Biden’s Crime Against the Economy

I try to keep politics out of my economic analyses, and my approach is non-partisan. But sometimes I can’t avoid it because political policies can have significant economic impacts. Today is one of those times.

One of Joe Biden’s first acts as President was to kill construction of the Keystone XL pipeline. This is a pipeline that would bring oil from the tar sands of Alberta, Canada to the Midwest United States. From there it would be moved through other pipelines or refined and distributed to gas stations and industrial users in America.

Biden’s decision was destructive for a long list of reasons.

The immediate impact was to kill about 10,000 high-paying union jobs with benefits in construction, transportation and expert services. The ripple effects were even greater. Once a pipe delivery operation is killed, the trucking company and pipe manufacturer lay off more personnel and those workers stop spending at local restaurants and so on.

But killing the pipeline accomplishes nothing from an environmental standpoint. The decision to end the pipeline is pointless because the oil still moves out of Alberta. In the absence of a pipeline, the oil moves by railroad tanker cars on rail lines owned by Warren Buffett.

Pipelines Are Better for the Environment

It’s just that the railroad uses more energy and has higher CO2 emissions than a pipeline. If you cared about the environment, you’d favor a pipeline over railroads. But opponents don’t really care about the environment, they just want to shut down the oil and gas industries completely.

Shutting the pipeline is a step in that direction. Claims about local environmental damage and crossing Native American tribal areas were just feel-good red herrings. The goal was always just to kill the pipeline. Mission accomplished. Now, the Biden administration may have done more damage than thought at first.

Construction on the pipeline had been halted in the past by the Obama administration only to be started-up again by President Trump. The worksites and equipment were mothballed until the green light was turned on again. Not this time. The primary company backing the pipeline has announced they are throwing in the towel and terminating the project for good.

The science of climate change is highly uncertain. There’s some evidence that the world is cooling, not warming. There’s no conclusive evidence that man-made CO2 emissions are the primary cause of warming if there is any. CO2 is a trace gas of little impact except as plant food.

Climate change is real, but it happens over hundreds, sometimes thousands of years for reasons that science does not completely understand.

Real Climate Change

I lived for ten years on Long Island Sound, a beautiful body of water where locals enjoy fishing, sailing, swimming and other water sports. It has a rocky coast because 10,000 years ago it was a glacier (A glacier pushes rocks out of its way and they accumulate along the edges in a formation called a moraine).

Going from a glacier to a waterway is the result of real climate change, but the process took ten millennia, not ten years. The idea that cities will be inundated by rising oceans in ten years, a stock claim of climate alarmists, is nonsense. (By the way, the alarmists made the same claim twenty years ago, fifteen years ago, and ten years ago and they’ve been dead wrong every time; they’re still wrong).

Climate changes due to sunspot cycles, shifting ocean currents, volcanic activity and extreme geological events. Still, the climate change narrative persists because it provides political cover for global government, global taxation, open borders and other facets of the globalist agenda.

That might sound conspiratorial to some, but it isn’t. It’s just the way these globalist elites operate. I’ve been watching them closely for years and know how the game is played.


They know they can’t impose global solutions unless they concoct a global “problem” and climate change as the alarmists define it fills the bill perfectly.

This hidden agenda is revealed in their writings, which discuss the need to “frame” the issue, for example. But why do you have to “frame” anything if the story is true?

Framing is a form of propaganda, the climate alarmist’s favorite tool. You don’t need to frame a narrative if you have good science on your side. The facts will speak for themselves. So, you can be sure you’re being fed propaganda, which is.

The best advice is to ignore propaganda, stick to real science (when you can find it) and make long-term investment decisions that don’t rely on false predictions of climate doom.

But, there’s money to be made from climate alarmism.

ExxonMobil recently had their annual meeting. A small hedge fund named Engine No. 1, with only 0.02% of the ExxonMobil stock, proposed four new directors of whom each has a “green” background with experience in renewable energy sources such as wind and solar.

Normally, a dissident slate like that would have no chance. But, Engine No. 1 managed to recruit major institutions such as BlackRock to join their cause. With other major investors joining in, the green directors won three board seats outright. Eight sitting directors and the CEO retained their seats.

Three incumbent directors got the boot, something practically unprecedented in major corporations absent a hostile takeover. What’s the impetus behind this?

Follow the Money

The public story is that ExxonMobil was too slow in adapting its business plans to a world of solar and wind power and electric vehicles. The reality is more complicated.

There’s good reason to believe that solar and wind will never provide more than a small percentage of the power needed to run America. ExxonMobil is an oil and gas exploration and distribution company. They should stick to what they do best and let others build windmills. Oil and gas, nuclear and hydro-electric will power the country for decades to come or longer.

So, why did Larry Fink of BlackRock climb on the green train?

It turns out he’s promoting so-called ESG funds (for Environmental, Social and Governance) with higher fees to customers. Fink and others are just promoters using the green banner to make more money at investor expense.

What happened in the board room at ExxonMobil is an example of how private corporate resources are being hijacked by activists and do-gooder institutional investors to pursue social policy goals with little or no scientific evidence to back them up.

Research shows ESG funds and related ETFs do not outperform major index funds. Fink just needed to bolster his ESG credentials and he did so at ExxonMobil’s expense. Concern about the environment is minimal or incidental. It turns out that Fink and the others are only in it for the money.

That’s the kind of green they really care about.


Jim Rickards
for The Daily Reckoning

The Daily Reckoning