Category Archives: Energy

The EU is sleepwalking into anarchy

Sept. 26, 2022 – By Thomas Faze

Source: The EU is sleepwalking into anarchy – UnHerd

All eyes may be on the Italian election results this morning, but Europe’s got much bigger problems on its hands than the prospect of a Right-wing government. Winter is coming, and the catastrophic consequences of Europe’s self-imposed energy crisis are already being felt across the continent.

As politicians continue to devise unrealistic plans for energy rationing, the reality is that soaring energy prices and falling demand have already caused dozens of plants across a diverse range of energy-intensive industries — glass, steel, aluminium, zinc, fertilisers, chemicals — to cut back production or shut down, causing thousands of workers to be laid off. Even the pro-war New York Times was recently forced to acknowledge the “crippling” impact that Brussels’s sanctions are having on industry and the working class in Europe. “High energy prices are lashing European industry, forcing factories to cut production quickly and put tens of thousands of employees on furlough,” it reported.

Zinc, aluminium and silicon production cuts (amounting to a staggering 50% of output) have already left consumers in the Europe’s steel, auto and construction industries facing severe shortages, which are being offset by shipments from China and elsewhere. Meanwhile, steel plants in Spain, Italy, France, Germany and other countries — more than two dozen in total — are beginning to slow down or entirely stop their output.

The fertiliser industry, which is heavily dependent on gas as a key feedstock as well as a source of power, is in even bigger trouble. More than two-thirds of production — around 30 plants — has already been halted. The German chemicals powerhouse BASF has temporarily shut down 80 plants worldwide and is slowing production at another 100 as it plans further output cuts depending on what happens to gas prices. To make things worse, EU sanctions have also limited imports of Russian fertilisers.

Dwindling supplies of fertilisers are also having a dramatic knock-on effect on European farmers, which are being forced to scale back their use of the key nutrient. This means higher prices for less output, and the consequences are bound to be felt well beyond Europe’s borders, potentially triggering a global food shortage.

But the shortage of fertiliser isn’t the only problem facing European farmers. Across northern and western Europe, vegetable producers are contemplating halting their activities because of the crippling energy costs — in some cases ten times higher than those of 2021 — required to heat greenhouse through the winter and keep harvests refrigerated, on top of rising transport and packaging costs. Greenhouse industry group Glastuinbouw Nederland says up to 40% of its 3,000 members are in financial distress. This further threatens food supplies — and will certainly lead to even higher food prices which, coupled with soaring energy bills, is likely to drive millions of European into poverty. In other words, the European energy and cost-of-living crisis is on course to descend into an outright humanitarian crisis.

In the UK, 45 million people are forecast to face fuel poverty by January 2023; as a result, “millions of children’s development will be blighted” with lung damage, toxic stress and deepening educational inequalities, as children struggle to keep up with school work in freezing homes. Lives will be lost, experts warn. Meanwhile, in Germany’s Rheingau-Taunus district, the authorities have carried out a simulation of what such a blackout would mean for them, and the results are shocking: more than 400 people would die in the first 96 hours. And this in a district of just 190,000 inhabitants.

Now, these numbers may well be overestimates, but the local government can’t afford to ignore them. Indeed, Gerd Landsberg, general manager of the German Association of Towns and Municipalities, has urged residents to stockpile water and food for 14 days. Landsberg says that Germany is “in no way” prepared for such a scenario.

What’s important to understand is that this is not some temporary crisis where all we need to do is grit our teeth through the winter, after which things will return to normal. The reality, as the chief executive of Shell recently made clear, is that if European governments insist on decoupling Europe from Russian supplies, the continent will face gas shortages “likely to last several winters”. It’s a bitter truth, but there’s simply no short-term alternative to Russia’s gas. Indeed, the European Commission forecasts gas and electricity prices to “remain high and volatile until at least 2023”.

To put it simply, if it stays on its current course, Europe is looking at years of economic contraction, inflation, deindustrialisation, declining living standards, mass impoverishment, and shortages — and this without taking into account the terrifying prospect of an outright military confrontation with Russia. How can anyone think Europe can survive this without plunging into anarchy?

The folly of the situation becomes even more apparent when we consider that, in its attempt to reduce its dependence on Russian gas, the EU is increasing its reliance on supplies from countries like China and India — which, it would appear, are simply reselling to Europe gas that comes from… Russia (at a higher price, of course). If people’s lives weren’t on the line, this whole thing would seem like a sick joke.

Europe has lost the energy war

By Thomas Fazi

It’s truly a sign of the feebleness of Europe’s politicians that despite the fast-approaching cliff, no one can bring themselves to state the obvious: that the sanctions need to end. There’s simply no moral justification for destroying the livelihoods of millions of Europeans simply to school Putin, even if the sanctions were helping to achieve that aim, which they clearly aren’t.

And so, rather depressingly, the only voice of reason appears to be that of Hungary’s prime minister, Victor Orbán. For weeks he and other members of his government have been warning about the economic calamity facing Europe. “The attempts to weaken Russia have not succeeded,” he said recently. “By contrast, it is Europe that could be brought to its knees by brutal inflation and energy shortages resulting from sanctions”. This is a statement of fact, not an opinion. But nobody seems to want to listen.

In response, the technocrats in Brussels are proving to be just as senseless as national leaders. Not only is the EU’s gung-ho approach to Russia one of the main causes of the present crisis, but its leadership continues to pour petrol on the fire. Just this month, Josep Borrell, the High Representative of the European Union for Foreign Affairs and Security Policy, said that “the strategy against Russia is working and must continue” — and promised new sanctions.

Even worse, the EU isn’t even doing anything to help cushion the effects of the crisis it helped create. After dropping the ridiculous proposal of capping only the price of Russian gas — which would have led to the latter’s immediate cut-off — Brussels is now mulling a cap on all gas imports, which even the German Minister of State for Europe has warned could lead to severe shortages.

The proposal also fails to take into account a basic fact: it’s not energy exporters that are ramping up the price of gas; the latter today is linked to the price at which gas is traded on virtual trading markets such as the TTF in Amsterdam, where speculators have been rallying up prices for months, making huge profits. Moreover, in today’s liberalised market, which is based on so-called marginal-cost pricing, the final price of power is set by the most expensive fuel needed to meet all demands — in this case gas. This means that as gas prices soar, so does electricity, even if cheaper, clean sources contribute to the total mix.

So, if the EU were serious about tackling about energy prices, it would decouple the price of gas from speculative trading markets and overhaul the marginal-cost pricing system. But that would go against the European technocrats’ fundamental ideology: the idea that prices should be set by markets. Indeed, the EU was among the most ardent supporters, against Putin’s advice, of the shift from long-term, fixed price gas deals to a system where the price is set by virtual trading markets.

Civil disobedience is coming

Given the unlikelihood of radical reform, what will Brussels do next? In all likelihood, it will settle for half-baked solutions — such as a cap on the excess revenues made by non-gas power plants and a windfall tax on surplus profits — as well as for what it does best: austerity. Meanwhile, the ECB, instead of announcing a new round of bond purchases to provide governments with the cash they need to cushion citizens and companies from soaring gas and energy prices, has started to taper its quantitative easing programmes and hiked interest rates, causing the spread between 10-year government bonds issued by Italy and Germany to widen to their highest levels since the pandemic began. This could easily precipitate a new debt crisis, which is the last thing Europe needs.

Without central bank support, governments in the EU have essentially been left to fend for themselves. Once again we are reminded of what it means for euro countries to have given up the power to issue their own money; it’s no coincidence that the UK alone has allocated more than 50% of what has been set aside by the EU as a whole.

This is already leading to beggar-thy-neighbour policies: those countries, such as Germany, that can rely on financial markets to raise the cash they need to help citizens and businesses, and nationalise or bail out ailing energy utilities, will inevitably outcompete weaker countries that are already facing stress on bond markets, such as Italy. In fact, this is already starting to happen, as more and more countries engage in what can only be described as energy protectionism.

In theory, Europe’s gas security is governed by a regulation adopted in 2017, which makes solidarity among European countries mandatory. But EU countries don’t always observe those rules when confronted with a supply crisis. So, for example, the Italian newspaper la Repubblica recently reported that Italy had received written notification from France’s state-controlled utility EDF regarding a potential two-year halt on power exports as part of France’s energy-saving plans. A spokesperson for Italy’s Ministry of Ecological Transition later confirmed the newspaper report, although it was denied by EDF. Similarly, Croatia and Hungary have both announced that plans to implement measures to limit exports of natural gas to neighbouring countries. While Norway, which has supplanted Russia as the EU’s largest source of gas, making gigantic profits on the back of higher gas prices, has thus refused to back a price cap on its gas exports.

Yet while moaning about such “lack of solidarity” between European states is easy, it is also naïve. This, after all, is simply how capitalism works. For all the talk of “global capitalism”, individual nations — or better, their respective capitalist elites — are still engaged in competition with each other. While the ruling classes of individual countries are more than happy to collaborate to pursue the interests of capital-in-general at the expense of workers — just look at the European Union — their competing interests inevitably re-emerge in times of crisis.

The EU, in fact, far from encouraging solidarity among countries, actually makes inter-capitalist competition even more fierce, by depriving countries of the basic economic tools that are required to deal with external shocks. It doesn’t matter if the continent is experiencing a financial crash, a global pandemic or an energy shortage. In Europe, beggar-thy-neighbour policies aren’t an exception to the rule — they are the rule.


C&C. Its Total Madness. Timing. Electric Heaters.

Source: Coffee & Covid ☙ Wednesday, September 14, 2022 ☙ MADNESS!


💉 Even though the 11th Circuit partially vacated the injunction on the federal contractor mandate last month, effectively limiting its scope to just the plaintiff states, the Biden Administration’s GSA issued new guidance yesterday stripping the mandate from federal purchasing requirements. The government now says it will take no action to enforce the mandate “absent further written notice from the agency.”

Ding, dong. Another jab mandate is dead.

🔥 One of the dreariest but most rewarding parts of a litigating lawyer’s job is reviewing bank statements. There’s a lot I could say about it, but for this morning, that often mind-numbing task is not just about WHAT people did with their money but it’s also about the TIMING. You can learn so much about people by looking at what they do with their money and especially, WHEN.

For example, say you have a guy who is a defendant in a lawsuit that went to trial on January 1st. He wound up losing big and owing a lot of money. That guy’s December bank statement is going to be EXTREMELY interesting, as would the entire last half of the year before trial while he was fretting about what would happen. You’re looking for large transfers to relatives or foreign jurisdictions that suggest he was trying to get ready to be judgment proof.

Once, I looked into a guy who only used his Venmo account when he traveled, and it was always to give $200 or $300 dollars to individuals, usually female names, suggesting he was always lonely when he was away from the comforts of home. By the way, you can always tell when someone was traveling, because the charges on their statements are from out-of-state or out-of-country gas stations, hotels, restaurants, and shops.

On the other hand, cash transactions are not so helpful. Sure, you can point to cash withdrawals and say “aha! Look, judge, he took out $10,000 cash out of the account every time he went to Vegas!” But it doesn’t PROVE anything. The witness will just say, “I needed it for something else; I can’t remember. I definitely didn’t gamble with it, are you insane?” Sure, it makes them look bad, and the judge might help you out, but it can’t prove where the money WENT. You still need the casino receipts.

Many people think this is part of reason governments are suddenly pushing for digital currencies; because it’s so easy to know everything worth knowing about someone by their account records.

But I digress. The point is about the TIMING. When you’re trying to figure out what another person is up to, the WHY of something they’re doing, you should consider whatever they did in the context of what ELSE is happening around the same time.

Right now, we have to consider everything Joe Biden does in the context of the mid-term elections.

🔥 Biden issued a massive new executive order yesterday that sweeps through every agency in the U.S. government, with the awkward title, “Executive Order on Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy.”

It’s the E.O. on A.B.B.I.S.S.S.A.B!

The order sets the driving policy of the Biden Administration to massively increase investment in bioengineering and manufacturing, because “[t]he COVID-19 pandemic has demonstrated the vital role of biotechnology and biomanufacturing in developing and producing life-saving diagnostics, therapeutics, and vaccines that protect Americans and the world.”

Stop laughing! He’s serious, pay attention.

Biden’s latest mega-order claims that the government has a CRITICAL NEED; a need to re-program people like robots. I’m not making that up. Here’s exactly what the E.O. says:

We need to develop genetic engineering technologies and techniques to be able to write circuitry for cells and predictably program biology in the same way in which we write software and program computers[.]

Haha! “Predictably program biology.” In case you missed the memo in second grade, YOU are biology, partner. Biden wants you to be predictable. Like a computer program. No pesky software bugs. No garbage in, garbage out. No MAGA extremism.

Haha, this is so over the top I’m starting to think they’re deliberately trolling us. I’m also sensing that the robot program must be struggling, since Biden seems to think it’ll be easier to re-program US than our metallic assistants.

Anyway, within the next two months, the order requires the Secretaries of HHS, Energy, Agriculture, and Commerce, plus the Director of the National Science Foundation, to come up with recommended programs to incorporate biotechnology and biomanufacturing into nearly every aspect of American government, “in order to further societal goals.”

Sounds legit, right?

After the agency heads turn in their proposals, the E.O. gives the OMB and other agencies about 3 months to “develop a plan (implementation plan) to implement the recommendations in the reports. “ They have to “solicit input” from “experts” on ethics, environmental sustainability and environmental justice, whatever that is, and however it is different from regular “justice.”

Soliciting input is not the same as following input.

Then, within two years, the agencies will have to report on how well they’ve implemented the bioengineering plans.

The two words of greatest interest are so broadly defined in the E.O. that they aren’t particularly helpful:

(b) The term “biotechnology” means technology that applies to or is enabled by life sciences innovation or product development.
(c) The term “biomanufacturing” means the use of biological systems to develop products, tools, and processes at commercial scale.

Now. I know what you’re thinking. You want to talk about the awful dystopian implications of predictably reprogramming everybody’s cells, but that’s bait.

Think about the timing. Right before mid-terms.

The real story is, the gold rush is on! Aside from anything else this order might actually accomplish, it will positively be a HUGE cash grab. Nearly every federal agency is going to be wanting to buy new products with the “bioengineered!” label on them. Every federal agency is going to be soliciting grants for products and services that help achieve the new bio-plans. Every federal agency will be handing out lucrative low-accountability bio-contracts to its special friends, like candy at Halloween. Some for you, some for you, and some for YOU!

It might be even bigger than the Covid Gold Rush.

So here we are, less than 60 days out from the midterms, and Biden is offering a brand-new gold rush, a massive across-the-board federal purchasing program that depends on a cooperative Congress to fund it. It’s an offer to corporate America — forget about the supply chain! Forget about mandates! Forget about CRT!

Because, if the right people get elected, we’ll shower you all with crisp, newly printed cash. And remember, you’ll only get the money if you play ball. They’ll remember who their friends were — and weren’t — during the elections.

And as a side benefit, the E.O. is bioengineered to spin up MAGA extremists and the medical freedom lobby, who are expected to decry and condemn the E.O., which will turn MAGA into a threat to anybody who stands to make oodles of money from all the proposed new programs.

Don’t take that bait! I’m not saying you should relax into this, just wait till the day after the elections, and then be smart about it.

Now we know why Joe Biden has been on vacation for the entire summer. They were resting him up for all this stuff he’s doing now, from his Great Big Hate Speech to his stump speeches and executive orders. It’s all about the midterms.

🔥 Trump’s lawyers and the DOJ have now traded feisty briefs on whether the judge should stay her order requiring a special master until the DOJ’s appeal runs its course. Which of course will be well after the FBI finishes doing whatever it is planning to do. But a spectacular opportunity is shaping up for President Trump, and if he planned it this way, he’s a genius.

There’s a lot of great stuff in the briefs. President Trump’s brief persuasively argued that the president has sole authority to declassify whatever he wants; it even cited a very helpful Obama executive order reinforcing that authority. But I’m detecting a momentum, a momentum pushing toward a single legal issue, and that issue was neatly summarized by the DOJ in its reply brief, filed yesterday, which made this perfectly legitimate point:

[Former President Trump’s] attempts to change the subject by holding out the possibility that he could have declassified some of the seized records and-or that he could have designated them as “personal” records fare no better. As already noted, Plaintiff [Trump] has now filed multiple lengthy submissions with the Court that stop short of asserting that he in fact took any of these actions with respect to any of the seized records, including those at issue in the stay motion.

The DOJ is right. If President Trump wants to argue that the classified records he was keeping at Mar-a-Lago were declassified, he needs to say so, and say it clearly. At present, Trump is playing coy, one of his usual strategies, and is trolling the government by saying that he’s NOT saying he did declassify or didn’t declassify, but as far as the government knows, he DID.

That kind of fence-sitting won’t hold up forever. In fact, it’s probably not going to hold up for very much longer at all, now that the DOJ has explicitly called him out. The judge can see this issue looming on the judicial horizon just like I can. It’s the key to the entire case. I wouldn’t be surprised if the judge sets a special trial just to determine whether the records are or are not declassified.

So so this could quickly and finally produce a miraculous victory for Trump, not just in the case but against the entire Deep State, a definitive victory once again snatched right out of the jagged jaws of defeat. We know that, shortly before he left office, Trump had proposed to declassify a bunch of records relating to Russiagate and other FBI corruption. He sent those records to the FBI so they could offer redactions of anything that would harm U.S. interests. But the FBI slow-walked their response until Trump was out of office.


It is not unreasonable to assume the records snatched by the FBI at Mar-a-Lago were the very same ones Trump proposed to declassify: the evidence of FBI corruption (and maybe a lot more) in the Russiagate papers, at least.

So Trump has been trapped in a weird middle ground. Were the records declassified even though the FBI never completed its redactions? Was Trump’s act of requesting the redactions merely a courtesy, and not a requirement for redaction? These are unsettled questions. Trump can’t — shouldn’t — release those documents until a court says they’re declassified, or they COULD lock him up.

But to get a judge to issue a “declaration” of a party’s rights — like the rights of a former president to publish declassified records — there must a REAL and PRESENT dispute over those rights, not just a hypothetical dispute. This may not make sense to non-lawyers, but judges may not give pure ‘advisory opinions.’

In other words, the only way Trump could have gotten this issue in front of a judge, the issue of whether the records ARE IN FACT declassified, was to pick a fight with someone over it. I have no idea whether the Trump team planned it this way, but it could not have possibly played out any better than it has. If Trump had been the one to instigate a dispute, it would have almost certainly been heard in D.C., where all the agencies are located, and where the deck is completely stacked against the 45th president.

To get the issue into an unbiased jurisdiction, Trump had to get someone ELSE to start the fight, in a place where he could fight on neutral ground. Where better than Florida?

Because the FBI raided Trump in Florida, starting a case there, and because the DOJ has now called the issue out, the decision over the records’ classified status will be heard in Florida, the inevitable appeal will travel to the 11th Circuit, and then it will go to the U.S. Supreme Court.

I will skinny out onto a thin branch and predict Trump is likely to win in all three courts. If he’d started in D.C., he would’ve lost twice — at the D.C. federal court and then the D.C. appeals court — and then the Supreme Court would’ve had the odious and unwanted duty of overturning both lower courts. If it had played out this way, the corporate media would have trumpeted the Supreme Court decision as more evidence of out-of-control judicial activism, and the whole thing would have looked illegitimate.

All that noise would have distracted from the real story, which is the Deep State’s corruption, exposed by the declassified records.

Trump’s lawyers know a lot more than I do. I might be missing something. But the strategy now looks crystal clear to me. All Trump has to do now is say the magic words, “I DID declassify those records,” and the judge can set the matter for a showdown in Florida.

I know it sounds weird, but this could be the best thing that ever happened to Trump. Thanks, DOJ!

💉 Fox ran an uplifting story yesterday headlined, “Navy Quietly Rolled Back Punishments for SEALs Seeking Religious Exemptions to the COVID Vaccine.” The article explains that the Navy’s jab order, issued a year ago, was titled “Trident Order #12,” and medically disqualified any SEALs who asked for religious jab exemptions, precluding them from training, traveling for deployments, and other standard business.

In other words, making them unemployable.

Fox reported that the Navy just filed a brief in the case that attached a May 2022 order rescinding Trident Order #12. The new order plainly states, “This order rescinds reference A [Trident Order #12] on COVID-19 Vaccinations.”

Even the SEALs were surprised to see the order. It’s not clear whether the Navy might’ve replaced Trident Order #12 with a new jab order, but the lawyers in the case don’t think so.

So. Progress!

🚀 Reuters ran an article Sunday headlined, “Germans Switch to Costly Fan Heaters as Gas Shortage Fears Bite.” The headline tells you the whole story; Germans aren’t stupid. They’re buying up every electric heater they can get their hands on and German grid operators are freaking out. Electric heaters place HUGE demand on the grid. But it’s better than freezing.

So as you can see, the Russia Sanctions are really working out great. The GERMANS are starting to feel the pain. Russians, not so much. Maybe Germany will surrender soon?

And it’s a good thing Germany’s best and brightest are in charge. Guess what they’re up to now?

Last week, the Guardian UK ran a story headlined, “German Chancellor Rejects Calls to Reverse Nuclear Power Plant Closures.” Hahaha! That’s right, suckers! You Germans think you can warm yourselves with electricity, with your cute little heaters? Think again!

The Guardian reported that German chancellor Olaf Scholz rejected calls to extend the life of the country’s three nuclear power plants, insisting that Europe’s largest economy will have plenty of energy to get through the winter, don’t worry.

If you think that sounds crazy, you’re not alone. The Guardian said the opposition conservative alliance and at least one leading economist described the decision to close one reactor and place the country’s last two remaining reactors on standby status, in case of an emergency, instead of letting them produce electricity, as “madness.”


I wonder what “emergency” they’re waiting for.

It gets better. After taking criticism for his decision, Scholz blamed German conservatives for the country’s power problems. “You were incapable of bringing about the expansion of renewable energies. You led defensive battles against every single wind turbine,” Scholz whined.

Hahaha! Wind turbines! These guys kill me. It’s even funnier that corporate media takes that kind of kooky talk seriously.

Have a wonderful Wednesday! I’m flying this morning to meet with some state politicians about proposed parents’ rights legislation, so I have to cut it short. But don’t worry! C&C will be back tomorrow morning with another great roundup. See you then.


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How a CEO Rescued a Big Bet on Big Oil

Source: How a CEO Rescued a Big Bet on Big Oil; ‘There Were a Lot of Doubters’ – WSJ

Occidental Petroleum Corp. OXY 1.75% entered the thick of the pandemic among the worst prepared of its U.S. oil-and-gas peers. Struggling with debt from an ill-timed $38 billion deal, Chief Executive Vicki Hollub was fending off activist investor Carl Icahn, who controlled two board seats.

Two years later, the company has emerged as the top performer in the S&P 500, and Ms. Hollub has traded Mr. Icahn, who sold all of his Occidental shares in March, for Warren Buffett, whose Berkshire Hathaway Inc. BRK.B 0.86% now owns nearly 27% of the company.

It was touch and go for a time. Months before the pandemic took hold, she implemented widespread layoffs. To stave off bankruptcy after oil prices collapsed in 2020, she slashed spending and nearly eliminated Occidental’s once-sacrosanct dividend—“the biggest and toughest decision that I made and I’ve ever made in my career,” she said in an interview.

Her 2019 acquisition of rival Anadarko Petroleum Corp., which Mr. Icahn called a “disaster,” has given Occidental the dominant position in the largest U.S. shale-oil field, the Permian Basin. Lifted by climbing oil prices, Occidental generated a record $4.35 billion in free cash flow and $3.7 billion in profit in the second quarter. It has cut its debt to $22 billion from nearly $36 billion a year ago.

Shareholders initially punished Occidental for the Anadarko purchase, although the comeback in oil prices has since helped lift the company’s stock.

Oil-and-gas producers have reported banner profits this year, even as a global energy crisis sparked by Russia’s invasion of Ukraine has threatened to derail European industries, left the U.K. facing its worst economic crisis since the 1970s and forced the Netherlands, Germany and India to rely heavily on coal to make up for a dearth of natural gas.

But Ms. Hollub, the first woman to be CEO of a major U.S. oil company, says she doesn’t feel vindicated. “I just feel relief,” she said. “There were a lot of doubters.”

Mr. Buffett has publicly lauded Ms. Hollub’s leadership. After she detailed the company’s future plans for analysts in February, Mr. Buffett told his own shareholders, “What Vicki Hollub was saying made nothing but sense.” Last month, Berkshire received regulatory approval to buy up to 50% of the oil company’s shares, spurring speculation it might seek to purchase all of Occidental.

On Friday, the conglomerate reported it has bumped its stake in Occidental to 26.8% from a little over 20%, according to regulatory filings.

Mr. Buffett declined to comment for this story. Ms. Hollub said she has “tremendous respect” for Mr. Buffett, adding that “he will be very beneficial for us as we go forward.” She declined to discuss the possibility of Berkshire purchasing the entire company.

Some former investors remain skeptical, saying a spike in oil prices has rescued the company, not Ms. Hollub.

“I have nothing personal against Vicki,” Mr. Icahn said in an interview. “However, that will never change my mind that she should not have made a bet-the-company investment by way of overpaying for Anadarko.”

A University of Alabama graduate, Ms. Hollub joined Occidental in 1982 and soon found herself running operations in Russia and Venezuela. She almost got laid off in 2003, but Todd Stevens, an executive at the company who had followed her rise, arranged for her to lead a team evaluating acreage in Colorado, said Mr. Stevens, who has since left.

Equipment used to process carbon dioxide, crude oil and water at an Occidental Petroleum project in Hobbs, N.M.Photo: Ernest Scheyder/REUTERS

Ms. Hollub became known as a hard worker, once spending three weeks straightening out operations at a new gas field’s first well, said Donnie Enns, a former geophysicist who worked under her. “Nobody worked harder than Vicki,” he said. She also found time to run an office March Madness basketball pool.

After being named CEO of the company in 2016, Ms. Hollub departed from her predecessor’s preference for low-risk, “bolt-on” transactions. A little over a year into the job, she started courting Anadarko, an oil producer of comparable size, for a deal.

She outflanked larger Chevron Corp. in a bidding war that riveted the oil patch, offering $5 billion more than her rival for Anadarko and its prized assets in the epicenter of U.S. shale production. Yet victory came at a steep cost.

Some of Occidental’s largest shareholders decried the deal—especially a pricey loan from Mr. Buffett in the form of $10 billion in preferred stock paying 8% annually in dividends, or $800 million. Ms. Hollub negotiated the funding at the eleventh hour after meeting with the financier in Omaha, Neb. Mr. Icahn, who first bought stock as the Anadarko bidding war came to a close, wrote to Occidental shareholders that “Buffett figuratively took her to the cleaners.”

Ms. Hollub acknowledged the deal damaged the company’s standing with some investors. “I was never offended at the fact that our shareholders were skeptical,” she said.

Vicki Hollub said she never doubted the wisdom of the Anadarko acquisition.Photo: Angela Owens/The Wall Street Journal

But she said she never doubted the wisdom of the acquisition, even after it sparked an investor revolt that created an opportunity for Mr. Icahn.

Central to Ms. Hollub’s strategy was building on Occidental’s already-large position in the oil-rich Permian of West Texas and New Mexico. She believed purchasing and drilling a huge swath of new acreage, much of it near the company’s existing assets, would give Occidental economies of scale and allow it to outperform Permian rivals. Occidental, she said, was one of the most technologically advanced drillers in the field; it would turn Anadarko’s undeveloped assets into oil-gushing wells.

By the end of 2019, the oil producer said it was making progress on its merger goals. It had divested itself of more than $6 billion in assets, including stakes in a liquefied natural gas export project in Mozambique and in a Houston-based pipeline company. Occidental recorded single-day and monthly production records in the Permian and other oil fields. Occidental announced its 182nd consecutive quarterly dividend, which Ms. Hollub noted at the time that “few other companies can claim.”

Ms. Hollub believed the merger was on track, but investors remained skeptical. From the time of Occidental’s counteroffer for Anadarko in April 2019 to February 2020 Occidental’s stock fell around 35%. Then the global pandemic took hold.

As billions of people around the world began to lock down, demand for oil plummeted. In the spring, oil prices reached historic lows, briefly turning negative for the first time ever as traders paid counterparties to take oil off their hands. Falling demand for their product hammered oil-and-gas companies, forcing dozens into bankruptcy.

Every day, Ms. Hollub would drive to Occidental’s Houston offices in her red Jeep Wrangler, said Glenn Vangolen, a former senior vice president at Occidental and close adviser to the CEO. Mondays and Fridays, she and her lieutenants would mask up and gather in a conference room to discuss operations. Her office was spartan—a mostly bare room, except for a TV playing business news on mute, and a plush stuffed version of a costumed elephant, the Alabama Crimson Tide’s mascot, Mr. Vangolen said.

Occidental was in a worse situation than many of its peers: At the end of 2019, its long-term debt of about $39 billion was equivalent to roughly four times its earnings, excluding interest, taxes and other accounting items, quadruple the ratio from a year earlier, S&P Capital IQ data show. The divestitures it had planned on to pay it down were no longer viable as assets were losing value.

Ms. Hollub said that Occidental made a lot of the difficult decisions before the pandemic to mitigate the downside risks of the Anadarko acquisition, including hedging a portion of its oil production and bumping its line of credit to $5 billion. But the company still faced painful months ahead as it had barely enough cash on hand to meet debt maturities coming due in 2021 and was later forced to hire restructuring advisers.

Ms. Hollub moved to cut her executives’ salaries—including her own by 81%—offer employees voluntary buy-outs, slash expenses in the oil patch and cancel employee perks. She also cut the dividend, which rankled investors.

Mr. Icahn amplified his calls for Ms. Hollub’s ouster and said he would seek to replace the entire board of directors at the company’s annual meeting. As the oil producer’s stock plunged to under $10 from around $45 before the pandemic, Mr. Icahn—facing paper losses of about $1 billion—doubled down on his shares, boosting his stake to roughly 10% from about 2%.

After a price war between Russia and Saudi Arabia caused oil prices to plunge below $25 a barrel in March, Occidental reached a settlement with Mr. Icahn. The deal gave board seats to two of his deputies and added another director, required Occidental to create an oversight committee that must be informed of any offers to acquire the company or its assets, and replaced the board chairman with Stephen Chazen, Ms. Hollub’s predecessor as CEO.

Mr. Icahn’s camp pushed for Occidental to give its shareholders warrants that could allow them to buy discounted shares in the future. After he prevailed, Mr. Icahn received roughly 11 million warrants initially and bought more when they were worth around $3.

Mr. Vangolen said Mr. Icahn’s demand for warrants was part of the investor’s “raider playbook,” which he described as “trying to extract as much cash out of the business as you can before you bail.”

Mr. Icahn said that all the shareholders who rode the stock down deserved something for their loyalty.

As the pandemic dragged on, Occidental logged a roughly $14.8 billion loss for 2020, its largest on record, according to S&P Capital IQ data. Still, it continued to whittle down its mammoth debt, closing around $2.5 billion in asset sales at the end of 2020. Anadarko’s assets, meanwhile, were starting to shine, with production in the Permian reaching the high end of company estimates.

Even as Ms. Hollub wrestled with Mr. Icahn, she was building a relationship with Mr. Buffett.

In 2020, she traveled to Omaha to discuss Occidental’s long-term strategy with Mr. Buffett, according to a person familiar with the meeting. The investor expressed a strong interest in the company’s goal to become a leader in carbon capture, this person said.

Occidental says it has no plans to stop producing oil but also aims to be a leader in “carbon management.” It wants to develop 70 plants by 2035 to suck carbon dioxide out of the air, store it in the ground and sell carbon credits to businesses seeking to offset their own emissions—a technology still in its commercial infancy that received a boost thanks to tax credits included in the climate package President Biden signed into law last month. The company also plans to use the gas to squeeze more oil from underground.

Then, in late February of this year, Russia invaded Ukraine.

The war propelled oil prices to their highest level in years, with Brent crude oil topping $120 in March, translating into a windfall for oil companies. In the first quarter of the year, Occidental made roughly $4.9 billion in profit, its highest quarterly earnings on record, according to S&P Capital IQ.

The company now holds the most acreage across the Permian, with leases covering about 2.8 million net acres, according to data firm Enverus. Its domestic oil output in the second quarter of this year was up roughly 80% compared with before it acquired Anadarko, Occidental reported.

As Occidental’s stock rose above $50 a share in March, Mr. Icahn sold his common stake. The investor’s two representatives on Occidental’s board also resigned, as was required by the settlement agreement. Mr. Icahn made over $1.5 billion on his investment and still holds some warrants, according to public filings and people familiar with the matter.

As Mr. Icahn got out of the stock, Mr. Buffett bought in. In May, Berkshire reported it had purchased roughly $8 billion worth of shares.

Mr. Icahn said that Mr. Buffett’s investment could be ill-timed. “I respect Buffett a lot but I think buying this stock at this level is obviously not like buying warrants at $3,” he said. “I made a great deal of money on my investment in Occidental, especially with the warrants, and activism worked in that regard,” he said.

Ms. Hollub and Mr. Buffett have developed a personal relationship and the two talk periodically, said Mr. Vangolen. Ms. Hollub said in an interview she had no personal relationship with Mr. Icahn when he was an investor, and that he turned out not to be the kind of long-term shareholder the company prizes.

Mr. Icahn’s retort: “She came very close to not being a long-term shareholder also, because her ill-timed investment put the company on the brink of bankruptcy.”

Akane Otani contributed to this article.

Write to Benoît Morenne at and Cara Lombardo at

Appeared in the September 10, 2022, print edition as ‘A CEO’s Big Bet On Big Oil Pays Off’.


Policies Pushing Electric Vehicles Show Why Few People Want One

Source: Policies Pushing Electric Vehicles Show Why Few People Want One – WSJ

An electric vehicle gets charged up at RingCentral Coliseum in Oakland, Calif., Aug. 25. Photo: john g mabanglo/Shutterstock

We constantly hear that electric cars are the future—cleaner, cheaper and better. But if they’re so good, why does California need to ban gasoline-powered cars? Why does the world spend $30 billion a year subsidizing electric ones?

In reality, electric cars are only sometimes and somewhat better than the alternatives, they’re often much costlier, and they aren’t necessarily all that much cleaner. Over its lifetime, an electric car does emit less CO2 than a gasoline car, but the difference can range considerably depending on how the electricity is generated. Making batteries for electric cars also requires a massive amount of energy, mostly from burning coal in China. Add it all up and the International Energy Agency estimates that an electric car emits a little less than half as much CO2 as a gasoline-powered one.

The climate effect of our electric-car efforts in the 2020s will be trivial. If every country achieved its stated ambitious electric-vehicle targets by 2030, the world would save 231 million tons of CO2 emissions. Plugging these savings into the standard United Nations Climate Panel model, that comes to a reduction of 0.0002 degree Fahrenheit by the end of the century.

Electric cars’ impact on air pollution isn’t as straightforward as you might think. The vehicles themselves pollute only slightly less than a gasoline car because their massive batteries and consequent weight leads to more particulate pollution from greater wear on brakes, tires and roads. On top of that, the additional electricity they require can throw up large amounts of air pollution depending on how it’s generated. One recent study found that electric cars put out more of the most dangerous particulate air pollution than gasoline-powered cars in 70% of U.S. states. An American Economic Association study found that rather than lowering air pollution, on average each additional electric car in the U.S. causes additional air-pollution damage worth $1,100 over its lifetime.

The minerals required for those batteries also present an ethical problem, as many are mined in areas with dismal human-rights records. Most cobalt, for instance, is dug out in Congo, where child labor is not uncommon, specifically in mining. There are security risks too, given that mineral processing is concentrated in China.

Increased demand for already-prized minerals is likely to drive up the price of electric cars significantly. The International Energy Agency projects that if electric cars became as prevalent as they would have to be for the world to reach net zero by 2050, the annual total demand for lithium for automobile batteries alone that year would be almost 28 times as much as current annual global lithium production. The material prices for batteries this year are more than three times what they were in 2021, and electricity isn’t getting cheaper either.

Even if rising costs weren’t an issue, electric cars wouldn’t be much of a bargain. Proponents argue that though they’re more expensive to purchase, electric cars are cheaper to drive. But a new report from a U.S. Energy Department laboratory found that even in 2025 the agency’s default electric car’s total lifetime cost will be 9% higher than a gasoline car’s, and the study relied on the very generous assumption that electric cars are driven as much as regular ones. In reality, electric cars are driven less than half as much, which means they’re much costlier per mile.

In part this is because electric cars are often a luxury item. Two-thirds of the households in the U.S. that own one have incomes exceeding $100,000 a year. For 9 in 10 of electric-vehicle-owning households, it’s only a second car. They also have a gasoline-powered car—usually a bigger one, such as an SUV, pickup truck or minivan—that they use for long trips, given its longer range. And it takes additional costs to make electric cars convenient—such as installing a charger in your garage. Those who can’t afford it, or who don’t have a garage, will have to spend a lot more time at commercial chargers than it takes to fill up a car with gasoline.

This is all why electric cars still require such massive subsidies to sell. Norway is the only country where most new cars are electric, and that took wiping the sales and registration tax on these vehicles—worth $25,160 a car—on top of other tax breaks such as reduced tolls. Even so, only 12.6% of all Norwegian cars on the road are electric. The country has the wealth to pay for them partly because of its oil revenue, and the trade is dubious: To cut one ton of CO2 emissions through the subsidization of electric cars, Norway has to sell 100 barrels of oil, which emit 40 tons of CO2.

Needless to say, other countries’ car stocks aren’t likely to be anywhere close to 100% electric anytime soon. The U.S. Energy Information Administration estimates that barring new legislation only about 17% of all new U.S. cars will be electric by 2050, which translates to 13% of the total American car stock. As consumers continue to vote with their wallets against electric cars, it is hard to imagine places like California continuing to demand that they can purchase only electric ones.

Electric vehicles will take over the market only if innovation makes them actually better and cheaper than gasoline-powered cars. Politicians are spending hundreds of billions of dollars and keeping consumers from the cars they want for virtually no climate benefit.

Mr. Lomborg is president of the Copenhagen Consensus, a visiting fellow at Stanford University’s Hoover Institution and author of “False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.”