Other foundations
affiliated with Tides Canada (Ie. William & Flora Hewlett Foundation and the David and Lucile Packard Foundation -- who founded Hewlett-Packard, or HP) are closely linked to organizations that promote clean energy and US energy security. These include the Bipartisan Policy Center, Securing America's Energy Future (SAFE) and the Apollo Alliance. While it no longer exists, the Apollo Alliance was a project of the Tides Center "launched in the aftermath of the 9/11 tragedy to catalyze a clean energy revolution in America".
Discoverthenetworks.org reports the Alliance had a powerful influence on the Obama Administration including helping to craft part of the $787 billion stimulus legislation that Obama signed into law in early 2009. SAFE's mandate according to its website is to "[unite] prominent military and business leaders to develop and advocate for policies that improve America's energy security by significantly curtailing our dependence on oil and promoting responsible use of our domestic energy resources."
Two other organizations, ClimateWorks and the Energy Foundation, promote renewable energy and energy efficiency and have worked extensively to promote fuel efficiency standards in the US, Europe and China, states Krause. She notes that since 2009 the Hewlett and Packard foundations have granted over $1 billion to ClimateWorks and the Energy Foundation, which she describes as the
twin engines of the campaign against fossil fuels.
The Hewlett Foundation is one of the largest philanthropic organizations in the United States, awarding $400 million in grants in 2016. In December the foundation announced it will
donate $600 million over the next five years to non-profits working to solve climate change.
Conservation is the last strategy being employed by large US eco-funds in the name of habitat protection, but in reality the underlying objective is to stop oil and gas development. Krause writes that in all of Canada's largest conservation efforts -- the Great Bear Rainforest in BC, the Yukon to Yellowstone Initiative (Y2Y) and the Canadian Boreal Initiative -- the main funder is a US foundation.
The Wilburforce Foundation, which according to its 2004 tax return funded Y2Y to protect the region "from oil and gas development, through an advocacy campaign that focuses on grizzly bears and critical wildlife habitat." The Wilburforce Foundation is funded by James Letwin, a co-founder of Microsoft.
Research by Krause also uncovered that the Great Bear Rainforest, a no-development zone twice the size of Switzerland, was created through over $100 million in funding from the Rockefeller Brothers, the Gordon and Betty Moore Foundation, the Hewlett and the Packard foundations.
Billionaire backers
It shouldn't have escaped your attention that the Tar Sands Campaign is being bankrolled by some extremely deep pockets including the Rockefellers, Bill Gates, the founders of Hewlett-Packard (though the funds claim to be independent from the company), and James Letwin of Microsoft. Among the companies on the Tides Foundation board is Salesforce, a $4-billion cloud-based software firm. Google was also a key funder, along with $22 billion market cap Pacific Gas & Electric Co.
Among the other connections to rich and powerful US interests, are billionaire investor and philanthropist George Soros and the people behind the Natural Resources Defense Council (NRDC), a New York-based environmental group. While Soros' Open Society Foundation rejected claims by former Canadian Natural Resources Minister Joe Oliver that Soros was
among foreign interests trying to influence the Northern Gateway pipeline back in 2012, the Tides Foundation and the Tides Center are
listed among the hundreds of organizations Soros and his organization funds directly.
The
NRDC, which receives money from the Energy Foundation mentioned earlier, is chaired by Daniel R. Tishman, who while perhaps is not a billionaire (his compensation was not published in a Bloomberg biography), is CEO of the Tishman Construction Corporation, which built the new One World Trade Center building following the destruction of the twin towers on 9/11. His father's firm constructed the original towers. NRDC's current president is Rhea Sun Suh, a former Obama appointee in the Department of the Interior.
Legal money-laundering
Unlike many charitable organizations, Tides US does not have a large endownment and according to the US Center for Consumer Freedom, "In practice, Tides behaves less like a philanthropy than a money-laundering enterprise, taking money from other foundations and spending it as the donor requires. Called ‘donor-advised' giving, this pass-through funding vehicle provides public-relations insulation for the money's original donors."
The web of "dark money" being funnelled through large US philanthropic organizations to support environmental causes is highlighted in a four-part series published by the Capital Research Center. Author Hayden Ludwig explains that the Tides Foundation was originally set up by Drummond Pike, a San Franciso investment banker and political activist/former anti-Vietnam protester, as a "donor-advised fund". While the IRS requires Tides to disclose its grantees, it doesn't make them report where the individual grants go. This makes Tides
an effective legal money-laundering enterprise, and extremely non-transparent. Writes Ludwig:
Collectively, Tides forms one of the largest "pass-through" organizations in the United States--operating a legion of specialized funds designed to maximize the flow of donations to far-left nonprofits while minimizing donors' public exposure to the fruits of their largesse.
This vast shroud has earned Tides a reputation as a "dark money" heavyweight (dark money being defined as donations that cannot be traced back to the original donor) and rightly so. Since the mid-1970s, Tides has brokered billions of dollars between left-wing philanthropists and groups that fund the "social justice" agenda. Over the years, Tides has weaponized its 501(c)(3) IRS tax-exempt status to "incubate" hundreds of organizations, many of which underpin the Left's political infrastructure today. - Hayden Ludwig, Capital Research Center
An example of how the pass-through works can be seen in the chart below. Instead of the Energy Foundation directly funding the NRDC, or the Sierra Club, other larger funders like the Hewlett Foundation contribute to the Energy Foundation, which then distribute the funds to smaller groups. The system provides an extra layer that obscures where the money is coming from and going to.
The Energy Foundation was featured in a 2014 Senate Committee report that highlighted "the lengths the far-left environmental movement goes to hide sources of funding and to disguise their actions -- bought and paid for by millionaires and billionaires -- as charitable acts in service of their fellow man."
Links to the Dems
Capital Research also uncovered strong links between Tides and the Democratic Party, noting that Tides received nearly $8 million in grants from federal agencies during the former Clinton Administration. The Tides Foundation was a major funder of the Apollo Alliance mentioned above as influencing the massive stimulus package passed by former President Obama. The website reports that
Apollo was behind a "cash for clunkers" program aimed at promoting fuel-efficient cars for low-income earners. The program was headed by Brian Deese, Obama's former climate change adviser.
Besides promoting the Left's anti-oil agenda, the program helped stimulate the flagging U.S. auto industry alongside the federal bailouts that followed. It was so effective in the eyes of many on the Left that in 2009 the New York Times described the then-31 year old Deese as "one of the most influential voices" in the Obama administration's bailouts of General Motors and Chrysler.
In August 2009, Fox News host Glenn Beck identified the Apollo Alliance as a professional attempt at further solidifying labor unions, social justice activists, and environmentalist groups under one, well-coordinated aegis."This is the head... this is at least a main player of what's going on in America," Beck said. - Hayden Ludwig, Capital Research Center
Damage done to Canadian oil
All of this well-financed and coordinated environmental and economically-driven activism is interesting for its secretiveness and the powerful US interests behind it, but what really represents the hammer hitting the nail is the negative effect it is having, in several ways, on the Canadian oil industry.
The first of course is the continued disparity in prices between Western Canadian Select -- the main benchmark for oil sands crude -- and West Texas Intermediate, or WTI. In December the disparity between WCS and WTI reached a
four-year high of $30 per barrel, due to increased production from the oil sands and pipeline bottlenecks including TransCanada's Keystone pipeline being shut for two weeks due to a spill in South Dakota. That means Canadian crude is selling for $30 per barrel less than WTI, meaning far less revenue for producers, who have to compete with US and Mexican oil being refined on the Gulf Coast and don't have the same transportation costs -- Canadian producers have to offer it at a discount. The spread is now well beyond pipeline costs.
The differential also means b
illions in lost tax revenue.
Bloomberg predicts the problem is only going to get worse. That's because an increase in oil sands production, expected to reach 4.8 million barrels a day in 2019 compared to 3.9 mbod in 2016, cannot be handled by domestic refineries. Canadian refining operations only process about half a million barrels a day, leaving around 330,000 for export. By 2019 that exportable oil goes up to almost 700,000 bopd. Some of it could go by rail, but lately that isn't happening either, due to a s
hortage of locomotives.
Why isn't more oil processed in Canada rather than exported south? This often-asked question is
well-answered by Oil Sands Magazine, which explains that a refiner's ability to handle types of crude oil is defined by its Nelson Complex Index (NCI). NCI values run from 1.0 for a simple refinery, designed for light sweet crude, to over 15 for a complex refinery able to handle heavy, sour crude oil such as Western Canadian Select, a blend of 20 heavy conventional oil streams, condensate and upgraded bitumen. Canadian refineries tend to be older, averaging 8.2 NCI, meaning they are unable to handle the complexity of WCS. That's why
Canada imports almost a million barrels a day and exports 3.1 mbod. Refineries on the US Gulf Coast receive most of Canadian oil sands crude, and they're happy to get it at a significant discount to US and Mexican oil.
Canada has a refining capacity of just under 2 million bbl/day, about 40% of which is light sweet crude imported from the US and overseas. In 2016, less than 100,000 bbl/day of heavy diluted bitumen from the oil sands was processed in Canadian refineries. The remaining 1.5 million bbl/day was exported to the US. - Oil Sands Magazine
It's also noteworthy that the main beneficiaries of the crude oil bottleneck in the US Midwest, through which a lot of Canadian oil flows, are the Midwest oil refineries, with the costs borne by Midwest and Canadian producers forced to take lower prices due to the glut.
According to the National Bureau of Economic Research, construction of the northern and southern portions of the Keystone XL pipeline would relieve the Midwest bottleneck and increase Midwest prices closer to the Gulf Coast price.
The lack of pipeline capacity is taking its toll on Canadian producers. Bloomberg reported last week that
Cenovus Energy is cutting back production due to difficulties shipping its crude, while Canadian Natural Resources announced March 1 that its Peace River oil sands site would be placed on maintenance due to the heavy discount between Canadian crude prices and futures.
A February report from the CD Howe institute said that lack of pipeline capacity is the biggest factor affecting competitiveness with US energy companies.
More than that though, investment is fleeing the Candian oil and gas industry. The Calgary Herald recently reported that pipeline, regulatory and political frustrations
slumped Canadian energy shares to their lowest level in nearly two years this month. The Shares S&P/TSX Capped Energy Index ETF, which tracks Canadian energy companies, shows about $56 million in outflows this year versus $32 million in inflows for an ETF focused on US stocks. Weak prices caused by pipeline woes is named as the chief culprit.
Locking up the oil sands?
So why are well-moneyed interests in the United States deliberately destroying the Canadian oil industry, by stopping east-west pipelines from being built, keeping existing pipelines full and perpetuating a never-ending glut that allows US refineries to buy our oil at a 30% discount? We think the answer is the US is trying to lock up Canadian crude for the future when they really need it.
Let's look at what we know. The original plan for the Tar Sands Campaign being funded by massive donor funds was to reduce demand for Canadian crude, by making it seem "dirty" (ironic considering
‘fracking' is destroying, by permanently poisoning, huge amounts of the US fresh water supply yet where is the billionaires money regarding this?), and to stop pipeline construction. The campaign has mostly succeeded on both fronts. At one point it looked like the US might not need Canadian crude any more, or less of it, as the US moved toward energy independence. But now, as
we have proven in a recent article on the decline of shale oil, it seems very likely that the US
will need our oil, when it runs out of shale.
The goal as before is still to lock up the oil sands, but the purpose now is to keep it in the ground for use in the future, because US energy independence will not happen. The country still imports 7 million barrels a day, 40% from Canada. They can't crank up shale production, for all the reasons we pointed out, to a point where imports are unnecessary. When shale runs out, they'll turn to conventional fields and use enhanced oil recovery techniques to get it out, and possibly offshore oil, but will it be enough? To make sure, they need a ready supply of cheap oil, and what better place to get it than their neighbor to the north? And when they do come for it, the north-south pipelines will exist to ship it. At Ahead of the Herd we normally only draw conclusions based on facts, and while we admittedly can't prove this theory, it does make a lot of sense.
Maybe the Tar Sands Campaign is all about environmentalism and making the switch to renewable energy, but we don't think so. It's looking more and more like a convenient way to ensure America has enough oil, by keeping Canadian crude in the ground, pipelines full, and the option open to expropriate it, if necessary. You might call me paranoid, but there's a saying - 'I know I'm being paranoid but am I being paranoid enough?' We'll let you, dear reader, draw your own conclusions as to what is happening.
Conclusion
Canada is a free country with a Charter of Rights that guarantees freedom of association and expression and I have no qualms about people gathering to protest what they don't like. What galls me is when the money behind the protests is driven by a shadowy group of funders whose real interests don't even lie on this side of the border. Their interests, which as we have shown are primarily economic while cloaked in the seemingly benevolent cause of anti-pipeline activism, do not align with Canada's interests at all. In fact the goals of the Tar Sands Campaign, bankrolled with millions from the Rockefeller Brothers Fund, the Tides Foundation and other huge US philanthropic groups, is to hurt the Canadian oil and gas industry -- never mind help the environment, although that might be a nice adjunct. Canada's January GDP decline was the largest since May 2016 and it was driven by a 3.6 percent drop in oil and gas extraction. Statistics Canada cited a 7.1 reduction in oil sands production due to unscheduled maintenance shutdowns.
What needs to happen is for these groups to become more transparent about who their funders are, but that is never going to happen, since doing so would expose the campaign for what it really is: a multi-million-dollar shell game. And why would small Canadian environmental groups want their cause to be associated with billionaires like Bill Gates and the Rockefellers, and big corporations like Microsoft, Google and Salesforce? That would disrupt the David and Goliath narrative that drives the emotion behind these campaigns and brings locals, blind to the real objectives, out to protests.
I'm watching, bemused, as the Kinder Morgan protests continue and tens of billions of dollars, in the form of taxes and wages, continue to be lost to Canadians. I've got what big US money is doing to the Canadian oil industry on my radar screen, do you?
If not, you should.
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.