Government at all levels (federal, state & local) impacts the energy industry. Whether it be overarching regulation at the Department of Energy, fracking bans in New York state, or local permitting issues – it impacts production, economics, and strategy.
This week’s election (like most elections) will have a material impact on the oil and gas industry, and thus producers, associations, and other industry participants will be observing closely as to the outcome. Recently, editors of the Oil & Gas Journal (Nick Snow & Bob Tippee) gave some of their thoughts on the topic.
What Won’t Change
Regardless of who wins, there are some trends and initiatives that will continue moving forward:
- Alliance Building: continued development with industries outside of oil and gas. This has become more valuable than ever because industry players have done a good job of building relationships, but if industry players want to continue to be effective, they will have to work harder.
- Knowledge Turnover: state and local co-operations with industry groups. These entities are looking for people to replace those retiring. Both sides of the aisle (industry & government) want to tap new and more recently developed sources of knowledge.
- Improved Relationship & Communication with Regulators: companies must be ready and willing to talk with state and local regulators about their needs. This is particularly pertinent in the area of infrastructure system improvements, which must continue. Construction of pipelines and maintenance of waterways, which serve as supply routes, will be one of the industry’s biggest challenges going forward. This is critical because if service is interrupted and customers do not receive their products, the company is often blamed even if not at fault.
- Precision Emission Measurements: more measurements are needed to supplement emissions estimates for methane and CO2. These are largely based on estimates and projections that require measurements to balance. The quantities are hard to estimate properly. It seems that every time measurements are taken in cooperation with EPA and air quality boards it turns out that the actual emissions are lower than the estimates. It is imperative this work to accurately measure emissions continues for the next four years.
If Clinton Wins
- The OGJ editors think that a Clinton presidency would be a continuation of current regulation and will force a review of where the industry has been and where we are headed. Policy change will not happen just because there is an election, but will require changing minds. Right now energy policy is unfavorable for all fossil energy, and coal has been severely hamstrung. That industry is struggling commercially and the OGJ editors think a Clinton administration will shift to be even more unfriendly to oil and gas infrastructure.
- We have already begun to see a shift in the behavior of federal agencies in their response to the oil and gas industry. Evidence of this was the rapid response of three federal agencies to a court decision that refused to impose an injunction against the Dakota access pipeline. The Administration was ready to side with activists and asked agencies to suspended approvals of water crossings, when the court ruled that in fact the pipeline company had done everything that it needed to do. The injunction sought by the Native American group was indeed inappropriate. This is symptomatic of current administration’s approach to oil and gas.
- A Clinton Administration would aim to make America the world’s cleanest energy super power. OGJ’s editors say in fact they think this is an unsustainable agenda. Renewables cannot replace fossil fuels any time soon. Yes, renewables are growing rapidly, but they currently lack scale. They require subsidization, which at double the cost, is the reason why oil and gas development is blocked so that funds can be allocated to the development of renewable energy.
If Trump Wins
This is a much murkier proposition, because the editors don’t exactly know what a Trump administration would do for the oil and gas industry.
- The OGJ editors generally think Trump would have a more friendly energy environment, but the opposition would not go away. Most likely they could collect more money from their donors and get ready for the next fight.
- Harold Hamm of Continental Resources is advising Trump. That is why on the campaign trail, his energy policy positions have come across pretty sound for someone with a background in real estate. There are rumors that Trump would make Mr. Hamm the secretary of energy, but the OGJ editors see problems with this because energy policy is not made at the DOE, but at EPA and Department of Interior. Additionally, opponents of the continued development of fossil fuels would likely contend that the DOE would be corrupted by having an industry expert in charge. It would be a lightning rod. That doesn’t mean that Harold Hamm wouldn’t do well in a place like that, but the politics would be difficult.