6 ms·

Environmentalist Creates Uproar at Oil-Lease Auction by Running Up Prices

21 points by kalvin 18y ago

bjclark 18y ago
I'm from the area that this concerns, and if anyone wants to know why the tree huggers are so upset check out google maps of the area: http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=Rifle,+CO&sll=39.333146,-108.213746&sspn=0.053442,0.067978&ie=UTF8&ll=39.507749,-107.910719&spn=0.051719,0.067978&t=h&z=14&iwloc=addr http://maps.google.com/maps?f=q&source=s_q&hl=en&#38... If you look all up and down I-70 and all throughout the region, you'll see tons and tons of dirt roads and big dirt rectangles. Each one of these is a natural gas well. This is a beautiful part of Colorado and Utah, and it's being completely devastated by the development. We call it a "National Sacrifice Area" in my family.
- patrickg-zill 18y ago
  So your hatred of the resulting ugliness trumps others' private property rights, including mineral rights?
  - emuload 18y ago
    Hmm this is tough. Ugly or less domestic oil production... Thing is, if we drill more, gas prices are affected (in a good way for us). If we don't drill, we will NEVER tap the potential of our resources (and it's there). And if we do drill, the land will look disgusting, which is definitely bad. Especially such beautiful land in the west... But since I'm not living there I am inclined to be okay with the land looking ugly, since I'm not the one who has to live with it. It's the same deal with windmills -- everyone wants to build them but nobody wants to look at them. I guess I care more about my gas prices. Is that a bad thing? Hm and can we stick to hacking? I mean it was an interesting article but man I'm depressed now. Haha.
    - lliiffee 18y ago
      In order to decide, we need quantitative estimates of how much prices will be reduced, and how much natural beauty will be harmed. It seems to me that even someone with your attitude will probably find the trade-off does not favor development in beautiful areas for the unmeasurably small change in prices we can expect. http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html
  - mindslight 18y ago
    I don't think property rights enter the picture when it's a government steward making long term leases available, possibly against the public interest. And that they're claiming he significantly raised prices for parcels that he didn't end up winning shows that the auction was a sham (basically the companies expected to not have much bidding competition).
    - cperciva 18y ago
      And that they're claiming he significantly raised prices for parcels that he didn't end up winning shows that the auction was a sham Not necessarily. It's entirely rational for bidders to say "hey, there's more competition bidding on this parcel than I expected, maybe this parcel is worth more than I thought". Bidders don't have perfect knowledge, and they are well aware of this fact.
      - mindslight 18y ago
        It is true that a bid signals a committed willingness to pay a certain price. But then what disqualifies this kid's bids as not being part of determining the true cost? He says that he accepted possibly going to jail, and I'm sure he'd rather be in debt for the bid amount instead of jail, so in essence his bids were backed up by a commitment. You know, now that he's got a bit of money and publicity backing him, it'd be kind of funny if he sued and got all of the sales that were completed after he was escorted out invalidated, as he was denied participation, and therefore they are _undervalued_.
        cperciva 18y ago
        what disqualifies this kid's bids as not being part of determining the true cost The fact that they were fraudulent. He had no intention of ever paying the amount which he bid.
        mindslight 18y ago
        Yeah, I suppose that was a stillborn argument, given that the debt in question isn't the result of a creditor explicitly loaning money for the purpose, but arising from a non-fulfilled transaction.
mdasen 18y ago
This guy just wasn't smart. If he were, he'd have created a company with an innocuous name like "NextWave" or something. Get some funding (apparently $45k) from environmentalists who don't want to see drilling. Then have NextWave bid on licenses, I mean land parcels that they couldn't pay for. Next, declare bankruptcy so that they didn't have to continue payments to the government. Hold onto the licenses, I mean land parcels until the government decides to settle rather than losing again in a bankruptcy case where someone didn't pay them. They wouldn't get to keep all the land, but they'd get to keep enough that it would be worth their while. Plus, it's the business that's doing this action. Generally speaking, that means the business gets in trouble and not those running it. I'm no lawyer, but it seems like unless you pull an Enron, you don't seem to be individually held accountable. This guy just wasn't smart: http://www.eweek.com/c/a/Mobile-and-Wireless/NextWave-FCC-Settle-Wireless-Spectrum-Battle/ http://www.eweek.com/c/a/Mobile-and-Wireless/NextWave-FCC-Se...
- byrneseyeview 18y ago
  It's odd that the government wasn't just treated like a normal creditor. Usually in that situation, the party they owed the most to would end up owning all of the equity.
- cperciva 18y ago
  Using a shell company wouldn't have helped him. What he committed was an act of fraud -- bidding on licenses which he knew he couldn't pay for -- and fraud can pierce the corporate veil. There is extensive legal precedent that a corporation created for the purpose of carrying out a fraud does not provide any protection to the individual(s) behind it. (This is not legal advice. I am not a lawyer. Talk to a lawyer if you plan on committing acts of fraud.)
  - mdasen 18y ago
    My comment was more of a late night joke based on how NextWave kept lots of spectrum from serving the public good (and earned a lot of money) doing a similar thing. Oh, and I love Tarsnap!
biohacker42 18y ago
Ignoring if what he did was right or wrong, you have to a admit it is a pretty good social hack. But could it be an even better hack? What if he started a business, leased all that land, after a while filed for bankruptcy because you know the business "earnestly" was going to raise funding for exploration but then that darn financial crisis... Then the bankruptcy preceding drag on for a while and when the leases come up for auction again... another small company... Rinse and repeat.
- sethg 18y ago
  He didn't have time to pull off such an elborate hack, because the Bush Administration organized this auction in a big hurry, hoping to get as much land as possible leased out before Bush left office. If the whole auction is declared void and repeated, then when it happens again, the Obama Administration will run the show.
electromagnetic 18y ago
Hopefully this inspires some environmentalists with real money to do the same. Gas right now in Ontario is hovering around $0.75 a litre, but last summer it was at $1.49 (I believe was the highest I personally saw it at). I think the more restrictions are placed on oil and the higher the price stays then the less people are going to use. I mean the carpooling lanes actually have cars in now, even with the price of gas being low. Ironically, the more people who carpool the less money all the 'pay $5 to park' lots will get, which will actually mean some new buildings can be built and probably save the economy sooner.

21 points by kalvin 18y ago

I'm from the area that this concerns, and if anyone wants to know why the tree huggers are so upset check out google maps of the area: http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=Rifle,+CO&sll=39.333146,-108.213746&sspn=0.053442,0.067978&ie=UTF8&ll=39.507749,-107.910719&spn=0.051719,0.067978&t=h&z=14&iwloc=addr http://maps.google.com/maps?f=q&source=s_q&hl=en&#38... If you look all up and down I-70 and all throughout the region, you'll see tons and tons of dirt roads and big dirt rectangles. Each one of these is a natural gas well. This is a beautiful part of Colorado and Utah, and it's being completely devastated by the development. We call it a "National Sacrifice Area" in my family.

patrickg-zill 18y ago
So your hatred of the resulting ugliness trumps others' private property rights, including mineral rights?
- emuload 18y ago
  Hmm this is tough. Ugly or less domestic oil production... Thing is, if we drill more, gas prices are affected (in a good way for us). If we don't drill, we will NEVER tap the potential of our resources (and it's there). And if we do drill, the land will look disgusting, which is definitely bad. Especially such beautiful land in the west... But since I'm not living there I am inclined to be okay with the land looking ugly, since I'm not the one who has to live with it. It's the same deal with windmills -- everyone wants to build them but nobody wants to look at them. I guess I care more about my gas prices. Is that a bad thing? Hm and can we stick to hacking? I mean it was an interesting article but man I'm depressed now. Haha.
  - lliiffee 18y ago
    In order to decide, we need quantitative estimates of how much prices will be reduced, and how much natural beauty will be harmed. It seems to me that even someone with your attitude will probably find the trade-off does not favor development in beautiful areas for the unmeasurably small change in prices we can expect. http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html
- mindslight 18y ago
  I don't think property rights enter the picture when it's a government steward making long term leases available, possibly against the public interest. And that they're claiming he significantly raised prices for parcels that he didn't end up winning shows that the auction was a sham (basically the companies expected to not have much bidding competition).
  - cperciva 18y ago
    And that they're claiming he significantly raised prices for parcels that he didn't end up winning shows that the auction was a sham Not necessarily. It's entirely rational for bidders to say "hey, there's more competition bidding on this parcel than I expected, maybe this parcel is worth more than I thought". Bidders don't have perfect knowledge, and they are well aware of this fact.
    - mindslight 18y ago
      It is true that a bid signals a committed willingness to pay a certain price. But then what disqualifies this kid's bids as not being part of determining the true cost? He says that he accepted possibly going to jail, and I'm sure he'd rather be in debt for the bid amount instead of jail, so in essence his bids were backed up by a commitment. You know, now that he's got a bit of money and publicity backing him, it'd be kind of funny if he sued and got all of the sales that were completed after he was escorted out invalidated, as he was denied participation, and therefore they are _undervalued_.
      - cperciva 18y ago
        what disqualifies this kid's bids as not being part of determining the true cost The fact that they were fraudulent. He had no intention of ever paying the amount which he bid.
        mindslight 18y ago
        Yeah, I suppose that was a stillborn argument, given that the debt in question isn't the result of a creditor explicitly loaning money for the purpose, but arising from a non-fulfilled transaction.

mdasen 18y ago

This guy just wasn't smart. If he were, he'd have created a company with an innocuous name like "NextWave" or something. Get some funding (apparently $45k) from environmentalists who don't want to see drilling. Then have NextWave bid on licenses, I mean land parcels that they couldn't pay for. Next, declare bankruptcy so that they didn't have to continue payments to the government. Hold onto the licenses, I mean land parcels until the government decides to settle rather than losing again in a bankruptcy case where someone didn't pay them. They wouldn't get to keep all the land, but they'd get to keep enough that it would be worth their while. Plus, it's the business that's doing this action. Generally speaking, that means the business gets in trouble and not those running it. I'm no lawyer, but it seems like unless you pull an Enron, you don't seem to be individually held accountable. This guy just wasn't smart: http://www.eweek.com/c/a/Mobile-and-Wireless/NextWave-FCC-Settle-Wireless-Spectrum-Battle/ http://www.eweek.com/c/a/Mobile-and-Wireless/NextWave-FCC-Se...

byrneseyeview 18y ago
It's odd that the government wasn't just treated like a normal creditor. Usually in that situation, the party they owed the most to would end up owning all of the equity.
cperciva 18y ago
Using a shell company wouldn't have helped him. What he committed was an act of fraud -- bidding on licenses which he knew he couldn't pay for -- and fraud can pierce the corporate veil. There is extensive legal precedent that a corporation created for the purpose of carrying out a fraud does not provide any protection to the individual(s) behind it. (This is not legal advice. I am not a lawyer. Talk to a lawyer if you plan on committing acts of fraud.)
- mdasen 18y ago
  My comment was more of a late night joke based on how NextWave kept lots of spectrum from serving the public good (and earned a lot of money) doing a similar thing. Oh, and I love Tarsnap!

biohacker42 18y ago

Ignoring if what he did was right or wrong, you have to a admit it is a pretty good social hack. But could it be an even better hack? What if he started a business, leased all that land, after a while filed for bankruptcy because you know the business "earnestly" was going to raise funding for exploration but then that darn financial crisis... Then the bankruptcy preceding drag on for a while and when the leases come up for auction again... another small company... Rinse and repeat.

sethg 18y ago
He didn't have time to pull off such an elborate hack, because the Bush Administration organized this auction in a big hurry, hoping to get as much land as possible leased out before Bush left office. If the whole auction is declared void and repeated, then when it happens again, the Obama Administration will run the show.

electromagnetic 18y ago

Hopefully this inspires some environmentalists with real money to do the same. Gas right now in Ontario is hovering around $0.75 a litre, but last summer it was at $1.49 (I believe was the highest I personally saw it at). I think the more restrictions are placed on oil and the higher the price stays then the less people are going to use. I mean the carpooling lanes actually have cars in now, even with the price of gas being low. Ironically, the more people who carpool the less money all the 'pay $5 to park' lots will get, which will actually mean some new buildings can be built and probably save the economy sooner.