Oil companies tax our coast; it’s time we tax them back

Bienvenue en Louisiane! We’re still calling ourselves the Pelican State, but who knows what the future holds? Louisianans identify with pelicans because they are unique, non-extinct birds that seem to coast through life and eat lots of fresh seafood. We admire them because when times get tough, pelicans will prick their breasts and feed their young with their own blood. Noble, huh?

But what happens after that?

After? Hmm. I suppose unless circumstances change, the Pelicans run out of blood to share and they all die.


In a recent speech, New Orleans Mayor Mitch Landrieu posed the following questions to the nation:

How many times are you going to ask the people of Louisiana to be the tip of the spear? How many times are you going to send them into battle without the right armor or without the right equipment and expect them to continue to show up?… The deal ought to be: If you want to drill, protect us. If you don’t want to drill, stop driving.

Perhaps the “battle” Landrieu refers to is the risks inherent in energy production, and the “armor” he refers to is our protective wetlands. During the past century, Louisiana has played a major role in satisfying America’s ever-growing demand for more energy. We extract oil and gas, refine it, and send it to market via ports, pipes, and rivers.

And during the past century, while we did this, Louisiana suffered 2,000 square miles of coastal loss. This is not just a coincidence. Simply put, energy development in South Louisiana contributes to wetlands loss. Everyone knows this, yet Big Oil and its  favored politicians like to ignore the connection. They say: “No time to play the blame game. Let’s move forward together as partners.” Then little gets done.

For some reason, Louisianans have accepted this empty lip service and inactivity. But what exactly has this “partnership” accomplished? A $10 billion  coastal problem has grown into a $100 billion dollar coastal crisis (now with oil on top). Very soon, coastal restoration will be an impossible pipe dream –  and that will be the death knell for South Louisiana as we know it.

Laissez les bon temps roulez!

To be sure, wetland loss is complicated, and has several causes. For example, the levees that tamed the Mississippi River have also starved the coast of replenishing silt. Also, invasive species have entered habitats and disrupted ecological balances. But no one can dispute that the arrow-straight canals dredged to facilitate oil and gas production have harmfully altered the natural hydrology of the region. And this alteration hastens plant death, and contributes to the disappearance of our precious, productive wetlands.

A recent Times-Picayune article about the state’s lack of stringency regarding wetlands work permits for Big Oil concluded with a summary of the industry’s effect on our coast:

By some estimates, the state loses as much as 35 square miles of wetlands each year, the blame for which usually goes to the levee system, which blocks the natural land-building action of the sediment-rich Mississippi River. But wetland loss also results from the continuous exploitation of Louisiana’s wetlands by the oil and gas industry, which received roughly 70 percent of state coastal use permits during the period reviewed by The Times-Picayune…

The network of historical oilfield canals — still used to reach active wells and drilling sites — caused as much as 59 percent of the wetland loss in coastal Louisiana from 1955 to 1978, according to a 1988 study commissioned by the MMS. A plane ride over the coast makes their effect on the wetlands instantly plain: Uninterrupted expanses of green marshland suddenly change into a latticework of narrow waterways that resemble a city street grid.

[Oliver Houck, an environmental lawyer with Tulane University] sees the state’s reluctance to ask oil companies to pay for past damage as evidence that politicians are afraid to confront an industry so central to Louisiana’s economy.

“It would require the state to admit that these canals were part of the problem,” Houck said. “It would require the finger to begin to point at the oil and gas industry, and the state won’t touch it.”

So: to what extent is Louisiana responsible for its own devastating shrinkage? It’s true that the state selflessly sacrifices itself on behalf of an oil-addicted nation. But doesn’t it also selfishly sacrifice its future on behalf of the oil and gas industry? To what degree is Louisiana a fearless energy warrior for the nation, and two what degree is it merely a masochistic supplicant for Big Oil?

Times-Picayune columnist James Gill recently framed the issue concisely:

[I]t would be a shame to invite ridicule by harping on the country’s indifference to the loss of wetlands that sustain our fisheries and protect us from hurricanes. Louisiana was hardly a helpless victim as the oil and gas companies sliced up and contaminated the landscape to keep an ungrateful nation moving. We took the money and turned a blind eye.

Louisiana accepted the dirty role pretty much from the moment the first oil well was sunk here in 1901. The result is a coastal region criss-crossed with canals that provide a conduit for salt water to accelerate the land loss. Chemicals have been leached into the waters for a century, while oil companies never could remember their promises to backfill when they were done raping the landscape.

Gill says we allowed Big Oil to rape our coast for decades. Let that thought sink down into your heart of hearts, and see if it doesn’t find agreement.

Recently, I’ve needled former Louisiana Insurance Commissioner Jim Brown because his views on the risks of oil drilling have, um, evolved since the Macondo oil gusher began spewing. However, in a recent post Brown actually wondered whether the oil industry was, on balance, a net benefit to the state. Talk about an eyebrow-raising claim! While Brown doesn’t explicitly answer his own question, he does helpfully remind Louisianans about its “original sin” in regards to oil royalties.

The state as a whole just might want to take a look in the mirror. Louisiana was seduced by an outside industry full of vast economic promises. The money came in easily and… many new jobs were created. But when you put the financial tally to paper, has it been worth it?

A number of Louisiana politicians, including Gov. Huey Long in the 1930s and Plaquemines Parish dictator Leander Perez in the 1950s, made off like bandits by creating family controlled corporations and awarding themselves public oil leases that made them hundreds of millions of dollars. Oil company campaign cash has flowed into state and local political campaigns for decades.

Perez was particularly aloof from the public interest when he used his political clout to blackmail thenGovernor Earl Long back in the late 1940s to reject a federal-state split of off shore oil. President Truman forged a compromise on the federal-state land dispute by offering Louisiana two thirds of all off shore oil out to a three mile boundary, then one third of all production from that point on out into the Gulf. Perez opposed the deal as his “vested interest” made him greedy, and Louisiana ended up receiving not one penny after a protracted battle all the way up to the U.S. Supreme Court. The failure to take this settlement has cost Louisiana, by several studies, more than $500 billion (that’s billon with a “b”) in lost revenue.

Maybe if Perez hadn’t been so greedy, an enriched Louisiana could’ve directed some of those oil royalties into a fund to restore the coast, when wetlands loss first became an issue back in the 1970’s. Maybe. (Of course, even without the windfall we could’ve found the money for coastal restoration if we really thought it was that important. But we didn’t.) Louisiana is scheduled to get a significant increase in oil royalties beginning in 2017. Which is exactly 10 years after coastal experts declared that we have a decade at most to start repairing the coast before it’s too late. Isn’t that cutting it a bit close?

Before the Deepwater Horizon disaster, the T-P’s Bob Marshall took up the coastal cause, on March 4:

Since the 1970s, efforts to lessen the damage inflicted on our wetlands by industry have been fought by a can’t-lose partnership: industry and state officials. Attempts to restrict the dredging of canals, or the cutting of cypress forests, or the dumping of poisons into wetlands were always met by the same cries from the offending businesses: Too expensive! It’ll cost you jobs! And, besides, the researchers are wrong, the science is bogus, they’re all a bunch of left-wing environmentalists out to steal your jobs! And the trump card: We’ll move!

The correct response from Louisiana’s body politic should have been: Move? Where? The oil, gas, pipelines and refineries are here. If you think you can drill for that oil in Minnesota, go ahead. If you think you can re-route those pipelines through Florida or Texas beaches, have at it.

Bob Marshall said the “correct response” in this situation is unblinking brinksmanship. Call Big Oil’s bluff – see what they’ll do. Two weeks after he wrote that, BP’s oil rig exploded.

Here’s a few lesser-known details about the rig, from an editorial in The Louisiana Weekly:

The [Transocean] drilling rig was flagged in the Marshall Islands, whose corporate profits mainly flowed to the United Kingdom, using oil from a well owned by a Swedish company, and whose few tax royalties, a mere 12.5 percent of the sum, flowed only to the U.S. federal government. Not a dime in tax monies remained in Louisiana, and our coasts have paid the price.

Then after the scope of the Macondo disaster became apparent, Congress responded by setting aside new funds for future cleanups.

Responding to the massive BP oil spill, Congress is getting ready to quadruple — to 32 cents a barrel — a tax on oil used to help finance cleanups. The increase would raise nearly $11 billion over the next decade.

The tax is levied on oil produced in the U.S. or imported from foreign countries. The revenue goes to a fund managed by the Coast Guard to help pay to clean up spills in waterways, such as the Gulf of Mexico.

So, if you think like Bob Marshall, did Congress “correctly respond” to the cleanup issue by taxing Big Oil and Foreign Oil, and making them pay for the damage they caused, or will cause?

No state suffers more oil spills than Louisiana. And today, our coast is getting hammered by an underwater oil gusher. You’d think the crisis would create momentum to not only hold Big Oil responsible for the immediate cleanup, but also for its direct role in slicing up Louisiana’s coast. Where are the dynamic voices taking this case to the public?

In other words, where y’at Foster Campbell? This is your time!

Many know the Public Service Commission member as the ultimate hedgehog. He has one idea, which is to replace the state income tax with an oil processing fee, and spend the remaining funds on restoring Louisiana’s wetlands and aged infrastructure. His plan is based on proposals made decades ago by Gov. Dave Treen, which never gained political traction. But when Campbell campaigned for governor in 2007, he was undeterred, and doggedly presented his idée fixe as a cure-all. The electorate mostly ignored him. What struck me at the time, though, was that none of Campbell’s three main opponents (all from South Louisiana) talked about coastal restoration with the conviction of the man from Bossier Parish. The usual suspects rolled their eyes at Campbell’s campaign and dismissed his idea (again), but many of these critics are the same ones who downplayed the environmental risks of oil drilling. They’re the ones who make the pro-industry arguments Bob Marshall mocked in the earlier quote. So, isn’t it a good time to revisit plans and have a vigorous conversation about Big Oil’s culpability for our stricken coast?

I can’t believe that during an oilpacolypse, a firebrand like Campbell is “unsure” about whether he’ll run for lieutenant governor (especially since there’s not a single Democrat in the race). If there were ever a time to argue for a tax on Big Oil to preserve the coast, it’s now. But instead of launching a full-throated crusade and leveraging national media attention during a crisis, Foster still is undecided about running for higher office, preferring to issue strongly worded letters, instead. In a recent one, he stated:

[L]et’s finally modernize Louisiana’s 90-year-old system for taxing oil and natural gas to recognize that 90 percent of the oil and natural gas processed in our state comes from foreign or offshore sources and is not taxed — despite the heavy environmental cost it inflicts on us — and all the tax burden falls on in-state producers.

As they say in the country, these oil and natural gas revenue issues are “where the mule jumps the fence.” Railing against BP or the federal government for their response to the spill is empty words if you don’t back it up with a real plan to restore coastal Louisiana.

The first paragraph may be controversial, but the second paragraph is undeniable. A slow moving disaster currently threatens our coast with oil, but our disappearing coast was already in the midst of an existential crisis. Why doesn’t Campbell want to strike while the iron’s hot and make his case on the campaign trail, and on national media outlets?

My Bossier has a video featuring a recent exchange between Foster Campbell and conservative talk radio host Moon Griffon. Surprisingly, Griffon pledges his support to Foster if he runs and makes the runoff against Jay Dardenne, because Griffon said  “Republican hypocrites” like Dardenne are his bête noire. Also, Griffon sees an additional side benefit to Foster becoming lieutenant governor, as it will tether Jindal closer to Louisiana, and keep his attention on Louisiana rather than marketing his book in influential swing states. Campbell has so many good angles right now, beyond his obvious appeal to enraged environmentalists and populists. For instance, couldn’t he make some inroads into the “Taxed Enough Already” Partiers with his income tax elimination idea? And wouldn’t Big Oil apologists be slower to criticize his plan as a “job killer,” when fishermen are on TV cleaning oil out of their fouled fisheries? There’s no guarantee Campbell would win, of course, but isn’t now the time for him to see what he can do?

While Campbell mulls his options, coastal restoration advocates should try to recruit other public figures to bolster their case. They need to find officeholders who will be their advocates on national news outlets because this oil story isn’t going away any time soon. Further, restoration advocates shouldn’t forget that the Obama administration presented a coastal Restoration Road Map on March 4 –  which in itself demonstrated more of a presidential commitment to Louisiana’s coast than any previous administration. So there is an emerging framework to formalize our state’s coastal goals with the feds. Pieces are coming together, but time is of the essence. Implementation of the “Road Map” needs to be fast tracked, and long term funding secured. This whole process requires momentum, which the furor over the oil spill should be providing.

The state will need voices that will push the rest of the country to make a national effort to fund the coastal restoration process. And the oil and gas industries should recognize their moral responsibility to pay for the coast they helped to kill. If these industries don’t feel the need to make a voluntary contribution, then coastal advocates should explain to Louisianans why Big Oil should be taxed in order to fund the Road Map/coastal restoration plan.

In short: coastal restoration, not drilling, is the larger issue that needs to emerge from this oil gusher crisis. Drilling off our coasts will continue –  let’s hope  in a safer, more regulated capacity, with better spill response mechanisms in place. A new national movement towards conservation and alternative energy would be welcome, too. But the central question for Louisiana is this: Will we save the coast while we can, before the window of opportunity shuts? And then: Shouldn’t Big Oil and Gas pay to restore the wetlands they helped destroy?

Southern Louisiana is the fastest disappearing land mass on earth, yet it supplies huge portions of America’s energy, seafood and culture. Louisiana has bent over backwards to power the rest of the country, and has bent over frontwards to serve Big Oil. We fuel the nation at the expense of our wetlands, and our wetlands fuel our cultural identity. We’ve become outraged by the oil catastrophe because it suddenly threatens our way of life, yet we can’t forget that our way of life still will be threatened by coastal loss. Why bother moving heaven and earth to save coastal estuaries that, at the current pace, won’t exist in a couple decades? After we finish cleaning oil from our wetlands, their existence will be in no less long-term danger. But can we sustain the current urgency and outrage, after the oil spill is gone? And will we have leaders who can channel it productively? In short will we save our wetlands from oil today only to let them die from salt water tomorrow?

The answer appears to be “yes”. Unless circumstances are changed.

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  • Update: I should mention that Sen. Landrieu has proposed legislation to make royalty funds immediately available, and these monies will be needed for coastal restoration. This will go to restoring wetlands that Big Oil and Gas helped kill.

    Also, regarding the current moratorium on deep water drilling, I definitely feel for the families affected and for those whose jobs will be lost. Drilling will eventually resume, though, and Big Oil will still be offloading catastrophic blowout risks on to Louisiana’s coast. You would think that before they’d be allowed to drill again, they would have to demonstrate that they have “proven technologies” to quickly stop oil gushers. But, apparently they won’t have to do that. If god forbid another blowout causes another oil gusher, I guess we’ll go through this same top hat/top kill/junk shot showbizness for several months until the relief well is drilled. By the way, why don’t we just make relief wells mandatory, so that a fairly sure solution is ready-to-hand, in case a blowout occurs?

  • Really really great throw’down here.

    If you don’t have the Land upon which to Stand, you got No States Rights.
    Isn’t that the end game here? Voters have to have somewhere to plant the poll.

    In the meantime, they want everyone scared to lose the Oil Jobs due to a moratorium on drilling. Right. Silly meeses! Move to the Niger Delta if you really want to follow that one, or Indonesia, Ecuador, Nigeria… then after you get citizenship in those H’oil holes you can come back and work for the US Oil Industry in the Gulf of Mexico where Louisiana used to be. Give it another 25 years at this rate of bow’down. And btw, that Macondo oil was going to Texas –not Louisiana. I would even be willing to bet that this Strike isn’t even planned for the domestic US market but China.

    BP isn’t going to go bankrupt on this. Indeed we could seize every asset down to the toilet paper in their gas station bathrooms and it wouldn’t make a dent in their profit. So I say we should do that, and move the money to the recovery from their heinous anus.

    Just because we will become shocked out of our wits from this catastrophe, we must maintain our place… or at least the memory of it with nothing left to lose.

    Thanks youz,

  • jeffrey

    “By the way, why don’t we just make relief wells mandatory, so that a fairly sure solution is ready-to-hand, in case a blowout occurs?”

    I recently found myself asking the very same question. One answer, I discovered, was that Canada already has such a requirement in place AND BP was in the process of petitioning for its removal mere weeks prior to the Horizon explosion.


  • Ricky P.

    Gill’s column and a lot of others about this disaster have rubbed me the wrong way. Of course we have some responsibility as citizens of our fine state for the wetlands loss and general environmental degradation we are witnessing, but we shouldn’t minimize the responsibility for this specific event. BP and the rest of the companies responsible for this well are fully responsible for it and every bit of damage associated with it.

    Wetlands reclamation is something we can look to in the future, and ought to demand shares from the O&G producers who we grant license to our coast line’s future from. I just don’t think that we ought to lose sight that there are specific people responsible for this event. We’re not those people, no matter how many jobs O&G provide to this state.

  • jacki

    I’ve been asking the same question everywhere….WHY WAS THERE NOT A SYSTEM IN PLACE BEFORE any drilling ever began? It blows my mind that this hasn’t been a requirement, as caretakers of this earth it is our (MOSTLY THEIR) responsibility!!!!

  • Ricardo

    Jacki, because the administration before this was Bush League. I’ll have to come up with something clever for the current one…

  • It was bad enough that lax regulations (thanks to a generation of “government is the problem” rhetoric) meant no requirements to build a relief well simultaneously with the main well; adding to the injury is that the well itself more demonstrative than critically necessary. The oil fouling the coast for what will likely be decades wouldn’t have made more than a penny’s worth of difference or so in spot market prices.

    But I guess it did manage to demonstrate how thoroughly BP owns the government…

  • Foster Campbell is an alright guy, but his problems have always been one of adequate fund-raising. He just can’t spend the money necessary to get his face out there to enough folks. Especially in SoLA.

    But, he has made an absolute fortune on royalty deals with Natural Gas up in North Louisiana with the Haynesville Shale discovery. He had money before, but now he’s filthy rich, if you know what I mean.

    The question for his future political endeavors may be whether he decides to self-finance future campaigns to put his money where his mouth has always been, or whether he’s content to relax, content with his current place in the political game and the fat stacks of cold cash he’s recently come into.