Kamala Harris’ frac stance worrisome to shale states, attractive to the left

By Jennifer A. Dlouhy on 8/12/2020

WASHINGTON (Bloomberg) - Less than two hours after Kamala Harris was named Joe Biden’s running mate, President Donald Trump had cast the California Democrat as an oil industry and fracing foe.

“She is against fracing. She’s against petroleum products,” Trump said at a White House news conference Tuesday. “I mean, how do you do that and go into Pennsylvania or Ohio or Oklahoma or the great state of Texas? She’s against fracing. Fracing’s a big deal.”

It’s a line Trump will surely use again and again against Harris, the former California attorney general who has vowed to fight the fossil fuel industry in court, embraced the Green New Deal and last September said there was “no question” she’d ban hydraulic fracturing. But the criticism may have limited appeal beyond Trump’s political base and is likely to boost enthusiasm for the Democratic ticket among progressive voters.

Kamala Harris listens as Supreme Court nominee Judge Brett Kavanaugh appears for his confirmation hearing before the Senate Judiciary Committee on Capitol Hill in 2018.

Harris’s positions on the issue put her to the left of Biden, who has made clear he would not seek an outright ban on fracing, which could only be imposed through congressional action. Nevertheless, Harris and Biden have both promised to curtail oil and gas development on federal lands and waters managed by the U.S. government. And a senior campaign official reiterated last month that Biden would block new fracing on federal lands.

The “fracing” technique is used to coax oil and gas out of some 95% of U.S. wells today, and Trump has been touting his support for the industry as he campaigns for a second term in Pennsylvania and other swing states.

Biden’s energy agenda was already “setting up to be the greenest in U.S. history,” but adding Harris to the ticket signals the Biden administration would “aggressively” pursue its policy goals, ClearView Energy Partners said in a research note to clients.

Some oil industry figures already fearful of Biden’s environmental agenda worry Harris would bolster his resolve to combat climate change and stifle fossil fuel development, including through regulations making them more expensive to produce. But industry advocates plan to emphasize the importance of oil and gas as an engine driving the U.S. economy and critical to its post-pandemic recovery.

“The oil and gas industry represents about 8% of the American economy,” and is “a very important component of our recovery,” American Petroleum Institute President Mike Sommers said by phone. “The world looks a lot different behind the desk in the Oval Office than it does on the campaign trail, and we’re an industry that represents 10 million American workers and will be a key part of that recovery.”

The oil and gas industry faces significant headwinds, not least from the historic drop in demand caused by the coronavirus pandemic. Gas companies seeking to build new pipelines have been stymied in court recently, and some economists have argued a more effective recovery plan would involve green-friendly policies.

As California attorney general, Harris filed lawsuits against Phillips 66, ConocoPhillips and other oil companies for alleged environmental violations. Her office secured criminal indictments against Plains All American Pipeline LP for a 2015 spill in Santa Barbara, California, which resulted in convictions in 2018, after Harris was elected to the Senate.

Harris also has a history of tangling with oil refiners that have operations in California -- a pugilistic approach that could add heft to Biden’s threat to target fossil fuel executives and “put them in jail.” For instance, Harris opposed Chevron Corp.’s planned expansion of a refinery in Richmond on grounds it risked accidents and would exacerbate climate change. And Harris criticized a bid by Valero Energy Corp. to receive rail shipments of crude at its Benecia refinery, emphasizing the risk for spills and explosions along an expected Northern California route.

Nevertheless, some environmental activists have complained Harris didn’t do enough to pursue oil companies for misleading the public on the risks of climate change. Though Harris’ office was reported to have investigated Exxon Mobil Corp. on climate accusations, it never filed a suit -- an approach later pursued by other attorneys general in Massachusetts and New York. Harris has since been supportive of the efforts and last year joined other senators in an amicus brief supporting a climate lawsuit against oil companies by San Francisco and Oakland.

“Her activity on climate change litigation will continue to drive away the energy industry,” said Kathleen Sgamma, head of the Western Energy Alliance that represents oil producers. “While most of that work is rhetoric, her accusations against an industry that provides 70% of the energy Americans use every day belies the narrative that Biden/Harris would govern in a moderate way.”

Harris was one of three dozen Democratic lawmakers who in May backed an effort by the Standing Rock Sioux Tribe to shut down the Dakota Access crude oil pipeline, which was greenlighted by Trump in his first few days in office but has since had a major permit vacated by a federal court.

The company behind the project, billionaire Trump donor Kelcy Warren’s Energy Transfer LP, is seeking to continue operating the line while a more robust review is conducted by the Army Corps of Engineers. But policy analysts have warned that the November election remains a serious overhang for Dakota Access.

Harris would bring “a prosecutor’s zeal for confrontation” to Biden’s climate agenda, said Dan Eberhart, a Trump donor and chief executive of drilling services company Canary Drilling Services LLC.

“She has a distorted view of capitalism that is interventionist in nature,” Eberhart said by email. “That’s going to result in more government interference, more regulation and more conflicts with energy producers who don’t produce the right type of energy, at least according to Harris.”

Analysts warned against overstating Harris’ influence on oil and environmental policy. If elected, Biden would face pressures to emphasize other policy proposals first and could expect resistance from moderate Democrats in the Senate. “I understand why the environmentalists will be happy because she’ll be at the table, but it’s important not to draw too much from this,” BloombergNEF’s Ethan Zindler said in an interview. “She’ll be one powerful voice influencing the administration, but not the ultimate one.”

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