Gasoline prices hit eight-month low

With the end of the summer driving season just around the corner, traders and investors on Monday drove gasoline prices to an eight-month low on U.S. commodities markets, providing the latest sign of pessimism about the economic recovery.

The sagging commodity market price for gasoline is good news for American motorists, promising a mild easing in pump prices. It also marks the end of a summer of relative stability for retail gasoline prices, which have fluctuated by about 20 cents per gallon since the beginning of the year and have stayed in an 8-cent range for the past 69 days.

Prices have been stuck in neutral because of the continuing weak global economy and fundamental shifts in the U.S. gasoline market, the world's biggest.

The surge in U.S. consumption that many refiners expected earlier this year has not materialized. Last week, the American Petroleum Institute reported that in July, U.S. gasoline deliveries (a measure of demand) were 9.3 million barrels a day, down slightly compared with July 2009. Except for 2008, it was the lowest July gasoline demand number since 2003.

A lack of consumer confidence and continuing high unemployment have kept people cautious about spending and traveling. "With unemployment high and July regular gasoline prices more than 20 cents a gallon above those a year ago, consumers likely have been shopping and vacationing less and trimmed their gasoline purchases accordingly," said John Felmy, the institute's chief economist.

But long-term trends -- such as improvements in the fuel efficiency of American autos -- played a part too, other analysts said. A steady increase in the biofuels component of U.S. motor fuel is another reason; the four week average for ethanol production ending Aug. 13 was 854,000 barrels a day, up nearly 18 percent from a year ago and now more than 9 percent of the volume of motor fuel, according to the Renewable Fuels Association.

With consumption lackluster, U.S. oil companies have been left holding much bigger than usual inventories of gasoline. That, combined with renewed pessimism about U.S. economic prospects, has prompted traders to increase their short selling of gasoline -- betting on a further decline in prices. Short positions jumped 20 percent in the week ended Aug. 17, according to figures compiled by Barclays Capital.

Crude oil prices have also tumbled after a brief surge. The price of a barrel of the benchmark West Texas Intermediate type of crude for delivery next month stood at $72.70 at the end of Monday, down from $82.55 on Aug. 3.

"What is amazing is the degree to which the trading community failed to understand that the gasoline season ended at Memorial Day weekend," said Edward Morse, a veteran oil analyst at Credit Suisse who has been predicting stable prices for months. "All the evidence was in sight that the market was going to be oversupplied."

Morse said that refinery output was "too high, Europe was exporting too much [fuel], biofuel blending components were rising, and the fuel efficiency of the fleet has grown remarkably in the past four years."

The American Automobile Association said Monday that the average retail price of a gallon of regular gasoline eased to just under $2.71 a gallon, down more than 4 cents from a week ago and up only 8 cents from a year earlier, when the economy was more deeply mired in recession.

There have been some signs of economic recovery, however, in petroleum statistics recently. The Petroleum Institute said that there was an 11.6 percent increase in deliveries of low sulfur distillates, which are primarily diesel fuels used in trucking, and a 6.9 percent increase in kerosene jet fuel deliveries. The price of diesel fuel also fell 4 cents a gallon in the past week, but it has climbed 28 cents from a year ago.

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'Risk/reward equation' used in building gulf well, BP worker testifies

A BP drilling engineer involved in the planning of the Macondo well declined to testify before a federal investigative panel Friday, invoking through his lawyer his Fifth Amendment right against self-incrimination.

Mark Hafle, who was involved in some of the most heavily scrutinized decisions about the well, became the third BP employee to invoke his constitutional right not to answer questions from the panel. Hafle had testified in an earlier round of hearings.

As Friday's hearing proceeded, another BP employee who wrote one of the most widely derided e-mails to surface in investigations of the Deepwater Horizon disaster testified under oath and gave a more benign explanation of the document.

In an e-mail four days before the April 20 blowout in the Gulf of Mexico, drilling engineer Brett Cocales addressed one of the most controversial decisions in the construction of the Macondo well, saying in part, "who cares, it's done, end of story, will probably be fine."

In the e-mail, he went on to defend the decision based on "the risk/reward equation."

Congressional investigators have cited the decision as evidence that BP might have cut corners to save time and money. Testifying before a separate federal investigative panel in Houston on Friday, Cocales said, "Those are my words."

But he said they had nothing to do with financial considerations.

Cocales said he was weighing engineering risks associated with alternative approaches, and he thought less risk was associated with the course BP took.

At the time, he said, he thought the "worst-case scenario" was that BP would have to do remediation work on the well, not that safety would be jeopardized, he testified Friday.

But he acknowledged that there "was still a risk of channeling" - a term that refers to gaps in the cement lining between the steel well pipe and the rock formation that could give gas a path to escape.

At issue was the number of devices called centralizers installed to center the pipe in the well. Halliburton, a contractor to BP, recommended 21 but BP used six. In a report to BP two days before the explosion, Halliburton warned that with as many as seven centralizers the well could have a "SEVERE" gas flow problem.

Cocales on Friday became the fourth BP employee to testify that, before the blowout, he did not read that warning.

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Early cleanup efforts of gulf oil spill marred by communication woes, scammers

PASCAGOULA, MISS. -- Johnny Ray Harris hunted for oil in the gulf near his home for 45 days straight, radioing in coordinates to cleanup crews when he spotted large, inky patches floating in the choppy waters.

"I would call it in, but no one ever came. Not once," Harris said, sitting on his 73-foot-long shrimp boat beside a box filled with unused rubber boots, gloves and coveralls. "What a waste."

Harris is a part of BP's Vessels of Opportunity program that promised to turn out-of-work fishermen into a powerful task force, skimming and scooping up oil before it reached the shores of Alabama, Mississippi, Louisiana and Florida. At its peak, the program dispatched 3,200 boats at an average cost of $2,000 a day. In recent weeks, with a successful capping operation containing the spewing well, the oil company has scaled back to about 1,400 vessels.

Fishermen involved in the program and the company that runs it both say the effort -- costing $450 million so far -- has been fraught with problems. Much of the money doled out by BP probably went to opportunists rather than to commercial fishermen and charter boat operators whose livelihoods were disrupted by the spill. Harris and dozens of other fishermen said in interviews with The Washington Post that the amateur effort, which included laying and maintaining boom, failed to prevent oil from reaching the beaches, marshes and islands near their homes.

BP officials acknowledged that payments as high as $100,000 might have gone to recreational boat owners and others who enrolled multiple boats in the program and quickly seized an opportunity to cash in. But the officials said that it took time to identify problems and make needed reforms. "When a response of this size gets pulled together that quickly, things fall through the cracks," BP spokesman George Gigicos said.

Boat sales spiked in states around the gulf. And even though fishing was banned in as much as 40 percent of the water, officials saw a double-digit rise in demand for fishing licenses in three gulf states in April through July over last year's totals, according to data analysis done for The Post by wildlife officials in the four affected states. In Alabama, license sales shot up 66 percent; in Mississippi, they rose 30 percent; and in Louisiana, they went up 13 percent.

In late June, more than two months into the program, BP began asking participants for proof that their licenses had been issued before the oil spill, company officials said. The company also started a rotation system in mid-July that officials said they hope will pull in fishermen who have been passed by.

"I've been waiting by the phone for three months. I've heard nothing. I'm still not in," said Jerry Walker, who fishes for kingfish and red snapper in Louisiana. "I've been a fisherman for 40 years. I make 100 percent of my living from fishing. These guys out on the water, I've never seen any of them before in my life."

Gigicos said: "It did take some time to weed out the recreational vessels and the out-of town-vessels. It wasn't perfect at first." He added, "But for a while, our motto was 'All hands on deck.' We needed everyone we could get out there."

Fishermen and harbor chiefs describe the program's early days as chaotic and unproductive. Coast Guard planes flew overhead and spotted oil, but their crews were unable to communicate with the rag-tag bands floating beneath them. Repeatedly, boat owners in the program said in interviews that they thought they were part of a "show."

"The entire task force was on different radio frequencies," said Michael White, harbor chief in Long Beach, Miss. "I had to surf through 15 channels to find someone. From a distance, it looked good to have all those boats out there, but it was a mess."

At the height of the program, participants thought their boats would be equipped to skim oil from the surface of the gulf waters. Retired Coast Guard Adm. Thad Allen, who is coordinating the oil spill response, said in a June 11 news briefing that BP and the Coast Guard wanted to get "the skimming equipment in the hands of the vessels of opportunity out there."

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Three books on the gulf oil spill

Just six months after BP stopped the oil that had been flowing into the Gulf of Mexico, a gusher of books about the spill has begun to wash ashore. The first wave includes three very different approaches to the disaster that riveted the nation most of last summer.

How we interpret the spill is important. A 1969 spill off Santa Barbara soiled the shores, killed birds and helped give rise to the modern environmental movement. Exxon's tanker accident in Valdez, Alaska, 20 years later became another symbol of reckless disregard for the environment. What makes the BP oil spill not just shocking but also dispiriting is that it might have relatively little impact on ocean-drilling policy beyond a retooling of the regulatory bureaucracy and the imposition of a few more technological safeguards. The spill has had no effect on the world's appetite for oil, and drilling will continue because the best prospects are offshore in the Gulf of Mexico, off Africa and Brazil, in the Caspian Sea, and in the Arctic.

The recent spill received massive coverage. At the Associated Press alone, more than 40 reporters and editors were thrown into the fray; teams of reporters were mobilized at papers such as The Washington Post, the Times Picayune in New Orleans, the New York Times and the Wall Street Journal. But even though the books under review present little if anything new, readers seeking overviews between two neat covers might find them useful.

"In Too Deep," by Bloomberg News journalists Stanley Reed and Alison Fitzgerald, opens with a brief account of the blowout, then moves on to BP's history, starting in Iran during the 1950s, when the U.S. and British governments overthrew the democratically elected regime for fear that it would hurt foreign oil interests. The authors shift quickly into more recent BP history, describing the enormous and lasting impact of former chief executive John Browne. Browne not only engineered giant mergers with Arco and Amoco, he also helped lead BP into post-Soviet Russia, Alaska and the Gulf of Mexico.

An intellectual, an engineer and a politically savvy executive with passions for art and opera, Browne guided the company into deep-water exploration in the gulf. He is credited with recognizing that the size of the discoveries in deeper water was increasing, not leveling off.

The book also profiles lower-level BP geologists who figured out where to find the likeliest prospects. A striking chart shows that BP's average cost to add a barrel of oil to its proven reserves was lower than any other major oil company's, and a tiny fraction of current prices.

Yet Browne was also a relentless cost-cutter who squeezed money out of operations that should have invested more in maintenance and equipment. The authors blame BP culture for a focus on personal rather than process safety, for leaks in the company's Alaska pipeline, for an explosion at its Texas City refinery and for the gulf blowout.

In this account, Browne's successor, Tony Hayward, who resigned in the wake of the spill last year, was the unfortunate inheritor of the company Browne built. Chosen in part because he wasn't flashy - the board of directors was weary of Browne's celebrity - Hayward lacked the skills to manage this environmental and public relations disaster.

In "Blowout in the Gulf," William R. Freudenburg, a professor of environmental studies at the University of California at Santa Barbara who died late last year, and Robert Gramling, a sociology professor at the University of Louisiana at Lafayette, concentrate on the regulatory framework that failed to prevent the accident. They compare offshore-drilling regulation to airline regulation and discuss whether regulation might be better handled by the Occupational Safety and Health Administration. They examine cleanup techniques and the prolonged and futile efforts made in Valdez. A sign of how their perspective differs from that of Reed and Fitzgerald: The two reporters write that Hayward's parting pay package was not "huge" so that "there would be no reward for failure." Freudenburg and Gramling call Hayward's $17 million package a "golden parachute."

The authors make solid points about the way the U.S. government has allowed big oil companies to march into public waters, about how the much-admired interstate highway system contributed to a fateful boom in U.S. oil consumption and about the way Americans ravenously consume oil and gas today. "Despite our habit of referring to oil 'production,' the reality is that the twentieth century was an unprecedented exercise in oil 'destruction,' " they write. "The oil was actually produced during the time of the dinosaurs."

Bob Cavnar brings an insider's view to "Disaster on the Horizon," but not one the industry will like. Cavnar has spent three decades, first on a rig and later as a chief executive, working for drilling companies in Texas, Louisiana and offshore areas. But he has a dim view of many industry practices and blogs about them for the Huffington Post.

Here, he focuses on the oil rig disaster itself and what caused it, constructing a narrative based on extensive testimony at hearings, newspaper accounts and his own experience. He makes a strong case that the spill was caused by human error. "An older engineer taught me, years ago, that wells actually talk to you," he writes. "In the hours leading up to the disaster, the Well from Hell was screaming at the crew that it was going to blow out, but nobody could understand the language it was speaking." And he notes that in deep water, "bad situations can escalate very quickly into catastrophes."

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Chinese oil company, Chesapeake Energy enter deal for shale project in Texas

The China National Offshore Oil Corp. will pay Chesapeake Energy $2.2 billion for a one-third interest in a South Texas oil and natural gas shale project and will pay billions of dollars more for its share of development costs over the next several years.

Chesapeake Energy, an Oklahoma City-based domestic exploration company, announced the deal Sunday night, saying it will help speed development of resources on 600,000 acres in the Eagle Ford shale play that could help keep natural gas prices low and boost production of unconventional U.S. oil resources.

"They're providing the capital and we're providing the expertise and assets, and the output will be the development of American assets, less U.S. dependence on foreign oil and the creation of 20,000 jobs and tax revenues for all levels of government," Aubrey K. McClendon, Chesapeake's chief executive, said in an interview.

The investment by CNOOC is one of the company's biggest. Other CNOOC investments around the world have been aimed in part at securing sources of oil for China's growing economy, but this investment will not result in any oil shipments to China. Chesapeake will sell the resources, almost certainly in the United States, and send CNOOC its share of the proceeds.

Chesapeake has been seeking to raise money to help develop its extensive inventory of oil and gas acreage. The company has also been trying to pare its debt, which peaked at about 60 percent of the company's book value and which on Sept. 30 stood at about 42 percent. McClendon said the company's target was in the 30s.

CNOOC will pay $1.1 billion now and another $1.1 billion over the next two years by covering 75 percent of Chesapeake's share of development costs. After that, CNOOC will pay a third of the cost of all wells, which run about $6 million each and could number 5,000 or more over the next few years as the region is developed, McClendon said.

Chesapeake said CNOOC's investment will enable Chesapeake to quadruple the number of rigs it has drilling in the region to about 40 by the end of 2012.

Given the cost of development, many independent companies such as Chesapeake have been looking overseas for investors. U.S.-based oil giants such as Exxon Mobil and Conoco Phillips already have stakes in the region. Last week, Statoil and Talisman bought about 100,000 acres from Denver-based Enduring Resources. They paid about the same price as CNOOC did for its interest.

China has some shale gas, but the deal with Chesapeake does not involve any technology transfer or future project in China, McClendon said. He said Chesapeake has its hands full trying to develop resources in the United States.

Unlike shale developments elsewhere in the United States, the Eagle Ford has greater potential to produce crude oil as well as natural gas, McClendon said. He estimated that the United States could ultimately produce half a million barrels a day from shale. The country consumes 19.5 million barrels of oil a day, most of it imported.

The development of oil and gas from shale has aroused controversy over questions of how it would affect water supplies. And so far, most shale developments in the United States recently have produced natural gas, much of it from Pennsylvania and other parts of the northeast.

"Chesapeake's embedded safety culture and integrated environmental protection strategies will be adopted to safeguard personnel and the surface and subsurface environment," Chesapeake said in its news release.

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As gulf cleanup continues, BP will also struggle to clean up its brand

HOUSTON -- The protesters have stopped coming here to wave angry signs in front of BP's large office campus. The boycotts of BP gas stations are tapering off, too -- both signs that the energy company's plug of the spewing Gulf of Mexico oil well is quieting its loudest critics.

The shouting may be over, but rebuilding the company's badly tarnished brand will prove a much harder task -- one that advertising and oil industry experts say could be nearly as daunting as stopping the oil that gushed into the gulf for more than three months.

"It's probably the most notorious branding crisis in memory," said Tom Zara, director of corporate branding at Interbrand.

After the Deepwater Horizon rig exploded in April, BP went on the air with television ads and bought a series of full-page ads in The Washington Post, Wall Street Journal and other papers to position itself as an imperfect but responsible corporation committed to the cleanup of the gulf. The company has spent $55.8 million on television and print advertising so far this year, according to the Nielsen Co., which tracks ad spending. (The total for all of last year was $80 million.)

But as one of Washington's top corporate lobbying forces, BP took flak for paying lobbyists, so the company cut back that spending to only $3.3 million so far this year, compared with $8.2 million in the first six months of 2009.

BP has been bouncing back already in the place where its brand meets consumers -- at its gas stations. After the spill, sales dropped off 40 to 50 percent at some stations on the Gulf Coast, but in most cases business declines have leveled off to about 10 percent on the gulf and less than 5 percent in other parts of the country, said John Kleine, executive director of the BP Amoco Marketers Association, which represents the station owners.

Kleine, who calls the station owners "investors" in BP's brand (their only link with the company is contracts to buy gasoline), said they began facing angry protests after the spill and turned to BP for help. The company gave them signs and took out print and radio advertisements emphasizing that the stations were locally owned and operated. At some stations BP helped the owners do customer appreciation campaigns with free car washes and cups of coffee. Corporate staffers flew in to stand in driveways and listen to customers' concerns, Kleine said.

"Where the owner is known in the community, there is a less significant impact," Kleine said. "I think BP has to recognize that the local face is really a value to their brand even more so than anybody thought."

Company's evolution

BP, which began selling gasoline in Britain in the 1920s, has long been a company that cared a lot about its name -- and changed it several times. After it bought Amoco in 1998, the company British Petroleum to become BP Amoco, then two years later shortened it to BP, to signify that it was more than a petroleum company and emphasize its investments in alternative energy.

The company dropped the shield and torch that had represented British Petroleum and Amoco and adopted a logo called the Helios, which looks like a sunflower bursting with petals. BP says the design is named after the Greek sun god and represents "dynamic energy in all its forms."

The company's Web site declares that its brand can be summed up in two words: "beyond petroleum." Its executives have preached the importance of "social responsibility on a global scale" at major business conferences.

As British Petroleum, it won the support of some environmental groups in 1997 when it announced that it agreed with scientists that global warming stems from an excess of carbon dioxide and other greenhouse gases released through the burning of fossil fuels. It pledged to greatly increase its investment in solar power. Still, other environmentalists, including Greenpeace, called such investments a relatively insignificant part of the company's portfolio. In 2000, more than 10,000 students from seven Ivy League schools signed a pledge refusing to accept jobs at BP Amoco because the company had pursued permission to drill in the Arctic National Wildlife Refuge.

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Documents indicate heavy use of dispersants in gulf oil spill

While the BP well was still gushing, the Obama administration issued an order that limited the spreading of controversial dispersant chemicals on the Gulf of Mexico's surface. Their use, officials said, should be restricted to "rare cases."

But in reality, federal documents show, the use of dispersants wasn't rare at all.

Despite the order -- and concerns about the environmental effects of the dispersants -- the Coast Guard granted requests to use them 74 times over 54 days, and to use them on the surface and deep underwater at the well site. The Coast Guard approved every request submitted by BP or local Coast Guard commanders in Houma, La., although in some cases it reduced the amount of the chemicals they could use, according to an analysis of the documents prepared by the office of Rep. Edward J. Markey (D-Mass.).

The documents indicate that "these exemptions are in no way a 'rare' occurrence, and have allowed surface application of the dispersant to occur virtually every day since the directive was issued," Markey wrote in a letter dated Aug. 1 to retired Coast Guard Adm. Thad W. Allen, the government's point man on the spill. Markey chairs the House Select Committee on Energy Independence and Global Warming.

Some of them dealt with separate dispersant applications on the same day. Markey said it appeared that the order "has become more of a meaningless paperwork exercise" than a real attempt to curb use of the dispersants.

In an interview Saturday, Allen defended the decisions to grant the waivers, saying that overall use of dispersants declined sharply after that May 26 order to limit their use. The total use of dispersants underwater and on the surface declined about 72 percent from its peak, according to the Environmental Protection Agency.

Allen said that on some days the amount of oil on the surface justified a "tactical" decision, by on-scene Coast Guard commanders, to spray some dispersants.

"There's a dynamic tension that goes on when you're managing an incident that has no precedent," Allen said. "You establish general rules and guidelines, but knowing that the people on scene have the information" means trusting them to make decisions, he said.

In the end, Allen said: "You can quibble on the semantics related to 'rare.' I like to focus on the effects we achieved" by dispersing the oil. Officials have said that, in the days since the gusher was stopped, thick sheets of oil have nearly disappeared from the gulf's surface.

EPA Administrator Lisa P. Jackson conceded that there had been "frustration in the field" from EPA officials about the waivers. But Jackson said it was partly alleviated June 22, nearly a month after the order was issued, when Coast Guard officials began giving the EPA a greater role in the discussions over whether to approve dispersant use.

"EPA may not have concurred with every single waiver," Jackson said. But, she said, the Coast Guard had the ultimate say: "The final decision-making rests with the federal on-scene coordinator. That's where the judgment, the ultimate decision-making ability, had to lie."

The dispersants -- variants of a Nalco product called Corexit -- break up the oil, acting like a detergent on kitchen grease. They are intended to keep the oil from reaching shore in large sheets and to make it easier for microbes to consume the oil underwater.

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As the green economy grows, the 'dirty rich' are fading away

So the blown-out oil well in the gulf has finally stopped gushing, plugged with heavy mud and awaiting the ultimate "kill" by a relief well. Yet, even with the largest oil spill in the nation's history in the background, what seems to have been killed much more quickly is Washington's will to take meaningful action on the environment. After axing climate-change legislation in late July, the Senate is now taking up a modest energy bill -- and even that effort may go nowhere.

Hopes for a pivotal BP-driven eco-moment -- remember President Obama's call in June for a new "national mission" to get America off fossil fuels? -- have dissipated, seemingly confirming the common view that powerful energy firms, and corporate America more broadly, stand as the sworn enemies of any bold new environmental rules and that they have the clout to get their way.

Except that old view is no longer quite right. In fact, big business is more divided on energy and the environment than ever before, and the growing rift reflects major power shifts in the economy. On one side are business leaders and shareholders who derive their wealth from resource extraction, fossil-fuel-based power generation and energy-intensive manufacturing -- they are the "dirty rich." On the other are business leaders who run knowledge or service companies that generate very little pollution -- the "clean rich."

The dirty rich are dying off, and the clean rich are coming of age.

Of course, the dirty rich still have enough juice on Capitol Hill to kill bills they don't like, or to neuter the federal watchdogs who oversee deepwater drilling in the Gulf of Mexico and coal mining in West Virginia. ExxonMobil, for example, is not just the second-largest American corporation; it also has the some of the deepest pockets for lobbying, spending $27.4 million on such activities in 2009, more than any other company.

But the larger transition is clear: America is witnessing the twilight of the dirty rich and the inexorable move of economic power to the clean rich. What's more, environmental values are spreading fast through affluent America, with more super-wealthy individuals putting their money behind green causes and more upscale voters expecting government action to protect the planet. Climate legislation may be dead for now, but if big money really talks in America, the long-term prospects for tougher environmental rules would seem quite good.

It is hard to understate how dramatically the sources of business wealth have shifted in the past half-century. Of the top 20 companies on the Fortune 500 list in 1960, 16 were engaged in heavy industry, such as U.S. Steel and DuPont, or resource extraction, such as Texaco and Mobil. This year's list includes just six such companies in the top 20. And two of them, GM and Ford, have been in decline for years.

Meanwhile, the dirty rich are fading from the Forbes 400 list of the wealthiest individuals. When the list was first published in 1982, 38 percent of its members had made their fortunes in oil and manufacturing, and 12 percent in finance and technology. By 2006, those ratios had nearly flipped: 36 percent of the richest Americans made their wealth from finance and tech, while 17 percent earned it from manufacturing and oil.

The dirty-rich billionaires on the Forbes list are mostly on the older side -- such as industrialists David and Charles Koch, both in their 70s. In March, one of the nation's richest oilmen, pipeline magnate Dan Duncan, died at the age of 77. Among recent newcomers to the list, few have been from dirty industries. More typical is Facebook founder Mark Zuckerberg, who made the list in 2008 at age 24.

Even Texas doesn't have as many dirty rich as it used to. Fewer than half of the state's billionaires made their money in oil or energy, a major departure from earlier patterns. The two wealthiest Texans today are not oilmen; they are Alice Walton, an heir to the Wal-Mart fortune, followed by Michael Dell, a computer entrepreneur. Dell doesn't live in either of the traditional oil-money cities, Houston and Dallas; he resides in Austin, which has grown more influential in the state's cultural and political life as it has become home to numerous high-tech entrepreneurs. Dallas still has plenty of conservative oil money, but the city's economy is now powered by tech, finance and services. If the primetime soap opera "Dallas" were remade today, J.R. Ewing would probably be a telecom magnate.

The same pattern holds elsewhere. The great fortunes of Colorado used to be made from oil or mining, and the state's politicians were often creatures of these industries and unfriendly to environmentalists. Now the state's super-rich are a very different breed, including satellite TV mogul Charles Ergen and Quark founder Tim Gill. In the early 1980s, the only Forbes 400 member from the Pacific Northwest was a timber baron. Today a half-dozen billionaires live in the region, and most made their money in technology. California's Santa Clara County, which covers Silicon Valley, now has more millionaires than Manhattan.

This seismic shift in who gets rich is fast changing where politicians get their money and whom they listen to. A torrent of new cash has flowed into politics from the finance, tech and entertainment industries, and especially from the legal profession, which gave twice as much to national candidates in 2008 as any other sector. Dirty industries that once wielded enormous clout on Capitol Hill -- such as autos, steel and mining -- aren't the players they once were. Political contributions from the entire coal industry amounted to $3.5 million in 2008, while Microsoft employees contributed $3.3 million.

In 2008, John McCain far outraised Obama among employees of energy and natural resources companies, pulling in $4 million from this group. Not bad, except that Obama bested McCain in the communications and electronics sector five to one, raising $25.5 million. Until the 2002 election, the oil and gas industry -- long a deep well of GOP cash -- was consistently among the top 10 sources of money for federal candidates, according to the Center for Responsive Politics. In 2008, it ranked 16th. That same year, the entire energy and natural resources sector gave $77 million in campaign donations -- compared with $234 million given by lawyers.

The picture looks quite different when it comes to money for lobbying, with dirty industries still among the biggest spenders in Washington. But the winds may be shifting in this area as well: The once-feared automotive industry is now so weak that Detroit could barely swing a bailout last year and watched helplessly in late 2008 as its greatest champion in Congress, Rep. John Dingell (D-Mich.), was ousted from a powerful chairmanship by Rep. Henry Waxman (D-Calif.), a strong environmentalist.

Of course, new-economy giants such as Hewlett-Packard have faced withering criticism of their environmental records, and the pollution from high-tech products can certainly be serious. The difference, however, is scale. While Google's servers gobble up vast amounts of energy, its products exist mainly as pixels on a screen. BlackBerrys and iPhones are pocket-size, and desktop computers, which are among the larger products of the Information Age, weigh a few hundred times less than an automobile.

Other knowledge industries, such as the legal profession, are about monetizing cognitive skills and have little to do with the old-economy model of converting natural resources into wealth. So some of the fastest-growing and richest parts of the economy aren't much affected by environmental laws -- which is why a growing slice of America's business elite has little incentive to battle them.

What's more, an ever-larger contingent of clean-tech entrepreneurs and investors will score big if Congress acts to push up the price of carbon. Last year, George Soros pledged to make $1 billion in renewable-energy investments. Other billionaires, including Warren Buffett, Bill Gates, John Doerr and Vinod Khosla, are also placing major bets in this sector.

Apart from self-interest, many of the clean rich care about the environment. They tend to be highly educated, and quite a few have scientific training. They understand that climate change is real and must be addressed now. Google, which is run by three computer scientists, set out to be carbon-neutral several years ago and says it has achieved that goal. The company even helps employees to buy hybrid vehicles. Intel co-founder Gordon Moore -- a chemist by training -- is giving hundreds of millions of dollars to help preserve fragile ecosystems.

But the roots of the clean rich go deeper. The modern environmental movement emerged in the 1960s, fueled in large part by the spread of affluence and education. There is a logic to that link: Once your material needs are met, you can turn your attention to other concerns, whether saving polar bears or the Amazon. "Postmodern values give priority to environmental protection and cultural issues," University of Michigan political scientist Ronald Inglehart has written, "even when these goals conflict with maximizing economic growth."

Inglehart bases this conclusion on decades of research through the World Values Survey, which has tracked changing attitudes in 97 countries. His findings consistently show that rising incomes and more wealth lead to environmentalism. That certainly seemed the case in 2006, when Californians voted on Proposition 87, which would have taxed oil companies to fund alternative fuels. The initiative, which failed overall, passed in higher-income counties, such as Marin and Alameda, while losing by huge margins in some of the state's poorest counties. In Modoc County, a rural area with the one of the lowest household income levels in California, only 24 percent of voters supported the initiative, compared with 72 percent in prosperous San Francisco County.

It is hardly news that affluent liberals often fret more about the environment than working-class voters. But this class divide is poised to have a larger political impact. One reason the Republican Party can blithely block attempts to address climate change, one of the gravest threats facing humanity, is that its political base is heavily weighted with less-educated and less affluent voters who live in rural areas and small towns -- and who aren't keen on government activism to protect the planet. A poll last year by the Pew Research Center for the People and the Press, for instance, found that support for legislation to limit carbon emissions was 16 points higher among college graduates than those with a high school diploma or less.

Yet if the GOP is to build a durable majority, it will have to move beyond this constituency. Even if Republicans take control of the House this fall, that won't change the fact that the Palin and Limbaugh wing of the party has badly hurt GOP fortunes by alienating affluent and educated donors and voters -- as witnessed most dramatically by Obama's crushing fundraising edge over McCain. Wooing back these natural allies, especially the clean rich, will require tacking to the center. And climate change, an issue driven by scientific evidence and with appeal in this newly influential community, is a great candidate for a softened stance. Its time will come soon -- and could come even faster if a few far-sighted Republicans recognize their plight and decide to hasten that transformation.

dcallahan@demos.org

David Callahan is a senior fellow at Demos, a nonprofit public policy group, and the author of "Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America."

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BP names Dudley as CEO, announces $17 billion loss

BP gave investors a glimpse of its future Tuesday, one that will feature a new American chief executive, slimmed-down operations, and $32.2 billion or more in payments to clean up and compensate people affected by the massive oil spill in the Gulf of Mexico.

In announcing its second-quarter earnings, the London-based oil giant tried to walk a line between reassuring bankers and investors about its vast assets and financial strength, and avoiding the appearance of being a rich, powerful company insensitive to the plight of the Gulf Coast.

"We have much to do to make it right," BP Chairman Carl-Henric Svanberg said in a conference call with investment analysts Tuesday, referring to the spill. But he added that BP's directors are also "determined to restore value to our shareholders."

In mapping out plans to pay for damage and cleanup, BP said it will sell $25 billion to $30 billion in assets over 18 months, shedding about 10 percent of its oil and natural gas output. That should enable it to shrink its outstanding debt and reinstate dividends next year for shareholders while still covering payments to the massive escrow fund for spill damage claims.

"It's still going to be the second-largest oil and gas producer among international oil companies," said Fadel Gheit, oil analyst with Oppenheimer & Co. "Smaller than Exxon Mobil but bigger than Royal Dutch Shell."

In a sign of how difficult it will be for BP to turn the page on the crisis, however, Rep. Edward J. Markey (D-Mass.) lashed out Tuesday at the company for concealing its estimates of the rate at which oil had flowed into the gulf. Markey released a letter from BP Chief Operating Officer Douglas Suttles to the Coast Guard in early July in which Suttles estimated that oil was pouring forth at a rate of 53,000 barrels (2.23 million gallons) a day.

The BP briefing for investment analysts was a somber one, as Svanberg announced that the board had picked Robert Dudley, a BP managing director and former Amoco executive, to replace chief executive Tony Hayward, a British geologist who had spent his entire career with BP. Dudley, 54, who grew up in Mississippi and spent summers boating with his family in the Gulf of Mexico, will become the first foreigner to lead the century-old company.

"Today is a very sad day for me," Hayward said. "I love the company and everything it stands for." He said, however, he realized that for BP "to move forward, particularly in the United States, it should do so under new leadership."

Hayward's compensation package includes a pension valued at about $17 million and a severance of $1.6 million, or a year's salary.

Without costs from the spill, the company would have declared a profit of $5.6 billion for the second quarter. Spill charges turned that into a $17.2 billion loss.

The appointment of Dudley, who will take charge Oct. 1, comes at a turning point in the calamity. After gushing for three months, the damaged oil well in the Gulf of Mexico has been capped for the past 12 days. Kenneth Feinberg, the master for the $20 billion escrow fund, is taking over the task of scrutinizing and processing claims and proposing settlements.

Still, Dudley's task will be immense. Congress is set to raise liability limits for oil spills and to impose tougher regulations on offshore drilling. Some lawmakers want to prevent BP, the largest producer of oil and gas in the United States, from acquiring new federal leases. The Justice Department is investigating criminal charges against the company, which could complicate its ability to do business with the federal government or bid for leases.

Asked how BP would be viewed in five years, Dudley said in "a perfect world" people would realize that "BP met its commitments to restore the Gulf Coast and as a result of that BP has restored its reputation" and it would be allowed to grow its U.S. business. He said, "Five years from now, I hope that people look back and say that was a quite incredible response to a quite tragic accident."

Although BP's provision for claims and cleanup is unprecedented in size, some analysts questioned whether it is big enough. If found to be "grossly negligent" in the way it was drilling the Macondo well that exploded on April 20, BP could wind up paying an additional $12 billion in fines alone and nearly twice as much overall, said Gheit of Oppenheimer.

BP's chief financial officer, Byron Grote, said that in calculating the size of anticipated federal fines under the Clean Water Act, BP assumed that it was not guilty of negligence. By doing so, it pegged its fines at $1,100 per barrel spilled. If found negligent, BP would have to pay $4,300 a barrel. It would also have to pay 100 percent of the fines, while Anadarko Petroleum and Mitsui, its partners in the lease, would not have to share the cost of the penalties.

Critics in Congress decried the company's failure to say precisely how much oil it thinks has spilled into the gulf. Hayward said only that BP had used a number around the middle of published estimates, which most recently have been 35,000 to 60,000 barrels a day.

In addition, BP's financial statement reflected an offsetting tax benefit from lower earnings. Because the reserve for claims is deducted from profit, BP will not pay $9.9 billion in taxes that it would have otherwise owed.

Bracing for unknown costs, BP also said that it would shrink its outstanding debt to $10 billion to $15 billion, from its current $23.2 billion.

Dudley assumed his new title with modesty. He said he has the "greatest respect" for Hayward.

"I did not seek out this job," he said in a conference call with journalists. "I was asked to step into these shoes."

But in Washington, some people were ready to bid good riddance to Hayward, who had aggravated public anger by saying he wanted his "life back" and by going sailing on his yacht on his return to England after weeks on the gulf coast and in Washington.

"While it's now happy sailing for Tony Hayward, rough conditions will persist in the Gulf of Mexico for years to come because of his failed leadership," Markey said. "The new leaders of BP will have an uphill climb to correct the legacy left by Hayward, indelibly inked by the disaster in the gulf."

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