Oil Billionaire Says Keystone Irrelevant

As Congress tries to steamroll President Obama into building the Keystone XL pipeline, oil billionaire Harold Hamm says it's a waste of time.

“It’s not relevant at all in my opinion. And here we are making it relevant now? Forget it,” the billionaire CEO of Oklahoma-based Continental Resources told POLITICO in an interview Friday, just before the House passed a bill aimed at approving the pipeline.

The old Beatles song was right: Money can't buy you love. But it can buy you a Congress.

The price of gasoline is now less than $3.00 a gallon, the lowest price in four years. It's $2.69 a gallon in some places around the Twin Cities. At that price it is no longer be profitable to frack oil. From Forbes:

At $100 a barrel, the average oil company can generate net income on the order of $15 a barrel. But as prices fall, this margin evaporates quickly. A decline of $10 to $90 leaves a margin of only $5, that means profits plunge 66%. Thus, at current prices, the average oil company won’t be profitable at all, and the weaker ones, loaded up with debt, are the walking dead.

That means that $3.00 gasoline simply cannot last. If the price stays low for long, a lot of these oil companies, especially the independents, are going to go bankrupt. And when the fracking bubble bursts it's going to leave a huge, black, sticky mess in states like North Dakota, with nobody to pay for it, just like it did in Texas years ago.

Hamm's plan to remedy the problem of unprofitability?

Instead, he said, Washington should devote its efforts to lifting the 1970s-era U.S. ban on exporting crude oil — a cause that has gained momentum in Congress during the past year, even though Republicans have been divided. “They can lift that ban on exports and level the playing field and untie our hands,” Hamm said. “That’s the number one issue right there. If anybody’s got a doubt, that’s it.”

Republicans say the Keystone pipeline is necessary to increase national security by providing a domestic source of oil. Don't they get that Canada is a foreign country?

The whole argument for the Keystone XL pipeline is that it will increase our national security by providing us with a domestic source of oil. Republicans say this with a straight face, even though Canada is a foreign country! Remember how Ted Cruz just couldn't wait to disavow his Canadian birthright?

But at the same time oil magnates like Hamm want to be able to sell our domestic oil on the international market. What effect will that have? It will make the price of oil go up, because American drillers (and foreign companies like BP) will be able to spirit our oil away to China and Europe. Oil barons like Hamm just want to be able to sell the highest bidder. So much for national security, and any sense of loyalty to the United States.

The thing about fracking is that most of these fields were abandoned years ago as played out and unprofitable. When the price of oil went up, fracking allowed drillers to get the last dregs of that prohibitively expensive crude out of the ground.

But that also means most of these fields are running on empty. And when they start to run out again, which they will in just a few years, the fracking boom will bust. The price of oil will skyrocket again. But how likely do you think a Congress that was bought and paid for by Hamm and the Koch brothers will change the law back to keep American oil for Americans?

By coincidence, Hamm was in the news earlier this week. A judge awarded his ex-wife a billion dollars in a divorce settlement. That's less than 6% of his $18 billion fortune.

Harold Hamm has been directed to pay $322 million to his ex-wife by the end of the year, then minimum payments of $7 million each month starting in January. 

Sue Ann Hamm was awarded the couple's $4.6 million marital home in Nichols Hills, Oklahoma; an $800,000 home in Enid, Oklahoma; and a $17.4 million home in Carmel Valley, California.

Harold Hamm was awarded a $750,000 home in Branson, Missouri, along with a log cabin and 154 acres in Major County, Oklahoma, valued at about $300,000.

His divorce is going leave him nothing but a shack to live in!

The old Beatles song was right: Money can't buy you love. But it can buy you a Congress.