January 2020 /// Vol 241 No. 1

Features

Regulatory Affairs

A stark reality faces the U.S. oil and gas industry in the 2020 elections

David Blackmon, Contributing Editor

The time has come for people in the oil and gas business—especially its senior executives and those who do government affairs work within the larger companies—to wake up to the reality of the Democratic Party as it exists today, as exemplified by its current crop of presidential contenders and caucuses in both houses of Congress. 

Simply put, this is not your father’s Democratic Party.

MODERATION HAS DISAPPEARED

Gone are the days when there existed a subset of fairly moderate Democratic members of Congress, in both the House and Senate, who could be classified as strong supporters of the oil and gas industry. There are no more Mary Landrieus (Louisiana) in today’s United States Senate, nor even a Heidi Heitcamp (North Dakota) to be found. In the House, you still have one identifiable Democrat, Texas Rep. Henry Cuellar, who can be said to be a real supporter of the oil and gas industry, but that’s pretty much it. And even Rep. Cuellar was so cowed by Speaker Nancy Pelosi (California) that he cast a “yes” vote to impeach the most pro-oil and gas President in U.S. history, on the flimsiest grounds imaginable in December.

Gone are the days when a start-up industry trade association, America’s Natural Gas Alliance, could be effective by hiring a former Bill Clinton operative to be its president and hiring a raft of pro-Democrat contractors to shape its messaging. ANGA, created at the outset of the Obama administration in early 2009, was able to quickly become a force for promoting the benefits of natural gas, using that model a decade ago. A decade later, pretty much none of the Democrat senators and congressmen with whom ANGA formed effective working relationships remain in Congress. All have been replaced by Republicans, or by more radical left-wing, anti-oil-and-gas Democrats.

While ANGA and other industry trade associations were able to form working relationships with many Democrats of the time, even in those years such Democrats could not be counted on for industry support on the truly big votes. ANGA and the rest of the industry, for example, were unable to secure a single Democratic vote during the battle over the national carbon cap-and-trade bill that barely failed in 2010.

I know all of this to be true, because I was intimately involved in ANGA’s work during those years, when I was director of Government Affairs at El Paso Corporation. Working to form those relationships with Democrats in Congress made sense at the time, since a number of them really were pro-oil-and-gas, at least to some extent, and because there was a Democratic administration in place that was decidedly hostile to the industry’s interests. 

For example, relationships with key Democrat members of the House Ways and Means Committee helped prevent Congress from acting on President Obama’s worst impulses, such as eliminating every oil-and-gas-related tax treatment from the IRS Code. Mr. Obama proposed to do that in every “State of the Union” message he delivered, and every year the proposal was killed within the Ways and Means Committee, with tacit support from several Democratic members.

Likewise, the industry’s relationship with Senator Landrieu was critical in preventing a complete shutdown of drilling and production in the Gulf of Mexico, in the wake of the tragic Deepwater Horizon spill in 2010. Today, there is only a single Democratic senator representing a Gulf Coast state—Alabama’s Doug Jones—and no one would characterize Sen. Jones as a friend or real supporter of the oil-and-gas business.

Thus, while industry’s trade associations and government affairs professionals continue their efforts to form positive relationships with Democratic members of Congress, the thought that any Democrat member other than Rep. Cuellar can be relied upon to defy either Speaker Pelosi or Senate Minority Leader Chuck Schumer (New York) on any crucial vote is specious at best, and really just a fantasy thought process.

2020 PRESIDENTIAL POLITICS 

The stark reality in Congress today makes the 2020 race for the Presidency even more crucial for the oil-and-gas business than it normally might be. The presence of the most pro-oil and gas President in U.S. history, along with GOP majorities in both houses of Congress, made 2017-2018 very good years for the industry from a public policy standpoint. The subsequent takeover of the House by the Democrats following the 2018 elections produced only gridlock on energy-related issues within Congress, which the industry has always viewed as a positive situation. 

Thus, 2020 will no doubt be another gridlock year, as the Democrats have promised to make an impeachment process a permanent feature of their majority in the House. So, the maintenance of this status quo would likely produce a positive situation for the industry, from the standpoint of regulation and legislation.

But what if the status quo changes following the November 2020 election? Depending on how the equation shifts, things could suddenly become very bleak for those in the energy sector, at least the part of the sector that produces real, truly sustainable energy for the nation and the world.

CEOs and PACs can be wrong. Throughout 2015 and 2016, I was employed at a different company, LINN Energy. During that time, I became pretty much a social outcast among the industry’s government affairs community, as I had concluded in October 2015 that Donald Trump would certainly be the GOP’s presidential nominee and would most likely win the general election against Hillary Clinton, as well. Indeed, when I laid out my thoughts on the coming election before one of the industry’s major trade association’s board of directors in June 2016, I could hear snickering around the table. Which, to be fair, was justifiable, since every major poll at the time indicated Clinton would win easily.

During those months, my CEO at LINN, Mark Ellis, repeatedly came to me for advice on whether to participate in fundraisers sponsored by many of his industry peers, first for GOP candidates competing against Trump for the nomination, and then—to my amazement, frankly—for Mrs. Clinton in the general election. In every case, I advised him to not participate, given my strong belief that Mr. Trump would end up in the Oval Office. After the election, Mark thanked me for helping to save him many thousands of what would have been ill-spent dollars.

Indeed, company PACs and senior executives in the oil-and-gas business poured hundreds of thousands of dollars into the Clinton campaign, and its various supporting PACS and issues advocacy groups, during that general election campaign. At the same time, the industry contributed almost nothing to the Trump campaign. As things worked out, these companies and executives were very fortunate that the new President didn’t hold a personal grudge against them.

Democratic candidates. A Clinton victory in 2016 may or may not have produced a policy disaster for the industry—fortunately, we will never have to find out. But there is simply no question that a win by any of the current leading candidates for the Democratic Party’s 2020 presidential nomination would produce a calamity of epic proportions for America’s energy sector.

Start with the fact that both Massachusetts Senator Elizabeth Warren and Vermont Senator Bernie Sanders have pledged to make hydraulic fracturing—or “fracing” as they refer to it—illegal, not just on federal lands, but throughout the depth and breadth of the United States of America. Many observers scoff at Warren’s pledge to make that happen on her “first day in office,” correctly noting that no President can achieve that outcome via an Executive Order. 

But that does not make the threat any less real, given that there are myriad ways for any presidential administration to eat away at the industry’s license to perform fracing operations via regulations, environmental reviews, permitting processes, and more narrowly-focused executive orders. Even without congressional cooperation in passing a statute making fracing illegal, a Warren or Sanders administration could quickly render hydraulic fracturing operations so costly that they become uneconomic to deploy, even on private and state-owned lands.

The Biden factor. Then there’s former Vice President Joe Biden, considered to be the most “moderate” and “electable” of the current slate of candidates. At the Dec. 19 Democratic debate, the “moderate” Biden—currently the leader in the national polls—gave the following answer, when one of the moderators, Politico’s Tim Alberta, asked if he would be willing to sacrifice “hundreds of thousands” of oil-and-gas jobs, in his efforts to adapt portions of Rep. Alexandria Ocasio Cortez’s (New York) “Green New Deal” proposal:

"The answer is yes," said Biden. "We should, in fact, be making sure right now that every new building built is energy-contained, that it doesn’t leak energy, that in fact we should be providing tax credits for people to be able to make their homes turn to solar power. They’re all kinds of folks—right here in California, we're now on the verge of having batteries that are about the size of the top of this podium that you can store energy, when in fact the wind isn’t blowing and the sun isn’t shining. We have enormous opportunities."

There is nothing ambiguous about that answer, is there? Biden went on to say that all the oil-and-gas workers he would put out of jobs could be “retrained” to take jobs in the renewable energy sector, similar to then-President Obama’s 2012 statement that all the coal workers he planned to put out of jobs should “learn to code.” And that answer—again, from the “moderate” among the Party’s leading candidates—follows onto Biden’s pledge to “eliminate” the use of fossil fuels, including coal, oil and yes, even natural gas.

The choice facing the oil and gas industry, its PACs, its government affairs professionals and its senior executives in 2020 could not be more stark: Either you support candidates who are in favor of preserving the amazing contributions that oil and natural gas make to the modern world, or you support candidates who don’t. Anyone in the oil-and-gas industry, who sponsors fundraisers for the 2020 Democratic nominee, as so many CEOs and PACs did in 2016 for Mrs. Clinton, should immediately be asked by their boards of directors how they could possibly justify supporting a candidate who favors putting their company out of business.

This time around, things really are that simple.

The Authors ///

David Blackmon is a managing director of FTI Strategic Communications, based in Houston. Throughout his 33-year, oil and gas career, he has led industry efforts to develop and implement strategies to address key issues at the local, state and federal level. His stops along the way include stints with The Coastal Corp. Tesoro Petroleum, Hughes Texas Petroleum, Burlington Resources, Shell and El Paso Corp.

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