans are losing their homes, businesses, jobs, and livelihoods at the hands of powerful interests who view them as commodities to be exploited through energy production, voting, or economic injustice. These points should be kept in mind by those powerful interests as bloodthirsty Cajuns are chasing them down the street to exact revenge for their shabby treatment in this sordid affair. It is never wise to anger Cajuns who are used to hunting alligators and living in swamps. They don’t scare easy, and they are known for holding a grudge.

[1] Honeycutt, Leo. Edwin Edwards: Governor of Louisiana. US: The Lisburn Press, 2009.

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