The Magazine

Steyer’s War on Carbon

Buying a Detroit Senate candidate.

May 19, 2014, Vol. 19, No. 34 • By HENRY PAYNE
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Detroit
Countering the free-market political activism of the Koch brothers, green billionaire Thomas Steyer has pledged to spend $100 million in 2014 to elect an anti-carbon posse to Congress. Steyer’s litmus test is opposition to the import of Canadian crude oil through the Keystone pipeline—an issue on which the former San Francisco hedge-fund manager won a victory this spring when the Obama administration further delayed the pipeline’s construction after six years of study. 

 ... endanger the beauty of this?

... endanger the beauty of this?

henry payne

But the impact of Steyer’s campaign extends well beyond a single pipeline. His War on Carbon is a war on blue-collar jobs in cities like Detroit, where Steyer is bankrolling Senate candidate Gary Peters. The Motown battleground is a microcosm of the Californian’s larger threat to the U.S. energy sector and the communities it supports. All the players are present here: Canadian oil, Steyer money, green allies, an activist media, a politically financed Democratic candidate .  .  . even Koch Industries.

And in Detroit as with Keystone, the greens have been winning.

Peters is a Democratic congressman who is something of a political chameleon. A former Merrill Lynch financial adviser who once leaned right as a pro-Bush-tax-cut representative of wealthy, politically purple Oakland County north of Detroit, Peters was redistricted into solidly blue, liberal Detroit in 2012 and has transformed himself into an anti-tax-cut, leftist representative of Big Labor and Big Green. The three-term congressman was the only prominent Michigan politician to march with the Occupy Detroit movement in 2012.

Peters is on Steyer’s radar as a fierce opponent of Canadian oil sands who is running to maintain the Democratic party’s hold on retiring senator Carl Levin’s seat. Last year, Peters successfully led the charge against the storage of pet coke—short for petroleum coke, a coal-like carbon byproduct of oil sands refining—in Detroit.

“One of my main concerns with the Keystone pipeline is that we will be seeing piles of pet-coke in a lot of other places in the United States, because it is a main byproduct of refining Canadian oil,” Peters told London’s Guardian last June. “What we are seeing in Detroit now will be dwarfed by more oil coming through here with Keystone. This is just a glimpse of that future reality.”

Peters’s opposition made him a darling of green activists and their media allies, from the Detroit Free Press to the New York Times. The resulting wave of bad press ultimately forced Koch Industries, which owns the pet coke, to send its business to neighboring Toledo, Ohio. 

As night follows day, Peters’s campaign won him an audience with Tom Steyer.

In February, aspiring-senator Peters accompanied Al Gore, Senate majority leader Harry Reid, and six other Democratic senators to Steyer’s palatial residence overlooking the Pacific Ocean. The senators had all opposed Keystone despite its broad bipartisan support among their colleagues; Peters had opposed similar legislation passed by the House but blocked by Reid in the Senate.

The quid pro quo for Steyer’s money? “If we’re collectively going to put $100 million into this cycle, how much will go into key races depends on Keystone,” said top Steyer political hand Chris Lehane later. 

As an appetizer, Peters and the Steyer Seven were rewarded with a $400,000 contribution to the Senate Majority PAC. Since then, Senate Majority has spent nearly $1 million in Michigan attacking Peters’s Senate opponent, Republican Terri Lynn Land. Another Steyer-funded group, American Sustainable Business Council Action Fund, has begun running pro-Peters ads in western Michigan. 

In April, President Obama, who made his own pilgrimage to Steyer’s home a year ago, punted a decision on Keystone’s permitting until after the 2014 elections. “This is rotten eggs for TransCanada and good news on Good Friday for those who oppose Keystone,” Steyer cheered.

In truth, the war on Canadian oil sands is rotten eggs for America’s working men and women. 

“Congressman Peters has sold out the workers of Michigan to a liberal California billionaire,” says a spokesperson for Land. “Keystone means more jobs, lower gas prices, and greater American energy independ-ence, but to Gary Peters, opposing it means a political meal ticket.”

The $2.2 billion expansion of Marathon Oil’s Detroit refinery in 2012 to refine Canadian crude for the U.S. market was a boon not just to investment-starved Detroit—but also to businessmen like Noel and John Frye, who run Detroit Bulk Storage, a small, family-owned commodities storage business in Metro Detroit.

Koch chose the Frye brothers’ company to store much of the 600,000 tons of pet coke coming out of Marathon Oil for shipping to utilities, steelmakers, cement producers, and other plants across Canada and the upper Midwest. In turn, the Fryes chose Detroit’s waterfront—with its excellent access to rail yards and deepwater loading—for its storage platform and potentially dozens of new jobs.

Yet the Fryes came under immediate assault from Peters, other Democrats like Rep. John Conyers, environmentalists, and a hysterical media. 

“A Black Mound of Canadian Oil Waste Is Rising Over Detroit,” screamed a New York Times headline. Even after driving the storage jobs out of state, the green cabal has continued to harass Bulk Storage as it seeks to woo the pet coke contract back to Michigan and its River Rouge site immediately south of Detroit. 

Activists piled into a Michigan Department of Environmental Quality hearing in March to oppose Bulk Storage’s proposal. Peters demagogues that pet coke must be eliminated to protect “families and natural resources like the Great Lakes from the threat of contamination,” calling for a federal investigation into its potential menace. 

But the premise is absurd. Pet coke is virtually indistinguishable from coal. Millions of tons of these carbon-rich products course across the Great Lakes and America’s waterways every day for use in energy production and heavy industry. The EPA considers coke, like coal, a nontoxic material that poses no threat under American clean air and water laws, says Michigan’s DEQ spokesman Brad Wurfel. The  
depa rtment has approved Bulk Storage’s pet coke operations for years (the Fryes previously stored pet coke from Koch’s Chicago operation, which is also in the greens’ crosshairs). The commodity is everywhere on Detroit’s industrialized river-front—from the metallurgical coke produced by DTE Energy that is used in U.S. Steel’s neighboring mill to Marathon’s coker, the huge refining unit at the tail end of oil processing. The cheap pet coke is burned in a downriver coal power plant, in Canadian power plants, and in other energy-intensive processes like Lafarge’s Alpena, Michigan, cement plant, the nation’s second-largest. 

Until they lost the storage business to Toledo’s Midwest Terminal, the Fryes handled the material in full compliance with state and federal regulations. Indeed, while Peters and his allies have scare-mongered about piles of supposedly toxic coke, the Fryes’ River Rouge dock is piled high with a similar coal product. Its destination? Detroit, where it is burned in GM’s Hamtramck plant to power the manufacturing of the greens’ favorite electric car, the Chevy Volt.

“This campaign is about ignorance,” says a frustrated Noel Frye.

It is also about stopping America’s import of Canadian oil, an event that would have devastating effects on jobs. Steyer’s political action committee, Next Gen Climate, says on its website that “Canada’s tar sands are a carbon bomb that threatens our land, our health and the future of our families. To protect our environment and our communities, we must keep tar sands in the ground.”

Rep. Peters’s alliance with Steyer against oil sands threatens the 155 good-paying refinery jobs that Marathon’s coker expansion brought to Detroit, the $230 million in cumulative tax revenue that the company estimates oil sands would bring to the congressman’s bankrupt city by 2030—and Marathon’s rumored plans to build a second Canadian oil-processing coker that promises thousands more construction jobs.

Peters’s support of Steyer’s radical agenda flies in the face of public opinion polls showing Michigan voters support the Keystone pipeline. It also flies in the face of claims that Democrats support the working man.

“Because of politics, the administration fails to stand up for working people and the men and women we represent,” wrote Laborers’ International Union of North America (LIUNA) general president Terry O’Sullivan in April. His members could gain hundreds of trades jobs from Keystone’s construction. “Steyer has amplified the rhetoric of the environmental fringe aimed at tearing down the value of Americans who build things with their hands.”

Detroit’s waterfront is made for manufacturing and the transport of raw materials like coal and pet coke. To grow post-bankruptcy, the city must make the most of that resource. Never mind. Detroit’s revival is less important to Michigan’s would-be Democratic senator and his wealthy backers than their expansive campaign to shut down American coal plants and oil sands exploitation under the alarmist banner of global warming. 

Henry Payne is the Detroit News auto critic and a syndicated political cartoonist.

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