Wenonah Hauter, founder and executive director of the watchdog and advocacy organization Food and Water Watch, has written a new book set for release on June 7.
Titled “Frackopoly: The Battle for the Future of Energy and the Environment” and published by New Press, the book's title is somewhat of a misnomer. Not because it is false advertising or anything of the sort, but because it is also a rich history of the U.S. energy grid too, particularly as it pertains to natural gas pipelines and electricity.
It is this history, which takes up the book's first 100 pages, that serves as the necessary context and backdrop for the rest of the book as Hauter transitions into meticulously chronicling both the modern hydraulic fracturing (“fracking”) boom and the local grassroots across the U.S. that have arisen to fight back against it. It is a story with no shortage of villains, more than a handful of voices of dissent, and a living history that takes us up to the present day.
Though much has been written about fracking, along with several documentary films about the ecological costs of the oil and gas drilling technique, Hauter's is the first solo-authored, well-researched tome that examines the practice from a critical perspective.
Another recent book, “The Bakken Goes Boom: Oil and the Changing Geographies of Western North Dakota,” also examines fracking from a critical perspective but is a multi-author collection of scholarly essays published by The Digital Press at the University of North Dakota.
Hauter and her team have released a trailer for the book, which preview some of its contents. Just as much a book about the multinational corporations and Wall Street banks that made the modern unconventional oil and gas industrial complex what it is today, it is also a story of the deeply-entrenched regulatory state (which some call the “deep state” for shorthand) which facilitates the industrial practice and keeps the cogs in the machine spinning.
That “deep state,” which serves the industry's interests and was largely created by and for the industry, has essentially baked into it a revolving door of corporate jobs, boards and other related gigs at universities, think-tanks, etc. Many handfuls of these details, often as ugly as they come, receive a colorful telling in “Frackopoly.”
On June 3, I spoke with Hauter on the phone about how “Frackopoly” differed from the book that preceded it called “Foodopoly,” why the history of the natural gas industrial complex and not just fracking itself earned so much space in her book, a bit more about how and why she got interested in this topic and founded Food and Water Watch and many other topics. A transcript of that conversation edited for clarity, and annotated with multimedia enhancements, follows.
Steve Horn: Why did you end up choosing the title “Frackopoly” and what does did that title signify? And what moved you to write this big, broad book about fracking and natural gas?
Wenonah Hauter: The title really has to do with how our antitrust laws, or the laws that both protect people from abuse in the marketplace and also prevent a handful of companies from having too much power over a certain industry. I think that that’s a really important point and it’s a point I made in the book that I wrote about food titled, “Foodopoly.”
And then I decided that for the oil and gas industry, it’s even more critical to talk about how the evisceration of our antitrust laws. How the oil and gas industry was able either to skirt the law or be exempted from it, which allowed it to become more and more powerful and to really dictate everything to do with energy policy.
I think that, especially for younger people, I’m not sure that’s really a subject taught much anywhere. But it’s long been, in totally different periods in U.S. history, antitrust has been a subject for organizing debate and I think that we need to jump start that debate again because we now have companies in every sector, from the media, to the oil and gas industry and to food that are so large that they’re bigger than most governments, and they completely dominate public policy.
Horn: So I want to back up for a second. You currently head up Food and Water Watch and before that you were working on energy issues for Public Citizen, which is a public interest group that works more-so from the framework you are talking about right now: antitrust and looking at the public interest and things like energy consumption and use. I’m curious: when did you begin working on the fracking issue at Food and Water Watch? Was natural gas something that you’ve been working on for decades even before the modern fracking boom began? I guess what I’m asking is more of a personal story.
Hauter: So I can tell you the personal story. It would start all the way back in the 1970's, really, when I was part of the movement to live more sustainably and was an energy activist around stopping nuclear power. You know in those days we really believed that renewable energy would take off because it was such a smart technology and the big centralized power plants so obviously made no sense. It was rather naive at the time.
When I ended up coming to Washington, D.C. in the late 1980's, I was coming back to my roots in a sense: back to my family’s farm in Virginia and looking for a job in the environmental movement. I ended up working for a couple of groups during the period that there was a lot of work around renewables and I helped to land a project in the Midwest focused really on bringing renewables to the electric industry and it included putting together a committee of legislators and other individuals who were working on the technology and promoting renewable energy. And it was clear that renewables were ready and they were cost-effective.
And then suddenly, the vested interests started promoting the deregulation of electricity and of course at that point I didn't know a lot about how natural gas had been deregulated. I didn’t really understand that a big push in deregulating electricity had to do also with making a marketplace for more natural gas. In retrospect, doing the research I did for this book, I now realize that one of the big drivers in deregulating electricity was the Koch family and their funding of a number of think-tanks that were behind getting large industrial customers outraged about their inability to contract directly with energy electricity producers for the energy they need. And I knew at a gut-level that deregulation could not be good.
I won’t tell you that whole long story but I was kind of part of a network of energy advocates at that time funded by the Energy Foundation who became kind of — who began to promote deregulation if it was done the right way. You know the “right way.” This idea was that pretends that there aren’t industries actually trying to profit from trying to get rid of regulation. And a lot of advocates went along with this idea. Because, of course, everybody who worked on electricity disliked their local electric companies because obviously they weren’t doing the right thing. But the fact is, you shouldn’t organize for something you don’t want.
So, I really founded Food and Water Watch because a number of us were interested in creating a group that had the ability to organize outside of Washington DC. To really go back and to create a movement around you know the issues that are critical for our survival. Especially because food and water issues really grab people in the gut. But in reality, because energy affects just about everything, when we started getting phone calls in 2008-2009 about fracking and beginning to look at it. It became really obvious that this was a really dangerous scheme and that it was the next thing the oil and gas industry had actually been mustering their political power and the technologies that they had the option to use to now promote this completely insane process.
I wanted to put this story together because if you don’t know where you’ve been, how can you know where you are going? That’s probably a longer explanation than you wanted but it gives you a taste of where I come from.
Horn: That actually gets me to my next question. Why, just looking at the antitrust issues and deregulation of natural gas industry and of natural gas electricity, why does that matter? You spent many pages of your book writing about the history of that. How does that relate so much to fracking today? And why did you find it to be such an important episode to highlight in talking about fracking?
Hauter: Well, first of all, I think it’s important to realize that generations before have kind of lived through a similar period to what we’re living in today when finance and financial services laws were nonexistent, where electric utilities were misbehaving and really helping to bring on the crash of 1929 and where the natural gas industry was abusing consumers. And. so all of that resulted in some protective laws being passed in the 1930s under the Roosevelt Administration. Two of the most important ones have to do with utilities and with natural gas.
So, let me deal with natural gas first. Because of the profiteering of natural gas prices, a number of large municipalities started organizing to get legislation to regulate the price of natural gas. They were unsuccessful in getting that included in the legislation to regulate electricity and holding companies, but in 1938, they managed to pass the Natural Gas Act of 1938 which gave the Federal Power Commission the task of regulating the price of natural gas at the wellhead and that was confirmed in 1954 by the Supreme Court. And the transportation of gas which the price was linked -this was interstate gas - the price of gas and the way that it was piped. And this was to be done on a cost basis. The cost of actually producing gas and transporting it. Pipelines - interstate pipelines were approved. And it was all on as needed basis. And the cost basis also included a profit. I just want to say that between 1940 and 1960 the profit was 5.7%-6.5%. So, you know it was a steady fair profit.
Well, the oil and gas industry was infuriated and they spent the next 40 years trying to fight this regulation. It’s a much longer and more colorful story than I write about in “Frackopoly” with a lot of villains and people who wanted to profit. They created, they ended up creating a system where the market was doubling the price of gas. And so the deregulation, the legislation to deregulate passed in 1978 under Carter. Natural gas wasn’t finally deregulated until under the Reagan Administration.
Now let me get back on electricity before we go further into what happened. Because the two are so closely related. So the abuses of Samuel Insull and other utilities in basically gambling with ratepayers money, ripping off consumers by creating a holding company structure. That had a lot of different utilities and about 5,000 utilities that Insull ended up with. And at the same time creating investment companies that sold stock in these companies, you know resold the same stock. It eventually left a lot of investors — about 600,000 investors lost their life savings. And a lot of utility customers were left without reliable service.
So in 1935 the Public Utility Holding Company Act was passed to restrict how electric utilities could behave. They were to focus on their core business. They were to operate in a contiguous territory. Oil and gas industry wasn’t supposed to own them. The electric industry spent the next 50 years fighting that because they wanted to get bigger.
So to move up to more modern days, because this all kind of took place at the same time. And this was basically trying to do everything possible to deregulate these industries that are so large that everybody needs access to them. So under Jimmy Carter, he decides on natural gas deregulation. Under his guidance, all of the agencies in the federal government that related to energy were reorganized under the Department of Energy.
The Federal Power Commission, which had worked well under some presidents, it was really being corrupted towards the end. But the industry still hated it. So it was eliminated. And the Federal Energy Regulatory Commission replaced it.
So during the Reagan Administration then, under the guidance of his attorneys, a key goal was to put people in the Department of Justice and the Federal Trade Commission to basically change antitrust laws. And really throughout the past several decades we’ve had very poor antitrust enforcement.
Image Credit: Frackopoly.org
Natural gas trading started in the early 1990's. Ken Lay of Enron fame helped devise the schemes around trading. He had worked under the Nixon administration for one of the Federal Power Commissioners, Pinkney Walker, who was a right-wing economist. Lay had learned the “lay of the land,” so to speak, in terms of electricity regulation. And he was a pretty brilliant schemer, an economist, and managed to create from this pipeline company, this giant trading company Enron, which got rid of pipelines and focused on manipulating the stock market and electricity and gas sales and we all know what happened after that.
Horn: Wenonah, you write in the book that, “Ken Lay’s ghost, he died suddenly before he was sentenced in 2006, hovers around the debate around fracked gas.” How does Enron, as you spell out in the book, explain what we’re facing today a decade and half, two decades ago, with regards to fracking in the United States?
Hauter: First, by deregulating natural gas and making it a commodity that can be traded it was incentivizing more production of gas by putting it into that kind of market. But then you have these people — Ken Lay is just one of the more colorful ones because of the role he played. But they saw how the electricity industry and natural gas industry worked because the ability to break up electricity companies and create a wholesale market meant that natural gas was very much poised to step in for producing electricity. We know that for decades now they’ve known that coal is dangerous for the climate, that it’s very dirty. And the people — some of these people in the natural gas industry — saw that natural gas could be inserted as a fossil fuel that the oil and gas companies could continue to make a profit from and that burning it produced fewer carbon emissions. And that it was a way to really allow the industry to remain in place but to change the strategy about the fuel they were profiting from the most.
They very smartly targeted some of the environmental leaders who were close to some of the leaders in the movement to let the market really determine the direction of environmental protection. At the same time, many of the institutions that have kind of given a voice to a different opinion began to collapse. We saw the media industry go from fifty different major media outlets that were already beginning to consolidate in 1983 but by 2000 we had six left. I think that’s one of the ways this market philosophy was put forward.
So by deregulating gas, and then deregulating electricity, and creating this wholesale market, it meant that more electricity would be produced. Natural gas-fired plants are smaller and easier to site and build and the ideology that goes along with gas or the idea that gas is cleaner could be sold to these more conservative mainstream environmentalists who like to be close to the seat of power. And if you’re really trying to change the status quo you’re not going to get — in today’s environment, you’re probably not going to get as much funding, you’re not going to get as much media attention — and you’re going to have something much more palatable to the financial services industry and to the oil and gas industry.
And I think other thing is the connection of the financial services industry — the oligarchs and the deregulation that took place in the Clinton administration of Wall Street and how Wall Street and the oil and gas industry have worked hand in hand to promote fracked gas. Because gambling on Wall Street makes money on gas. And because of the kind of risky loans that they make. And also kind of the structure of their industry that we have today. Goldman Sachs has become as large of if not larger a merchant seller of gas than the big frackers like Exxon. I think all of these things have worked together to commodify gas and to promote it.
Image Credit: Frackopoly.org
And when the major environmental groups signed off on gas as being a bridge fuel, when Aubrey McClendon gave large sums of money ($26 million) to the Sierra Club (for its Beyond Coal campaign) which we know the Sierra Club has been reformed since then, but it really allowed gas to take on this shine as the savior for climate change. And then there’s also the very close relationship between the gas industry, some mainstream environmentalists, and some parts of the Democratic Party: the DLC leadership in particular that had really benefited from their partnership with the financial services industry and the gas industry.
Horn: That gets to a passage in the book about how Ken Lay had used the term “bridge fuel.” I don’t know if it was him using it or if you were just quoting it. I’m curious though: was it Enron that came up with the term “bridge fuel”? This is a key term that’s used today by Hillary Clinton who is running for the Democratic ticket to become president. Where exactly and when did this concept of the “bridge fuel” come about? Excuse the pun but it’s kind of the “bridge” between natural gas’s deregulatory history and now going into it with fracking, I feel like.
Wenonah: I’m sorry to say I never found who the first person was who used the word “bridge fuel.” But I know as someone who was working on energy issues in the late 1980's that that was already being tossed around by the environmental community. And I think Ken Lay took it along with some of the other environmental groups and the funders.
The Energy Foundation: I remember well when it was organized. A number of big foundations put it together. I think actually some of those foundations actually thought they were pushing renewables and energy efficiency technology. But when you put engineers in charge of a large foundation even if they’re well-meaning they probably don’t have the background or the foresight to think about how you’re gonna organize what we’d call an energy revolution today.
So, they very much began pushing natural gas as a way to allow renewables to be commercialized. But very quickly they bought into this idea that — in fact I remember the terminology — “the train has left the station.” I wish I had a dollar for every time I’ve heard the phrase “the train has left the station” and all of these bad things that have happened on many many issues. Because that’s one of the ways that I think public interest work gets corrupted: rather than fighting something that’s coming down the road that’s really bad, there’s this feeling that it can’t be stopped and that we’ve got to come up with some little scheme to make it better.
I think that’s what happened with electricity deregulation. And there was a lot of talk about how “choice.” You know, the Koch-funded think tanks like Citizens for a Sound Economy started using the word “choice” rather than deregulation or retail wheeling, which is what it was called with to begin with. They started talking about consumer choice and very soon we had some of the major leaders of the environmental community talking about how people would choose green energy. So this all worked together to allow the electric industry to be broken up. And then it was even leaders like Ralph Cavanagh of NRDC who has a very close relationship with California Utilities — has for years — who even broached the subject with a number of environmentalists at the time I was at Public Citizen of signing away the Public Utility Holding Company Act in exchange for getting something like a system benefits charge or a way to get more energy efficiency programs.
And, of course, when PUHCA was eventually eliminated in 2005 that was one of the key mechanisms that unleashed these giant utilities that we have today that are also in the business of profiting from fracked gas and the Obama Administration’s “all of the above” energy strategy. And that happened via the 2005 Policy Act, along with FERC having the ability to be part of the NEPA process — NEPA being one of our most important environmental laws — and allowing it to have a voice as part of the environmental assessment process and giving FERC the ability to condemn land and override state and local communities in the building of pipelines and infrastructure.
So it’s been a steady stream of deregulatory measures and at certain key points, the environmental community should have stepped up and said no. But by this time, the environmental community in the 1990's had bought into this idea that the market could be used to incentivize doing the right thing. And I think what it incentivized was fracked gas and making money from gas.
Horn: And how about going into today: there’s another similar push that you have a whole chapter in your book on. That is, cap-and-trade, carbon markets and a lot of the same environmental groups pushing for that. Do you think that — I guess going into the Clean Power Plan today which has a clause in there — an opt out clause in there for states for cap-and-trade.
Do you see more of what’s going on today and what went on, say, with the Waxman-Markey in 2009 as kind of more of the same as what you saw with the deregulatory push? With the same actors involved? Do you see key similarities or any differences?
Hauter: I absolutely do. I think what’s very sad is that the Environmental Defense Fund, even though they have some very good staff in some areas. the leadership is really focused on running interference for the industry. And you know, replacing mandates that protect the environment with schemes that literally are not very effective in working. And you know even on the whole carbon tax debate, we’ve recently done some work at looking at whether the carbon tax is effective and when you look at the data it doesn’t look like it’s had any effect at all.
It’s more from an organizing point of view if we’re going to do something really hard like changing our energy mix, then why don’t we actually organize and fight for what we want rather than these financialization schemes? And I think a lot of well-meaning environmentalists who feel like it’s really hard to change public policy end up supporting these kinds of measures because they think it’s better than nothing.
And you know personally, I think with the threats to our global climate and the fact that we need to do something in the next 10 years to really turn around our energy mix, we shouldn’t be focusing on these financial schemes where the market is going to save the climate. We need to focus and to organize to hold our elected officials accountable, to elect people who are actually going to be part of the process to fix things and not be in bed with oil and gas and the financial services industry. And you know I think it’s very sad that the whole history of the Environmental Defense Fund , the fact that Fred Krupp was basically recruited by one of the operatives in the Bush administration to promote this kind of strategy. I think many many of its supporters don’t actually realize the role that EDF plays in the environmental movement.
Image Credit: Frackopoly.org
Horn: Fast forwarding to 2016, it’s an election year. Your book is coming out in a presidential election year. Where does the anti-fracking movement fit into the state of play in an election year? At least in Colorado, I know there’s referenda. What is the role of the anti-fracking movement in a year like this?
Hauter: Well I think we can actually see what happens when a movement comes together to fight for what people really want. And that’s what happened in New York. The Big Greens said you couldn’t ban fracking, but in fact when hundreds of thousands of people come together to hold an elected leader accountable you can make tremendous progress. And I think that’s why we’ve seen fracking become a major issue in this election year.
It’s because there’s a movement that brought it to the forefront and I think we see that in Colorado where the initiative, there’s a battle on to qualify the initiative for the fall. I think we can even see it taking place in all the discussions taking place in California. We certainly saw it in New York. And I think the movement is also becoming a “keep it in the ground” movement. Because we have to keep fossil fuels in the ground. And the other thing is the marketplace alone is not going to bring renewables and energy efficiency to the forefront the way that it must be.
And that’s I guess part of why I started to write this book and how I see our work evolving at Food and Water Watch. You know, years ago in fact when I was at Public Citizen and was thinking of starting a new group that focused on these resources that we need to survive, I kind of thought “Oh you know the major environmental groups they’re getting a tremendous amount of money now to promote renewables and energy efficiency. You know we don’t need to go there. That work is already being done.”
So when I started writing Frackopoly and looking at the numbers, all I can say is I was really shocked. Because I had heard the huge percentage growth of solar and knew about a lot of the wind. But when you actually look at electricity generation — electricity generation is important because it accounts for about a third of emissions and also because of the big fix many environmental groups are fighting for is to electrify transportation. You know the 2015 stats are in and solar was 0.6% of electricity generation. Wind was 4.7% and natural gas continues to rise while coal shrinks. This coming year in 2016 our natural gas will supplant — we’ll have more natural gas generation than coal generation. It was in 2015, just under 33% of electricity generation was gas and coal was just over 33%. So exactly what the gas interests, oil and gas interests, really wanted is happening. Electricity is moving into gas.
Image Credit: Frackopoly.org
And there are a lot of rules being shaped at the state-level around transmission, a lot of legislative action funded by the Koch brothers to undo long-standing policies like net-metering that allows people who put solar on their rooftop to sell back the energy. So we’re not making the progress we need. We need a strict mandate for renewable energy. We need the environmental community to really get on board and start fighting for at the state-level for renewable portfolios that don’t allow dirty energy. I think the work has to be focused on actual transition, not financial schemes to let the market work.
Horn: I just want to close with one last question. That is, this was your second big book on a key huge issue. The first one was about food and this one is about energy and natural gas mostly and oil. I’m just curious, from the author’s point of view and as the author of both books, what were the key similarities and differences in your findings in doing the research and writing of the two books? What do you see as the thread that times them together? At least the titles are pretty similar: I guess that’s a leading question!
Hauter: It’s really the “-opoly” part. What has happened is that because of the way our democracy has been bought and paid for, we have gotten rid of our laws and protections that keep companies from getting too big. So in every industry, we see a handful of companies really dominate an area and we certainly see this in the food industry where you have about twenty giant companies that control all of the brands in the grocery store. And in the area of oil and gas, we see how the seven big oil and gas companies at the turn of the 20th century have consolidated and are now among the ten largest frackers. And we see our media industry which is so important to getting the word out about what needs to be done controlled by just a few companies.
Image Credit: Frackopoly.org
So I think the key is that we really need to look seriously at how just having just a handful of companies in every industry is corrupting our democracy. And we really need to do the organizing, but also to get money out of politics. And all these things are related. I think that when people are organized around issues and problems we can begin to then see how they are related. We have an immense organizing task ahead of us. I know that’s what I’m going to spend my last part of my career on: doing the organizing.
If we were going to win on the facts, we would have won a long time ago. We need to build the political power to win. And that brings a lot of discomfort because it means we are really shaking up the paradigm. But there are a lot of young people who are challenging the status quo. I think we’re engaged in an epic battle and if we work really hard, we can do what we need to do to save our climate from climate chaos and to improve people’s lives for a more fair, just, and equitable world.
Horn: Well I appreciate you taking the time to do this interview. Thanks again.