Pinkerton: After ‘Par-Exit,’ America Needs a Strategy for Fossil Fuel-Based Jobs and Growth

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Second of Two Parts

I. The Power of Big Green Money

In Part One, we considered the class-warfare dimension of the debate over climate change: the plutocrats vs. the people.  The immediate flashpoint, of course, is President Trump’s decision to exit the Paris Climate Accord, which we might dub “Par-exit,” as a play on Brexit.  Indeed, the conflation of the two exits seems fair: In both cases, big money was on one side, and ordinary people, and their respective national sovereignties, were on the other side.

So now let’s look at the future policy implications of this class war, and what must be done to secure middle-class American jobs in the future.

Let’s begin with a clear-eyed understanding of just how much big-money-power is aligned on the side of the greens.  In the previous installment, we noted that much of the Rockefeller family is fully on board with green activism.  Indeed, we can marvel at the fact that across the centuries—from the 19th-century days of the Standard Oil monopoly to the attempted green hegemony of the 21st century—the Rockefellers seem always to end up in opposition to the middle class.  Evidently, great wealth has that effect on a family dynasty, both then and now.

Yet on the issue of climate change today, it’s not just the trust-fund rich that have dedicated themselves to this cause; it’s also true for many of the top executives currently running corporate America.  For example, Lloyd Blankfein, CEO of Goldman Sachs, blasted Trump’s Paris decision, as did Elon Musk of Tesla and Jeff Immelt of General Electric.  To be sure, most CEOs were quiet about the Paris decision, and some were even supportive.

Still, we can see that the combined weight of all this money-power is doing everything it can to squeeze, even crush, the use of fossil fuels.  That is, all that loot can pay for a combination of bad press, boycotts, voluntary renunciations, litigation, and state-and-local regulation; the result of all this pressure could well be that the energy expansion that Trump hopes for can still be stopped, maybe even reversed.

To see how this anaconda-like squeezing is already having an impact, we might consider the case of ExxonMobil.  Just last month, New York City-based Black Rock, the investment behemoth that manages a whopping $5.4 trillion, forced a dramatic shift in ExxonMobil’s policy stance on climate change.

Yes, ExxonMobil is itself a huge corporation—the second largest in America by revenue—but it is owned by its shareholders, most of them institutional investors.  So Black Rock teamed up with two other financial giants, Vanguard and State Street, to use their combined 18 percent stake in ExxonMobil to ram through that policy shift.

Thus we can see: Even the largest industrial companies can be brought to heel by the massed power of finance.

Some might wonder: Why would Black Rock and the others want ExxonMobil to take a policy position contrary to their own financial interests?  After all, it’s hard to see how Exxon, or any oil company, will do better by selling less oil in the future.

To answer this question, we might start by observing that investment moguls have to live somewhere, and they have relationships with colleagues, friends, and family.  And if most of these bigs shots are clustered around New York City, it’s not shocking that they develop—if they don’t already possess—the liberal values of their sociocultural environment.

Indeed, as we all know, the human herding instinct is a powerful force; peer pressure has a way of changing behavior.  Thus the urge to stay with the “in group” is often more important than the need to maximize the bottom line—and the ExxonMobil case proves it.

Still, the bottom lines of the rich are doing just fine.  Today, the top 10 percent in America earn more than the lower 90 percent, and that’s a huge shift in their favor over just four decades.  And at the same time, the effective federal tax rate on the ultra-rich has gone down.   In other words, the plutocrat class is doing just fine, thank you very much.

We can quickly observe that if the wealthy were content just to enjoy their wealth, they wouldn’t be a problem; after all, one person’s opulence is another person’s sustenance.  However, as we saw with the Rockefellers, the possession of a great fortune often means, as well, the possession of a certain worldview; things appear different from the window of a private jet.

Indeed, if we examine this 3-D map of wealth in America, we can see that the richest locales tend to correlate closely with liberalism and Democratic Party strength.

Yes, it might seem strange to think that billionaires would be Democrats, given the Democrats’ rhetorical emphasis on “soaking the rich,” and yet as we have seen, the rich have mostly emancipated themselves from paying taxes, with the tacit nods of Democratic presidents Bill Clinton and Barack Obama (and perhaps it’s not a coincidence that the Clintons and Obamas are now both themselves multi-millionaires).

In other words, if there’s no threat to the rich from a Democratic IRS, then the plutocracy can indulge itself by using politics to address other concerns, mostly environmental and cultural issues.

A decade ago, the astute social observers Joel Kotkin and Fred Siegel coined a phrase for this top-down political phenomenon: “gentry liberalism.”  That is, rich Democrats can now buy much of the political system and thus a gain a chance to remake the nation, and maybe even the world, as they see fit.  More recently, Kotkin and Siegel have gone even further: They have equated gentry liberalism to feudalism—that is, oligarchic rule by the rich and powerful.

To get a sense of where this sort of politics can lead, we might look west, to California.  There, the billionaire class presides over a state that’s becoming ever less friendly to the middle class, and their jobs.  Yet from a liberal billionaire’s point of view, this hostility is a feature, not a bug. Why?  Because a shrinking middle class means fewer of those pesky Republicans.

In the meantime, Democratic-dominated California is working to perfect its ecological consciousness.  Its governor, Jerry Brown, is perhaps the greenest state executive in America; he called Trump’s decision to withdraw from the Paris accord “insane,” and has spearheaded the effort to make California go even further on CO2 reductions.

One has a right to wonder how this sort of neo-feudal politics will work out in the long run; after all, in old Europe, feudalism usually dissolved into civil war and violent revolution.  However, in the short run, our task is to consider American politics as they are today.

II. The Power Consequences of Slow Growth

As we know, the U.S. economy, overall, has grown slowly in recent years.  Barack Obama was the first president in at least seven decades never to see, in any year of his presidency, economic growth reach even three percent.  In fact, the average growth rate during his time in office was a mere 1.48 percent, barely above population growth.  In other words, all of Obama’s bright promises—“five million green jobs” and bountiful plenty for the vast middle—were proven to be hollow.

Yet at the same time, under Obama, the stock market zoomed, and we’ve already seen who has reaped most of the benefits of that zoom.

Some might ask: What could account for the seemingly paradoxical combination of slow growth in the economy and fast growth in the stock market?  Answer: The U.S. stock market is no longer a dependent variable of the domestic economy; it’s now a function of the world economy.  In other words, if China is doing fine, then it’s likely that American investors, too, are doing fine.  By this reckoning, Middle American well-being is simply an afterthought, and not much of a priority.

Meanwhile, across the whole of the U.S., the consequences of Obamanomics are now measurable.  We might note that one measurer is Thomas Edsall, a rare type of MSM journalist, insofar as he devotes himself to chronicling the struggles of ordinary Americans.

In particular, Edsall has come to report on the deepening divide between urban and rural America, as the former taps into the globalized economic jet-stream, while the latter is consigned to the slow zone.

As Edsall notes, since 2009, employment in metropolitan areas has risen 4.8 percent, while employment in non-metropolitan areas has shrunk 2.4 percent.  Another Edsall finding tells us that during the 90s, cities of over a million people accounted for 16 percent of new job creation, and then just two decades later, in the 10s, the biggest cities accounted for 41 percent of jobs created.   In other words, the cities are now hopping.

Meanwhile, The Wall Street Journal recently added this bleak headline: “Rural America is the New ‘Inner City.’” So, given what has happened to the well-being rural America under their watch, is it any wonder that the Democrats would rather change the subject to climate change?

So now, enter Trump.  He has yet to prove that he is a master of a robust legislative agenda, but he obviously recognizes the need to stop the harm being done to Middle America.

In his June 1 remarks at the White House, Trump declared that the “onerous energy restrictions” of the Paris Agreement could have cost  2.7 million American their jobs by 2025.  Then, looking further ahead to the impact on production by 2040, the President got specific, sector by sector: “paper down 12 percent; cement down 23 percent; iron and steel down 38 percent; coal down 86 percent; natural gas down 31 percent.”  Those losses, and losses to other sectors, would have totaled 6.5 million industrial jobs, with GDP down by $3 trillion.  In other words, Middle America, thanks to Trump, has missed a bullet—a green bullet.

Yet the mere fact that things won’t get worse doesn’t mean that they’ll get better.   In fact, if things continue as they are, with the financial deck stacked in favor of blue-dot America, at the expense of red-state America, then there can be no certainty of an economic recovery for Trump Nation.

In addition, there can also be no certainty that some future U.S. government won’t reimpose the Paris limits or, perhaps, go even further, all the way to zeroing out fossil fuels, as many leading greens advocate.

Yes, it’s worth bearing in mind that everything Trump has just done can be undone after the next election.   That is, if President Obama put us into Paris with an executive action, and if President Trump took us out with an executive action, then the next president could do just about anything—in, out, in-between.

So we can see: The ultimate hope for Middle American jobs is to make permanent the viability, even desirability, of fossil fuels—that is, to Paris-proof them.  And yet fossil fuels will only be safe to use, long term, if they are safeguarded by the addition of new clean technology, endorsed and ratified by specific Congressional action.

III. Cleaned-Up Fossil Fuels to Boost Jobs and Growth 

If you want to see what better times in the Heartland look like, consider this story that appeared in, of all places, The Washington Post. Datelined Gillette, Wyoming, the article was headlined, “How ‘the Energy Capital of the Nation’ regained its optimism in the Trump era.”

The piece recalled that in January 2016, the Obama administration commanded a moratorium on the leasing of federal lands for coal mining.  As the Post put it, “That was a direct hit to Gillette, where most mining was done on federal land.”

As a result, many mine workers were laid off early last year, and, as the Post put it,  Gillette “spiraled down.”  At the same time, the newspaper added grimly about the seeming fate of the miners: “Democrats, led by presidential nominee Hillary Clinton, declared their jobs passe.”  Might that be the reason that Clinton won just 21.9 percent of the vote in the Cowboy State?

Yet now, in the Trump era, the mines have reopened, and Gillette has bounced back; the Post even shined the spotlight on a same-sex couple whose new restaurant is booming.  Thus we are reminded that John F. Kennedy was right: “A rising tide lifts all boats.”

So here’s a question: Why can’t more of America enjoy the coal-driven prosperity of Wyoming?  And the answer is, more states can, provided that the necessary precondition is in place.

And that necessary precondition is positive action to mitigate carbon dioxide, aka, greenhouse gas.  To be sure, some will argue that the whole theory of climate change, or global warming, is a misnomer, even a hoax.  And perhaps it is.  Or perhaps it isn’t.

Either way, if the previous 4,000 words in these articles mean anything, then a politically attuned observer will conclude, however reluctantly, that the greens, with all their their money- and media muscle, aren’t going anywhere.

In other words, the mismatched wealth relationship between blue and red America needs to be factored in.  And so the prudent path is to think about a constructive compromise that gives something to both sides.

Yes, the fossil-fuel forces have Trump.  And yet the anti-fossil-fuelers, here and around the world, also have plenty of punch.

As a result, if the pro-fossil fuel forces wish to keep their recent gains—and continue to make progress in the future, come what may, election-wise—they will have to show genuine forward motion on the issue of climate change.  To put that another way, they will have to “sweeten the pot” in re: clean, green, technology.

Fortunately, such clean tech already exists—although we need a lot more of it.  Much of that technology falls into the category of carbon capture, that is, finding a way to sequester COout of the atmosphere.  As this author has argued in detail, carbon capture is the best way to have our cake and eat it, too.  With effective carbon capture, we can enjoy the enormous benefits of fossil fuels, including coal, without the risk of enormous environmental costs.

Admittedly, carbon capture hasn’t received much attention, perhaps because the two ideological polarities on the climate issue would rather fight than work together to solve the problem.

And yet even so, carbon capture is a big enterprise; earlier this year, the American Petroleum Institute’s Jack Gerard reported that from 2000 to 2014, the public and private sectors spent a total of $303 billion on carbon capture.  So we can see: Already carbon capture, in and of itself, means a lot of economic activity for red-state Americans.

Today, carbon capture means mostly re-injecting COinto the ground, often as an aid to fracking.  And yet with more research and development, pilot projects that have have already turned CO2  into useful things—including landfill, concrete, plastic, and new energy—can be escalated into large-scale industrial product-lines.

And if such carbon capture could be truly “scaled,” then the entire U.S. economy would be transformed, as vast energy vistas would open up.

It’s been estimated, for example, that the value of oil and natural gas under federal lands and waters is $128 trillion.  To put that number in perspective, that’s more than six times the size of U.S. GDP, and also six times the size of the U.S. national debt.

And we should emphasize: $128 trillion is just the value of oil and gas—not including coal—on federal property.  The dollar total for all fossil fuels, under all American lands, is in the many hundreds of trillions.  So if we could find a politically and environmentally acceptable way to get at that wealth, we wouldn’t just be sitting pretty—we’d be downright gorgeous.

So now we might drill down, pardon the pun, on a single state: Illinois.  As everyone knows, that Heartland state, once rich, has fallen on hard times.  After years of chronic budget crises, Illinois now has a bond rating of BBB-minus, just a notch above junk-bond status.  To be precise about it, Illinois owes $14.5 billion that it doesn’t have.

Yet at the same time, according to the Illinois State Geological Survey, the Land of Lincoln has 200 billion tons of coal, of which, given present-day prices and technology, 38 billion tons are rated as “recoverable.”  In other words, at the current price of around $30 a ton, the recoverable coal is worth some $1.1 trillion.  And yet today, Illinois produces only about 32 million tons of coal a year; that’s a microscopic .08 percent of what’s currently possible.

So we can see: Illinois is sitting atop vast wealth, and yet, at the moment, it has no feasible way of accessing it.  And of course, if coal were ever to become a focus of energy research, as it once was, then it’s likely that Illinois could find an acceptable way to recover a lot more of that 200-billion-ton grand total.

We can add: the same sort of mega-dollar calculations would hold true, as well, for many other states.

Happily, some visionaries are ready to help move Illinois, and all of America, forward on this journey toward techno-empowered abundance.  One such is the Trump administration’s Secretary of Energy, Rick Perry.  The Energy Department has long supported—even under Obama, however quietly—carbon capture as part of a portfolio of forward-looking energy strategies.

For his part, as the longest-serving governor of Texas, Perry was a champion of carbon capture, as seen, for instance, at Houston’s Petra Nova plant.

Today, as a key figure in the Trump administration’s emerging energy strategy, Perry stands ready to expand his scope to the nation as a whole.  On June 1, for example, he tweeted, “I fully support @POTUS’ decision on the #ParisAccord. The U.S. will continue to be a leader in energy technology, development, & delivery.”

So we can see: Innovative technology is available to start making full, and clean, use of ancient forms of energy.  What’s deemed to be dirty today can be made clean tomorrow.

Moreover, out of newfound cleanliness could come a new consensus; namely, a bipartisan, and thus enduring, commitment to responsibly re-energize the Heartland.  Needless to say, the hardcore greens would hate the idea, but then, as we all know, they hate everything that’s not made out of burlap—or hemp.

Yet in the meantime, plenty of middle-of-the-road Americans, concerned about climate change yet desirous of economic growth, could come to recognize carbon capture as the win-win that we have been waiting for.

Yes, carbon capture is an exciting technology, offering the hope that we can, indeed, Make America Great Again—all of it.


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