December 10, 2016
In early December I went to a party near Plum Island. Inevitably the conversation pivoted from how could the democrats have ever lost to Donald Trump, to his picks for the EPA, the Department of Interior and Secretary of State; then on to the protest de jour of East Coast liberals, the anti-fracking encampment in Standing Rock North Dakota.
It occurred to me that all these issues were related. It was difficult to find anyone on either the East or West coasts that had anything good to say about fracking. Why would anyone want to do something that caused earthquakes, polluted water and increased methane emissions?
But for people in red states, fracking is often an entryway into the American dream. In what other industry could someone with a high school education start out earning $66,000 and expect a salary of between $100,00 to $200,000 with a little more time and education? It was one of the few manufacturing industries where you could still get a decent foothold in the middle class.
Who cared about a few little earthquakes? Do folks leave California because of earthquakes? Do people leave Florida because salt water has intruded into their water supply? No they just buy bottled water. And who knows what methane emissions are anyway? Don’t they have something to do with cow flatulence?
But, with the nomination of Rex Tillerson as Secretary of State and Scott Pruitt as head of the EPA it was clear that our foreign and domestic policies were going to switch to an oil based worldview emanating out of Texas, not Washington or even New York. That worldview sees national power as coming not so much from democratic ideals and institutions but from access to cheap energy.
People living on the East and West coasts don’t really understand this petroleum centric worldview but it is in the very genes of people like Rex Tillerson who has spent his entire career working for the oil industry.
When Tillerson took over as CEO of Exxon Mobile, the company’s future looked bleak indeed. They were hemorrhaging cash and rapidly losing their position as the largest oil company in the world because they had missed out on the fracking boom. They got into the business too late and had bought an overpriced fracking company called XTO.
But small-scale fracking had never been Exxon Mobile’s style. They had always relied on superior technology and vast amounts of capital to exploit oil fields that no other company, or country, could afford to pursue.
But Tillerson soon found a willing partner in Russia that was running out of its own reserves of easily exploitable oil. He teamed up with the Russian oil company Rostneft to drill in the Black Sea and to develop Russia’s Siberian shale fields, but most of all to explore Russia’s big enchilada, their Arctic oil fields beneath the Kara Sea.
Tillerson had to beat out both Chevron and BP to make a deal with Russia to invest $3.2 billion to develop the Kara Sea oil fields that reportedly held hold more oil and gas than all the fields in the Gulf of Mexico combined.
Vladimir Putin personally awarded Tillerson with Russia’s Order of Friendship medal for Exxon’s part of the deal. It was this that convinced Trump that Tillerson would be a better dealmaker than either Mitt Romney or Rudolf Giuliani.
But right after the Exxon Rostneft partnership struck oil with Tillerson on board the drill ship, Putin invaded Ukraine and Hillary Clinton placed sanctions on Russia under President Obama’s orders. The sanctions meant that Exxon had to stop using it’s technology to continue drilling for oil in the Kara Sea.
Tillerson was appalled that the Obama would put the lives and freedom of people in Ukraine before the strategic interest of getting our hands on Russia oil. His counterpart Igor Sechin the president of Rostneft was equally appalled at Putin for inviting the sanctions by invading the Ukraine. They agreed that their respective leaders knew zynayet der’mo about business.
But what about the ramifications of drilling all that Arctic oil for climate change? Not really on Tillerson’s radar screen. He led Exxon Mobile’s campaign to discredit climate change even as his own scientists were telling him it was real. He knew it was real but he also knew oil meant national power and economic expansion.
Tillerson might actually make an effective Secretary of State and will undoubtedly push to remove the sanctions on Russia. Trump had already tipped his hand that that was in the cards. From a hard-nosed petroleum centric point of view this could even be good for the American and Russian positions in the world. It just wouldn’t be very good for people in the former Soviet satellites or for the future of our planet.