Kick Ass or Buy Gas?
This article originally appeared on TomDispatch.
Residents of Louisiana, Mississippi, Alabama and Florida are livid with BP in the wake of the massive, never-ending oil spill in the Gulf of Mexico—and Barack Obama says they ought to be. But there's one aspect of the BP story that most of those angry residents of the Gulf states aren't aware of. And the president hasn't had a thing to say about it.
Even as the tar balls hit Gulf beaches, their tax dollars are subsidizing BP and so far, President Obama has not shown the slightest indication that he plans to stop their flow into BP coffers, despite the recent call of Public Citizen, a watchdog group, to end the nation's business dealings with company. In fact, the Department of Defense, which has a longstanding, multibillion-dollar business relationship with BP, tells this author that it has no plans to sever current business ties or curtail future contracts with the oil giant.
In recent weeks, against a news backdrop of oil-soaked pelicans, President Obama has been talking tough. "We've ordered BP to pay economic injury claims, and we will make sure they deliver," he announced on June 1. Days later, he rebuked the oil giant for considering plans to pay out large dividends to shareholders and for spending tens of millions of dollars on an advertising campaign to repair the company's tarnished image.
"My understanding is that BP had contracted for $50 million worth of TV advertising to manage their image in the course of this disaster," the president said. "Now, I don't have a problem with BP fulfilling its legal obligations. What I don't want to hear is that they're spending that kind of money on shareholders and spending that kind of money on TV advertising, [but] they're nickel-and-diming fishermen or small businesses here in the Gulf who are having a hard time."
As part of his ongoing attempt to deal with flak from critics who claim that his reaction to the disaster in the Gulf of Mexico has been far too measured and that his administration has mishandled its response to the disaster, Obama told NBC Today show host Matt Lauer: "I don't sit around just talking to experts because this is a college seminar. We talk to these folks because they potentially have the best answers, so I know whose ass to kick."
While the president has been on the verbal warpath, the US military has—with little notice—continued to carry on a major business partnership with BP, despite the company's disastrous environmental record.
As an institution, the Pentagon runs on oil. Its jet fighters, bombers, tanks, Humvees, and other vehicles burn 75 percent of the fuel used by the Department of Defense. For example, B-52 bombers consume 47,000 gallons per mission, and when an F-16 fighter kicks in its afterburners, it burns through $300 worth of fuel a minute. In fact, according to an article in the April 2010 issue of Energy Source, the official newsletter of the Pentagon's fuel-buying component, the DoD purchases 3 billion gallons of jet fuel per year.
Thanks to the wars in Iraq and Afghanistan, the Department of Defense has been consuming vast quantities of fuel. According to 2008 figures, for example, US military bases in Iraq and Afghanistan used a staggering 90 million gallons per month. Given the base-building boom that preceded President Obama's Afghan surge, the 2010 figures may be significantly higher.
In 2009, according to the Pentagon's Defense Energy Support Center (DESC), the military spent $3.8 billion for 31.3 million barrels—around 1.3 billion gallons—of oil consumed at posts, camps and bases overseas. Moreover, DESC's bulk-fuels division, which purchases jet fuel and naval diesel fuel, among other petroleum products, awarded $2.2 billion in contracts to support operations in Iraq and Afghanistan last year. Another $974 million was reportedly spent by the ground-fuels division, which awards contracts for diesel fuel, gasoline and heating oil for ground operations, just for the war in Afghanistan in 2009.
The Pentagon's foreign wars have left it particularly heavily dependent on oil services, energy and petroleum companies. An analysis published at Foreign Policy in Focus found that, in 2005, 145 such companies had contracts with the Pentagon. That year, the Department of Defense paid out more than $1.5 billion to BP alone and a total of $8 billion taxpayer dollars, in total, to energy-related firms on what is a far-from-complete list of companies.
In 2009, according to the Defense Energy Support Center, the military awarded $22.5 billion in energy contracts. More than $16 billion of that went to purchasing bulk fuel. Some ten top petroleum suppliers got the lion's share, more than $11.5 billion, among them big names like Shell, Exxon Mobil and Valero. The largest contractor, however, was BP, which received more than $2.2 billion—almost 12 percent of all petroleum-contract dollars awarded by the Pentagon for the year.
While one exceptionally powerful department of the federal government has been feeding money into BP (and other oil giants) with abandon, BP has consistently run afoul of US government regulators from the Occupational Safety and Health Administration (OSHA). According to the Center for Public Integrity, "BP account[ed] for 97 percent of all flagrant violations found in the [oil] refining industry by government safety inspectors over the past three years." Records obtained by the Center demonstrate that between June 2007 and February 2010, BP received a total of 862 citations, mostly for alleged violations of "OSHA's process safety management standard, a sweeping rule governing everything from storage of flammable liquids to emergency shutdown systems." Of these citations, 760 were considered "egregious willful," which OSHA defines as a violation even more severe than those committed due to "plain indifference" or evidencing "intentional disregard for employee health and safety." As a result, BP faces $90 million in penalties, which the company is currently contesting.
Over those same years, BP received around $5.7 billion in federal contracts, according to official government data. In fact, the $2.2 billion the Pentagon paid to the oil giant in 2009 accounted for almost 16 percent of the company's nearly $14 billion in annual profits.
This fiscal year, the US military has already awarded the company more than $837 million, inking its latest deal with BP in March.