The American Spectator

Political Hay

Teachers' Pet: Big Oil

By Jeffrey Lord on 6.17.08 @ 12:08AM

You just have to love this.

The party of Obama and Pelosi is out there just pounding away at the Big Oil companies over the high price of gas at the pump. Greedy, they say. Heartless, they claim. Mean, cold, and uncaringly rich, they insist.

Yet in the v-e-r-r-r-r-y quiet precincts that represent the intersection between a key constituency of Democrats -- public employee unions -- and the pension funds that provide for said employees when they retire, guess what? Yes, indeed, these fine liberals are going out of their way to invest in...Big Oil. You read that right. At the intersection of Big Union and Big Money streets, the streets that can take you to Big Power Avenue, the political clout of the Democrats is being fueled by huge investments in Big Oil.

Let's take a look.

WISCONSIN: The Governor of Wisconsin is a gentleman by the name of Jim Doyle. He is a Democrat. He is an enthusiastic supporter of Senator Obama, endorsing his candidate back in January when it seriously counted. He is just as enthusiastic about making a show of going after Big Oil. Doyle, after staff mumbles about a company's fiduciary responsibility and vouching, sort of, for the concept of a company earning profits, has called the profits of Big Oil "excessive." A Doyle staff member, speaking for the Governor, says his boss is really upset that "the big oil companies have been making profits in excess in anything we have ever seen. And at the same time, regular Wisconsin families are struggling to pay rising prices at pump." The Doyle solution, naturally, is right out of the Obama playbook: a Wisconsin oil surcharge. Doyle's critics say the oil companies will simply pass the costs on to Wisconsin consumers.

So far, so good. This is what Democrats do, right? They always seem to have skipped that basic class in Economics 101. Ahhhh. But did they? It seems that very quietly, over there at the intersection of Big Union and Big Money Streets, what do we find? According to WisBusiness.com, which bills itself as "Wisconsin's Business News Source," we find this treasure trove of obscure information. Reporter Brian Clark, in a much nationally uncovered story from May of 2007, tells us the State of Wisconsin Investment Board (SWIB) had earned "nearly $400 million over the past four years." How was that? Reports Clark:

According to the State of Wisconsin Investment Board, cash earnings from the portfolios of five major oil companies managed by SWIB staff and external managers totaled nearly $207 million from January 2003 to March 2007. Those firms are BP Amoco, Chevron Texaco, ConocoPhillips, ExxonMobil and Shell.

During the same period, the value of the state pension fund rose from $51 billion to $85 billion, SWIB officials said.

In the last two years, oil company portfolios controlled by external managers saw cash gains of nearly $50 million. Those stocks were invested in Chevron, ConocoPhillips, ExxonMobil, Royal Dutch Shell and BP. (Figures from 2003 to 2005 were not available.)

And as of April 2, SWIB's accounting records also show unrealized gains (which have not been cashed out) of more than $134 million in both internally and externally managed oil company portfolios. In addition, SWIB has numerous commingled funds, some of which have investments in oil companies. (Some of those holdings go back even further than 2003, officials said.)

Well. Let's follow the money, shall we?

The SWIB includes, by Wisconsin law, a representative of "the Teachers Retirement Board." Teachers. Teachers who are in turn represented by a union, specifically in this case the Wisconsin Education Association Council (WEAC). According to the website Wisconsin Democracy Campaign, which reports on money in Wisconsin politics, WEAC is "among the largest contributors in Wisconsin politics" spending almost $1.5 million in the 2002 political cycle. It is, amazingly enough, a supporter of Governor Doyle.

So in other words, the Wisconsin teachers union is seeing to it that their members' pension money is invested in Big Oil. Guaranteeing paychecks for union members will be secured long beyond their active teaching days -- thanks to Big Oil. The members in turn contribute to WEAC's political action committee, which in turn contributes to, in this case, Governor Doyle. Who, if he gets his way, will place a "surtax" on Big Oil, which will promptly pass the cost on to Wisconsin consumers, thus ensuring that the huge investment by the Wisconsin teachers union goes -- up. Neat little racket, no? What says the Governor of Wisconsin about all the dough being made by teachers who have a piece of Big Oil? According to Clark, Governor Doyle "isn't bothered."

CALIFORNIA: Calpers. The California Public Employees' Retirement System. Befitting America's largest state, Calpers is a very big deal in investment circles. Heading up its board is one Mr. Rob Feckner. The Calpers website says their board president "is also the Association President of the California School Employees Association, and he is serving his 14th year on the Board of Directors. He also serves as an Executive Vice President of the California Labor Federation."

On the surface, Mr. Feckner is out there, just like his fellow Democrat Governor Doyle in Wisconsin, railing against Big Oil. In March of this year his union put out a press release with this typical populist pitch: "Assembly Republicans Vote Against Saving California's Schoolchildren, Side With Rich Oil Companies." Yet if you dig around, you find this underreported little nugget about Mr. Feckner's Calpers, according to a February 2008 story on Bloomberg News:

Calpers, which has about $240 billion in assets, agreed at a Feb. 19 board meeting to hold between 0.5 percent and 3 percent of its assets in commodities.....The Sacramento, California-based fund last year put $450 million into commodities, its first such investment.

Commodities?

This is trader talk for, yes indeed, oil. As in, Big Oil. In other words, to fill its members' coffers, California unions -- Obama supporters and Democrats mind you -- are investing Big Time in Big Oil. When House Speaker Nancy Pelosi -- a California Democrat who receives support from Mr. Feckner's union -- plays for votes by saying "oil companies are making tens of billions of dollars in record profits," she somehow manages to leave out that it is her buddies who in fact are profiting from those very same "tens of billions."

As it happens, Calpers is also the 13th-largest holder of stock in Democrat billionaire Warren Buffett's Berkshire Hathaway. In that role, Calpers has shown it is so devoted to its Big Oil investments that in 2007 it even voted against a move by a Berkshire investor to force Berkshire to sell its shares in PetroChina, the Chinese government-owned oil company. The investor was disturbed that PetroChina was doing business in the Sudan, where the government stands accused of genocide by a number of nations including the United States. According to Bloomberg News, a Calpers spokeswoman said that "telling a company how to invest would go beyond a governance issue" that is typically addressed by Calpers. "We believe it would do long-term harm to the company, so we're voting against it."

Letter to the Editor

topics:
Education, Trade, Nancy Pelosi, Economics, Business, Law, Iran, NATO, Energy, Oil, Unions