Rice University’s Baker Institute and the Academic Cover It Provides for Fossil Fuel Interests

When thinking about influential academic policy think tanks, Rice University’s Baker Institute for Public Policy doesn’t necessarily come first to mind. Slowly and steadily, however, the institute has turned into one of the nation’s most powerful outfits. In the 2009 “Global Think Tank Index Report,” a comprehensive yearly ranking by the University of Pennsylvania’s Think Tanks and Civil Society’s Program, the institute was ranked 37th amongst top US think tanks. By last year’s rankings, it was up to number 18. Significantly, on the specific list Top Energy and Resource Policy Think Tanks, the institute was already ranked 4th in the country.

Boasting $9.9 million in revenue in 2015 alone, the institute is located in the heart of Rice’s campus, housed in an impressive redbrick columned edifice that mixes classic beaux arts elements and byzantine ornamentation.

Established in 1993 by James Baker III, former Secretary of State during the Bush Sr. administration, it aims at building a “bridge between the world of ideas and the world of action.” After retiring from public service, Baker envisioned a place where scholars “should learn firsthand from statesmen of the practical imperatives that impact policy,” while “statesmen and policymakers should hear rigorous, logical – and always practical – scholarly analyses of how to improve the work they do.”

Rice was a natural home for his intellectual aspirations. The Baker family has longstanding ties to the Houston-based university. Baker’s grandfather and namesake was the first Chair of the Rice Board of Trustees, a position he held, astoundingly, between 1891 to 1941.

Shortly after establishing the institute, Baker chose as its director longtime friend and former US ambassador Edward Djerejian, who served in the Foreign Service during Baker’s tenure in the State Department. Djerejian, a widely respected expert on foreign affairs with three decades of diplomatic experience, has headed the institute mightily ever since.  

Under Djerejian’s influential leadership, the institute has significantly grown in authority and prestige, especially during George W. Bush’s presidency. Bush and Baker families’ inner circle members, associates, and business partners frequent its glamorous fund-raising events, exclusive forums, and distinguished lecture series.

Lavish black-tie galas, where former ambassadors, scholars, and top executives mingle and converse about big issues have become quite a thing amongst the local select, even by the high standards of Houston’s established plutocrats.

Last April, to cite one instance, an evening dinner raised $743,000 for the institute’s new Center for Health and Biosciences. Indeed, the institute has steadily turned into the premier intellectual hub for Texas’ top political and corporate pedigree, the ultimate fusion of diplomacy, business, and academia for one of America’s most potent power elites.

With over 20 centers and programs, the institute’s website lists no less than 113 experts who serve as Fellows, Rice University scholars, and in-house researchers.

Baker Institute’s Center for Energy Studies

The Center for Energy Studies (CES) has developed recently into the largest and most prominent program within the Baker Institute. CES’s website declares its non-political and objective character:

The mission of CES will be to provide policymakers, corporate leaders, and the public with quality, data-driven analysis of issues that influence energy markets. Like all Baker Institute research, the energy and environmental issues studied by the CES will provide a nonpartisan voice in areas that can be politically divisive.”

Yet careful scrutiny reveals a different reality. Despite the variety of research topics and perspectives at CES, an energy agenda does emerge: namely, promoting fossil fuels.

Much work produced by the CES, whether through research articles, position papers, issue briefs, conferences, blog entries, and media and congressional appearances, seems to paint an overall rosy picture about the prospects of entrenching and expanding oil and gas infrastructure, tapping into new reservoirs, opening new international fossil fuel markets, and loosening government regulations over the industry.

One latest focus by CES scholars is the recently lifted ban on US crude oil exports.

In a large study published early in 2015 titled “To Lift or Not to Lift? The U.S. Crude Oil Export Ban: Implications for Price and Energy Security,” the CES provided an extremely optimistic picture on the potentials in lifting the decades-long ban.

The author, CES’s Senior Director Kenneth Medlock, concludes that removing the ban will “raise US crude oil prices back toward parity with prices for internationally traded crude oils of similar quality, increase upstream and midstream investment, and improve US energy security.” Moreover, “this would be accomplished without raising domestic gasoline prices.”

In the weeks following the publication, Medlock spread the word in two congressional testimonies and numerous media appearances.

Another issue recently attracting the attention of CES researchers is the effect of government regulations on the natural gas industry. In a major 213-page study published in February 2015, Medlock and co-author Peter Hartley, a Rice University economics professor, employ the distant academic language of cost-benefit analysis to ultimately critique various regulatory policies and encourage loosening government constraints.

While they predict that federal action to limit shale gas production “may carry a high cost and thus be unlikely”, they also advocate that “[p]olicies that incur costs greater than the cost associated with the original externality should not generally be adopted.”

Or in other words, regulations that are too costly for the industry – but may actually protect the general public – need not be implemented.

Furthermore, “[T]he ability to develop pipeline infrastructure and allow unimpeded trade among Canada, Mexico, and the US conveys significant benefits. Specifically, it allows additional arbitrage opportunities that limit the impacts of various policy interventions.”

Again, in other words: strengthening the dependence on fossil fuel systems through infrastructure expansion serves as a structural barrier to foil effective regulations on the industry.

Industry-Friendly Approach of CES Comes From The Top

If, as it declares, the institute is led by data-driven empirical analyses and disinterested perspectives, why are so many of its energy conclusions tilted in favor of fossil fuels?

One possible explanation may be traced right to the head of the pyramid. In his storied diplomatic career, director Djerejian had long stints in the Middle East, where he gained deep insight into the geopolitics of oil. His 2006 bookDanger and Opportunity, a professional autobiography about his many years in the Foreign Service, devotes an entire chapter to questions of energy. In these pages, Djerejian takes the growing global demand for oil as a given.

He argues, “[M]aintaining the free flow of oil to world markets” is a critical national concern to the United States as well as a “global one.” Furthermore, since privately held American corporations are “more efficient and productive” than a potential government run energy company, the government should, amongst others, focus on promoting business-friendly “bilateral and multilateral trade and investment treaties such as WTO, NAFTA, and the Energy Charter.”

It is, in essence, a familiar mantra of neoliberal capitalism, applied to the fossil fuel industry, where the state is expected to work in the service of increasing corporate oil and gas profits.

While the last page and a half of the chapter is dedicated to climate change, it reads more like lip service than a serious attempt to boldly face the role of the industry in perpetuating climate chaos. Djerejian vaguely calls here for “promoting alternative energy sources and new conservation technologies” as a “top national priority,” while “hydrocarbons, including oil and gas, will remain the backbone of global energy consumption for at least several decades to come.”

But Djerejian conveniently left out of the book some important personal facts. At the time of its publication – and, in effect, through nearly his entire tenure as head of the Baker Institute – he has served as Director on the Boards of major fossil fuel corporations.

Edward Djerejian’s Oil and Gas Industry Ties

According to historical Security and Exchange Commission (SEC) filings, these include board positions with:

Occidental Petroleum, where Djerejian served as Director between 1996 and March 2015. From 2013 and 2014 he even served as Chair of the Board. Djerejian retired earlier this year from the Board only because its Directors are not eligible to serve after age 75.

Global Industries, where Djerejian served as Director between 1996 and 2011. Global Industries, a major provider of construction and subsea services to the offshore oil and gas industry in the North America, Latin America, and the Asia Pacific/the Middle East regions, was acquired in 2011 by French energy engineering and construction giant Technip S. A.

Baker Hughes, where Djerejian served as Director between 2001 and 2011, is one of the largest multinational corporations providing worldwide oilfield and gas services and technologies.

But that’s not all. Djerejian has recently been hired by energy start-up Siluria to serve on its Advisory Committee. Siluria is pioneering new techniques to produce commercial fuels and chemicals from natural gas. The company has recently raised $120 million from several investors, including Saudi Aramco, a consistent donor to the Baker Institute. Flushed with cash, Siluria is moving quickly and has already opened a demonstration plant in La Porte, Texas.   

And there’s even more. Though now retired from fossil fuel companies’ Boards, Djerejian has in 2013 joined the Board of Directors of the Mexico Fund, a management investment firm that invests in various Mexican companies. One of the Fund’s main investments last year was in IEnova, a large Mexican energy infrastructure company that builds and operates natural gas pipelines, LNG storage facilities, and a gas-fueled power plant in Mexico.

Several months after Djerejian joined the Mexico Fund Board, the Baker Institute had inaugurated a new research program: The Mexico Center. Since its inception, the Center has already conducted some work that supports Mexico’s monumental process of oil and gas privatization that began in 2013, identifies ways to overcome obstacles to this process, and encourages energy trade between Mexico and the US. A mere coincidence?

Probably not. In fact, this will not be the first time that former State Department officials stand to gain financially from advancing the selling of Mexico’s oil and gas resources to private corporations.

Recently released emails of former Secretary of State and current presidential candidate Hillary Clinton, reveal that Clinton and some her top advisors played a substantial role in pressuring the Mexican government to commence privatization. At least three of these advisors went on to profit from the energy reform in their private practices.      

Other CES Personnel Have Deep Ties to Oil and Gas

Another explanation for the bias may be traced to some of the research personnel of CES. CES Senior Director Kenneth Medlock may not be the neutral researcher the institute paints him to be. In fact, his ties to the private fossil fuel industry are rather significant.

Before joining the Baker Institute,  Medlock worked for El Paso Energy as Manager for Valuation and Analysis. Currently he is a member of the National Petroleum Council (NPC), the industry’s advisory arm in Washington that provides the Energy Department with research and data representing its business interests. The current chair of the NPC is Chuck Davidson, former longtime Chair and CEO of Noble Energy, who retired earlier this year only to join Quantum Energy Partners. The NPC’s current vice chair is ExxonMobil’s CEO, Rex Tillerson.

Medlock’s CV also reveals that he has done consulting for Chevron.

Another CES expert, Senior Program Advisor Michael Maher, who has also spoken out favorably about lifting the oil ban, joined the Baker Institute two years ago following a 30-year career at ExxonMobil.

By taking this stance, the institute had joined the chorus of academic voices and university think tanks who were recently instrumental in calling for lifting the crude oil export ban.

Influential historian and top energy consultant Daniel Yergin, who is financially invested in fossil fuels, has been one of the choir’s leaders. Columbia University’s Center on Global Energy Policy (CGEP) is another academic proponent.

In fact, Medlock has collaborated in the past two years with CGEP in its own studies on the export ban. CGEP, which has recently produced research in support of lifting the ban, features Yergin on its Advisory Board. Indeed, it seems like a coordinated effort by all parties.

Furthermore, The Baker Institute’s website does not mention that Peter Hartley, Medlock’s colleague on the regulation policy paper, wears another academic hat. In 2012 he wasappointed to the position of BHP Billiton Chair in the Business of Resources at The University of Western Australia’s Business School.

So Hartley has to thank BHP Billiton, one of the world’s largest petroleum, coal, and mineral conglomerates, for endowing his academic work in Australia. Furthermore, alongside his university scholarship, Hartley has consulted at high levels to the electricity, energy, and minerals industries.

Baker Institute Funders, Advisors Full of Fossil Fuel Interests

Perhaps the most influential powerbrokers are Baker Institute’s funders and external advisors. Specifically, the CES raises hefty sums of money through its Energy Forum, an exclusive invitation-only circle, where, according to the CES website, “key stakeholders” promote “discussion and research on energy-related challenges in the 21st century.”

But a close look at Energy Forum members reveals that it is populated almost entirely by major fossil fuel corporations. The Forum’s ‘Director’s Circle,’ which costs $75,000 per membership, includes ConocoPhillips and Schlumberger.

The ‘Advisory Board,’ costing $50,000 a seat, includes BP, Chevron, ExxonMobil, Marathon Oil, Saudi Aramco, and Shell. ‘Associate Members,’ who pay $25,000, consist of Baker Hughes, Cheniere Energy, and Pioneer Natural Resources. Lastly, the ‘Members’ category includes IPR-GDF SUEZ North America, TOTAL E&P New Ventures and TOTAL E&P USA, and VAALCO Energy.

The composition of Baker Institute’s Board of Advisors tells a similar tale. While expectedly it fashions prominent business magnates, former diplomats, and high-profile attorneys, it does not represent a diversity of sectors: of the Board’s 26 members, a whopping two-thirds profit directly from the fossil fuel industry or are strongly tied to it.

They include the following individuals:

Steven Miller, who serves as the Advisory Board’s Chair, is a longtime Houston oilman who formerly served as President and CEO of Royal Dutch/Shell. More recently, according to SEC filings, Miller chaired the Board of Directors of GenOn Energy, a large electric utility company that was acquired by NRG in 2012.  

Abdulla Al-Thani, a Qatari royal, who sits on the Board of Directors of Nakilat, the Qatari natural gas shipping company and the largest worldwide marine supplier of LNG.

Hushang Ansary, former head of the National Iranian Oil Company prior to the Islamic revolution, who moved to the US in the late 1970s to start his own holding company, the Parman Group, which included oilfield equipment. According to the State of Texas corporate filings, Ansary currently owns Stewart & Stevenson, a Houston-based company thatmanufactures and provides specialized equipment and services to the oil and gas industries.

James Baker IV, son of former Secretary of State and Baker Institute founder, James Baker III. Both Bakers are Partners at Baker Botts, the family’s powerful international law firm. Baker Botts has for years represented the oil and gas industry, including most recently in its fight against the Denton, Texas fracking ban.

William Barnett, a former veteran Managing Partner at Baker Botts, is currently a Director at Enterprise Products Partners, one of the nation’s largest midstream services companies for the oil and gas industry.

Clarence Cazalot Jr., former President and CEO of Marathon Oil, who currently sits on the Board of Directors of both Baker Hughes and Spectra Energy.

Peter ConewayManaging Director at Riverstone Holdings, a large energy investment firm with over $30 billion of capital sunken mainly into oil, gas, and coal firms. Coneway previously served as Director of Cobalt International Energy, a Houston-based oil exploration and production company with operations in the Gulf of Mexico and West Africa. Daniel Yergin is also a Managing Director of Riverstone.

James Crownover, former veteran Energy Director at McKinsey & Co., a global business consulting firm, where he focused on the petroleum, gas, and service sectors. According to SEC filings, Crownover also served as Director at Unocal from 1998 until 2005, when it was acquired by Chevron.

Linnet Deilyserves on the Board of Directors of Chevron.

Charles Duncan, former Energy Secretary during the Carter Administration who served in the past on the Board of Directors of Newfield Exploration Company, an independent oil and gas exploration and production company, and PanEnergy, which owned and operated natural gas transmission networks until its acquisition by Duke Energy. Today he owns Duncan Partnerships, through which he invests in oil and gas exploration and production ventures. According to State of Texas corporate filings, this includes MAD Exploration LLC, where Duncan partners with Mary Anne Dingus, friend and fellow minority-owner of the Houston Texans NFL team. Mary Anne, along with geologist husband Bill Dingus, own Dingus Investments, a Midland-based oil investment company.

Lynn Laverty Elsenhans, former Chairman and CEO of Sunoco, is currently a Director at Baker Hughes.

Armando GarzaChair of Alfa, a Mexican diversified holding company, whose hydrocarbon arm, NEWPEK, operates oil and gas fields in Mexico and the US.

Claudio X. González, Chairman of the Board of Kimberly-Clark de México, who also sits with Djerejian on the Board of Directors of the Mexico Fund.

Wilhelmina (Beth) Robertson, who hails from the Robertson-Cullen family of oil and coal magnates. Wilhelmina’s brother, Corbin Robertson Jr. is majority owner of Natural Resource Partners, previously one of the nation’s largest coal companies that has recently diversified into purchasing oil and gas interests. According to SEC filings, Wilhelmina has previously served as Director of Natural Resource Partners. Currently she is President of Cockspur Inc., a privately-held company registered in the State of Texas as providing services to the oil and gas industry.

Marc Shapiro, Longtime Texas banker, who currently serves alongside Djerejian on the Board of Directors of the Mexico Fund.

L.E. Simmonsfounder and President of SCF Partners, a private equity firm that invests in oil and gas services and production companies.

Robert (Bobby) Tudorco-founder, Chair and CEO of prominent energy investment and merchant bank Tudor, Puckering & Holt (TPH). TPH is a major player in financing oil and gas production and services industries.

Wallace Wilson, the former president of Wilson Industries, an oilfield services and product distribution company.  

Of course, one does not need to be on the institute’s Advisory Board to pad its coffers. Other fossil fuel moguls, such as Kinder-Morgan co-founder and Executive Chair Richard Kinder, have also recently contributed nice sums.

Such donations do not only provide companies with access to the institute’s scholars and a chance to direct its agenda, but also enable its daily operations and featured events. These now carry such names as the “Chevron Excellence in Leadership Energy Lecture Series” or the “Shell Distinguished Lecture Series.” 

So in the end, everyone is happy. The Baker Institute receives the fossil fuel backing to position itself as an emerging academic research powerhouse; its top brass profits financially from the energy status quo it promotes; and the oil and gas majors laugh all the way to the bank.

This is not, of course, to imply that all research carried out by the institute is biased by default. But when powerful personal and financial interests are hidden behind the scenes to promote CES’s aura of academic rigor and objectivity, there’s real danger that the “public” in ‘public policy’ will become a hollow shell.

By Itai Vardi

Image credit: Screenshot of Baker Institute Center for Energy Studies logo.