(Image: PBS Newshour)
By Analiese Kornely
“The most wealth I’ve ever made was during the dark times” - Kelcy Warren, 2015 (Bloomberg)
By now, most of us are all too familiar with the work of Energy Transfer Partners (ETP) and Chairman and CEO Kelcy Warren. His current and most controversial project, the Dakota Access Pipeline, is still facing legal challenges from Native groups but is almost operational. Although the ongoing struggle to stop the pipeline (and the Trans-Pecos and Comanche Trail pipelines in Texas) showcased Warren’s ruthlessness to the world, it was certainly not Warren’s first rodeo when it comes to putting petrochemical profits over everything else. In fact, one overlooked instance comes right from our own backyard in Texas. In cases filed by the Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission, they alleged that ETP and its subsidiaries manipulated natural gas prices in Houston before, during, and after Hurricane Rita. That’s right: ETP schemed to profit off of a natural disaster that caused $12 billion in damage and affected the lives of millions on the Gulf Coast. As Houston families were surveying the damage done to their houses and businesses, Warren and ETP were counting their cash.
Here (in very simple terms) is what they did. ETP and three subsidiaries took a short position on wholesale natural gas prices at the Houston Ship Channel in October 2005. Knowing a major storm would cause supply disruptions and trigger a spike in price, they then stockpiled gas to flood the market with the days after the storm. They bet on prices going down, and then took action to make sure they did.
The complaints brought by CFTC and FERC were settled out of court, but Energy Transfer Partners agreed to pay a total of $40 million in fines and penalties related to the market manipulation. If you’re wondering what $40 million means to Kelcy Warren, the answer is not a lot. When asked on his Texas Parks & Wildlife Commission application if he or his companies had ever been the subject of a complaint or investigation by a regulatory body, he replied that the FERC case above was “dropped with a minor fine.” For Kelcy Warren, that's apparently just the cost of doing business.
[Editor's Note: If you haven't already, send your State Senator a message today to oppose Kelcy Warren's appointment to the Texas Parks & Wildlife Commission.]