This is lawsuit land and frackers can feel tremors all the way from Netherlands

US Outlook

Andrew Dewson
Tuesday 08 September 2015 15:09
21 September, 2014 People's Climate Rally, Global Day of Action, California USA
21 September, 2014 People's Climate Rally, Global Day of Action, California USA

If there’s one thing Americans love, it’s a good old class-action lawsuit. In fact, any kind of lawsuit really – it’s as American as apple pie and high fructose corn syrup.

Who can you sue? It’s hard to watch anything on television here without seeing an ad for one suit or another. Asbestos, car accidents, pharmaceuticals, you name it – you can be sure someone is suing over it.

What are the odds on a fracking suit? A case decided in the Netherlands on Wednesday could have huge implications for the American shale industry. Shell and Exxon, the world’s largest oil companies, have been ordered to pay compensation to homeowners over the fall in the value of their homes due to seismic activity around the massive Groeningen gas field. The two companies which operate the field through a joint venture called Nederlandse Aardolie Maatschappij (thankfully usually referred to as NAM), have already put aside $1.4 billion (£920 million) to compensate 900 homeowners and 12 housing associations.

That could be the tip of the iceberg and many other households will fancy their chances of getting compensation, whether they were trying to sell their homes or not. There is a good chance most of them will receive something, and if heavyweights like Shell and Exxon, and their armies of well-paid lawyers, can lose such a case then smaller production companies ought to be terrified – especially those involved in fracking.

A Shell spokesman admitted that the decline in the value of the homes is directly linked to an increase in seismic activity at the gas field: "We recognise the concern of residents and agree that in specific cases earthquakes can cause a decline in value."

It was stating the obvious perhaps, but it is also the first time a big oil producer has admitted that drilling is directly connected to seismic shifts.

Residents of heavily fracked states in the US will presumably be rubbing their hands in glee at the result of the Dutch court case. Or at least attorneys will be rubbing their hands, because there is nothing gleeful about living in an earthquake epicentre.

Which is exactly what many states have become – in particular Oklahoma, where one in six jobs is in the oil industry and almost all of them are fracking-related.

Earthquakes used to be a rare occurrence in the "Sooner State", but over the past 10 years or so they have become an everyday occurrence, with 508 in 2014 alone.

The Groeningen case is somewhat difference – drilling in a single gas field rather than fracking – but there are enough parallels to make every shale company sit up and pay attention.

Only oil industry diehards could deny the link between fracking and earthquakes. The US Geological Survey’s public position is that injecting billions of gallons of water into the earth’s surface rock is the primary cause of increased seismic activity in states such as Oklahoma and Pennsylvania. Most activity is low on Richter scale – quakes that won’t inflict immediate or significant damage, but that over time, and if frequent enough, will cause homes to crumble. After hundreds of small quakes, many homes in Oklahoma are displaying severe signs of deterioration.

Damage to homes is probably the least of the fracking industry’s concern right now. With oil prices rapidly descending towards $30 a barrel and no sign of a cut in production from Opec – a faithful ally apparently happy to bankrupt the North American oil industry – fracking is well past the point of being economically viable.

That doesn’t mean anyone unfortunate enough to be living in a crumbling, worthless home shouldn’t do anything about it; the industry’s ill-gotten gains have been piling up for long-enough.

It’s not a matter of encouraging suits for the sake of suits. The fracking industry has become incredibly profitable while externalising a very significant cost on to ordinary people, most of whom have gained little.

Nobody’s property should crumble without reasonable compensation. Oklahoma homeowners should take inspiration from Groeningen and take the fracking industry to the cleaners.

Just why would American workers celebrate Labor Day?

On top of lawsuits, another thing Americans claim to love are their public holidays, even if they ignore half of them and many employers don’t even give their worker drones the day off.

Bank holidays vary from the compulsory flag-waving of the Fourth of July to the increasingly unpopular Columbus Day, commemorating the slaughter of native Americans by bloodthirsty Europeans. This Monday is Labor Day, once a time to celebrate the influence and achievements of the American worker but now another excuse for extended opening hours in shops, staffed by people making the equivalent of five quid an hour. The irony is so obvious, even Americans might understand it.

However, you won’t find many takers for the concept of organised labour. Many states are busy pushing "right to work" bills thourgh legislations, further cutting the funding of unions and the ability of employees to bargain for better wages and working conditions. Most of the legislation is being pushed by Republicans, with the usual pitifully weak Democratic opposition. American workers, meanwhile, are cheerfully selling themselves down the river.

The link between the decline in union membership and wages, and higher productivity, is crystal clear. Since the early 1970s, American workers have increased productivity at an incredible pace while abandoning union representation. Over the same period the age, profit and income gains from that productivity have ended up being shared by the very few at the top of the food chain. And yet hostility to union representation is increasing, not declining.

People earning seven bucks fifty an hour in a full-time job sneer at the idea of joining a union, brainwashed by their employers to believe that a union can do nothing for them except take their cash.

The end result is the bizarre situation, common in the US, where those earning the least are more sympathetic to the interests of the executives making hundreds of times more pay than them.

Capitalism works best when the interests of employees and owners are aligned. Working in a factory, with a stay-at-home spouse and two children, used to be considered middle-class. Laughable now.

Those interests haven’t been aligned for 40 years in this country, and we are increasingly witnessing the complete triumph of capital over Labour.

Labor Day is now an unfunny joke.

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