Oil Companies Get A $23B Gift at Taxpayers' Expense

The U.S.’s largest petrochemical complex is getting $23 billion worth of flood gates to protect it against hurricane-driven storm surges caused by fossil-fuel driven climate change.

A view of the Houston Ship Channel, taken from the San Jacinto Monument in 2011. The new work by the U.S. Army Corps of Engineers would help protect this from potentially damaging storm surges in the event of a hurricane. Photo: Roy Luck, CC

The question in this case is not whether the flood gates should be built. It is instead why the taxpayers and not the fossil fuel companies should have to foot the bill for it.

The new plan was unveiled by the U.S. Army Corps of Engineers in a report delivered October 26.

When Hurricane Michael struck the Florida panhandle with record-breaking winds just a few weeks ago, the fossil fuel industry breathed a sigh of relief. The storm could have been formed slightly differently and plowed over to the west just like Hurricane Harvey last year, but this time with far more devastating effects. If it had, the Houston Ship Channel, the largest array of petrochemical processing facilities in the entire United States, could have been destroyed through a combination of high winds, torrential rains, and a record storm surge.

The storm would have also likely taken out two of the country’s largest refineries which are also located along the Houston Ship Channel. Together they have a capacity of over 1 million barrels of oil per day.

A year ago, Hurricane Harvey hit the Houston region hard, but much of its damage was from flooding and delays in restarting things rather than complete wipeout of entire petrochemical plants. It was probably the wake-up call which caused the current plan to be drafted.

According to the report, Galveston, the coastal city and island complex which is 50 miles southeast of Houston and represents the southern entry to the Houston Ship Channel, gets hammered by a major hurricane approximately every 18 years.

Before Harvey, the last such storm that locals remember well was Hurricane Ike. It came across Galveston as a Category 2 storm in September 2008. Its winds, which were fierce but still nothing like that of this year’s Hurricane Michael, had their force multiplied by the bad luck of high Gulf of Mexico tides. Together they rammed a 20-foot storm surge wall as much as 30 miles inland. While destruction was extensive, with $20 billion in property damage, the fossil fuel industry did not get hurt much because the path missed the Houston Ship Channel just enough.

The average citizens and small business owners were hurt badly, of course, with loss of property and life that is completely unrecoverable.

Thanks to the Federal Government, however, the petrochemical industry, the same that brought increased carbon emissions, global warming, increasingly warming ocean waters and the dangers of fiercer storms which will do even more damage in the future, is getting a new $23 billion bailout to protect it from the next series of storms. But any potential benefit will be temporary.

The 442-page report was produced by the U.S. Army Corps of Engineers in partnership with the Texas General Land Office. The total project has an estimated cost of between $23 billion and $31 billion. The work on the project, which is expected to start in 2021 or slightly later, will include:

  • A surge gate to block storm surges from entering the ship channel
  • Extensive environmental restoration from Houston down to as far as South Padre Island, off Brownsville. Beaches, and dunes, islands central to local birdlife, wetlands, marshes and even oyster reefs will be rebuilt. With approximately 18 feet of shoreline wiped out every year from storms of all sizes, there is a lot of work that will be quickly undone by the next super-storm.

Under Federal rules, Texas will be paying 35% of the up to $31 billion of charges for the work by the Corps of Engineers.

George P. Bush, Texas Land Commissioner and son of former Florida Governor Jeb Bush of the Bush crime family, was a good spokesman for the oil industry when he said that Texas refineries were critical to the U.S. economy on many ways, and that it was a good thing the U.S. Army Corps of Engineers had chosen to make this project a high priority. In a prepared statement, he said that, “Texas’ coast is home to one in every four Texans and 30% of the American oil refining sector resides here. The Coastal Texas Study is about protecting our people, our economy and our national security. The options selected are proven to be effective in mitigating the deadly effects of storm surge on our state.”

The project will of course create major new business opportunities for those involved in the development of the surge gates and the environmental restoration. It will also protect the local economy and national economy in that a full 30% of the American oil refining sector is present here. But it will only be a bandaid for a few years.

The southern Texas coast is also home to the Motiva refinery, which is the largest refinery in the entire U.S. It too is getting coastal restoration work and floodwalls, this time at 19 feet high to block storm surges there. That refinery is owned by Saudi Aramco, Saudi Arabia’s national oil company.

The U.S. Army Corps of Engineers’ study recommendations are thorough and show that organization’s reputation of attention to detail and solid engineering work. Overall, however, the report raises several questions.

One of the bigger ones is why, with coastal storms only increasing in power in the future, the oil industry is not being asked to make the tough decision to relocate its petroleum processing inland. There is an answer, of course, and it is that it would cost the industry considerable money that would not be paid for by the State and Federal governments if it did so. It would also add ongoing costs for oil transportation between the inland refineries and the shore.

A second question is why, when these storm gates and coastal restorations are a direct cost of climate change attributable to the fossil fuel industry, the fossil fuel industry is receiving this as a pure gift. If the monies were not provided by the government agencies to build these, it is safe to assume the fossil fuel industry would find its own way to protect itself. As to having to ask for the right to build in the ocean or to rebuild the coasts as part of the protections, that’s never been a problem for the fossil fuel companies before. They build multi-billion-dollar drilling rigs, port additions, and more on their own every year. Why is this any different?

The third question is the toughest and is addressed more at the nation overall. That question is as to when the states and the Federal Government are going to stop – this time, literally – ‘shoring up’ the fossil fuel industry in this way. That is the what the combined ‘wake-up calls’ of Hurricanes Michael this year, Hurricane Harvey last year, and Hurricane Ike in 2008 before that should have made clear.

With up to $31 billion for this project as a gift to the fossil fuel companies to protect their future earnings, one can safely assume they won’t be the ones raising any of these questions. In their place, the citizens of the nation as well as those who represent them in Washington should be raising them soon, before it is too late.