Democrats were big winners on Tuesday, reclaiming the U.S. House of Representatives and winning a handful of state legislatures and governor’s mansions. But the oil and gas industry was also victorious, beating back a handful of closely-watched ballot initiatives with a tidal wave of cash.
The two most significant voter initiatives were in Colorado and Washington State. In Colorado, voters rejected a proposal that would have increased the setback distances for oil and gas drilling operations to 2,500 feet, up from the current 500 feet. The industry warned that the regulation presented an existential threat to drilling in Colorado, potentially putting about 85 percent of acreage off limits to drilling. Supporters of the setback distances cited air and water pollution, as well as the safety hazards of living so close to drilling operations.
In the end, spending on advertising and campaign messaging was lopsided, and the industry made sure that its position won out with a more than 30:1 spending advantage. Buried beneath that wave of cash, supporters of the setback initiative didn’t really stand much of a chance.
In Washington, the narrative is much the same. Voters were given the chance to vote on a carbon tax that would escalate gradually over time, with the proceeds to be used for clean energy initiatives. Again, the oil and gas industry ensured its defeat with heavy spending. BP and Chevron led the way, funneling money into the state.
Both initiatives were handily defeated.
Notably, however, Colorado voters also rejected a separate initiative that would have compensated landowners if their property values were negatively affected by state regulations. The measure would have made it prohibitively expensive for the state to pass regulations that hamper oil and gas drilling. Voters rejected the measure, but since they also rejected the proposal to increase setback distances, the result is somewhat of a wash for oil and gas drillers. Related: U.S. Oil Production Is Set To Soar Past 12 Million Bpd
To be sure, however, that is very welcome from the perspective of shale drillers, many of whom saw their share prices hit in recent weeks due to the fact that greater setback distances would have put some of their oil and gas reserves off limits. News of the defeated setback measure sent the share prices of Colorado drillers soaring. Anadarko Petroleum and Noble Energy were up more than 5 percent on Wednesday.
Some other clean energy initiatives went down in defeat. In Arizona, voters rejected a proposal that would mandate utilities generate 50 percent of their electricity from clean energy by 2050, but the measure was crushed by a 70 to 30 margin. The vote was largely a battle between billionaire green energy advocate Tom Steyer and the Arizona Public Service Company, the state’s largest utility.
However, Steyer had more luck in Nevada, which is further along in its clean energy transition. As Vox notes, the state already has Tesla’s gigafactory, and Las Vegas, the state’s largest city, already buys 100 percent of its electricity from renewables. The initiative that passed on Tuesday requires the state’s utilities to generate 50 percent of their electricity from renewables by 2030.
In fact, beneath the headlines of the losses in Colorado and Washington, clean energy advocates still notched a few notable wins. California voters rejected an initiative that would have repealed the state’s recently passed tax hike on gasoline. The 12-cent-per-gallon tax on gasoline and the 20-cent-per-gallon tax on diesel would have been repealed. The rejection leaves those taxes in place, and they should generate some $5 billion in revenue over the next decade, which will be used for public transit and road maintenance.
Florida voters passed a ban on offshore drilling. The measure is practically symbolic, since it would only apply to state waters within three miles of the coast. Drilling tends to occur in federal waters, which are farther away from the shore. In any event, the federal government will still decide whether or not to allow drilling near Florida – for now, federal waters near Florida remains off limits, as they have for a long time.
In Portland, Oregon, voters passed a Clean Energy Initiative, which implements a 1 percent tax on big businesses in the city, with the revenues to be used for energy efficiency, clean energy and job training for low income communities. Related: The Clock Is Ticking For China’s Oil Independence
Of course, the larger headlines focused on the Democratic Party’s takeover of the U.S. House of Representatives. Rightly so. In the majority, the Democrats now control the chamber’s committees, arming them with subpoena power and the power to launch investigations into the Trump administration.
Democrats have indicated they could begin to probe the legality of the deregulation effort spearheaded by Trump’s EPA and Department of Interior, including the watering down of methane emissions on oil and gas and the lease sales of public lands. Such probes would likely focus on the communications and possible coordination between the industry and the government.
Overall, the energy industry won quite a few significant battles, and only lost some minor ones. But, the flip side is that the industry was playing defense on just about all of these fights. They won handily, but only the victory only maintains the status quo. Meanwhile, the Democratic takeover of the House means that friendly legislation at the federal level is unlikely, and some scrutiny on the industry could return.
By Nick Cunningham of Oilprice.com
More Top Reads From Oilprice.com:
- It's All-Or-Nothing For Colorado Drillers
- Bolton: U.S. Is Preparing More Sanctions Against Iran
- Can We Expect A New Round Of Oil Production Cuts Next Year?
Also, the Asian currencies will be going stronger and stronger than US$ in coming years at least for the next 3-5years due to its economic booming starts in line with US economy. The oil demand will be at last recovering and surpassing its supplying glut since 2008yr.
The bottom line is that US must install its pipeline and finish its port storage facilities, means exporting -infrastructure esp for Asia ASAP, make it much earlier than 2nd half of 2019!
It will make not only those regional economy boosting, but also it will rapidly help reduce US trading deficits in trading with Asia.
Indeed, Asian refineries want more and more light and medium grades of crude oils from the States. US government and local government must solve the bottleneck problem through building infrastructure as early as possible!
Colorado Prop 112: The fact that the oil & gas industry had to spend $30M on advertising and relied on a (largely) uninformed statewide electorate to decide on as complex & nuanced an issue as a 2,500' set-back rule is a RED FLAG all by itself. What it clearly tells me, as a retired regulatory & Land professional, is that rather than relying on trade associations & advertising for messaging, the industry has to do a better job of GRASS ROOTS communication. There is no substitute for "ground pounding" day in & day out to earn your neighbors trust & respect. I think a lot of folks (now) call it a SOCIAL LICENSE.
Residents along the Front Range in the urban/rural interface of the DJ Basin just want to know that oil & gas operations are SAFE and their kids are not going to be negatively impacted. An ECONOMIC argument won't make ENVIRONMENTAL concerns go away. So, unless you want to spend $600M in two years to maintain (risk again) your operational license, it is incumbent that industry, state regulators, local governments/planning commissions & developers all COLLABORATE to look for constructive solutions. I believe Gov. Hickenlooper had a special commission a few years back that looked at many of these ongoing issues. Perhaps revisiting that "template" is a good starting point to get all the varied stakeholders "corralled" and constructive dialogue commenced. I honestly believe oil & gas extraction in Colorado can be done responsibly and safely & that industry can co-exist with a growing population. Better roll up your sleeves.
Regulatory Rollbacks: Other than the BLM methane rule you cited, VERY LITTLE has been "watered down" when it comes to basic regulation of oil & gas on the federal & state domain. Despite all the "hype" and what the FEAR mongering Environmental NGO's & fossil fuel activists claim, the Clean Water Act, Clean Air Act, Safe Drinking Water Act, Endangered Species Act, NEPA, et all are all still ALIVE & WELL. It'll take super majorities in Congress to make any significant changes to these foundational environmental laws, despite what the media spews out. Good luck with that. Don't take my word for it. Just ask ANY proponent filing an application for permit to drill or talk to any responsible environmental lawyer.
Let's add a bit of historical context & a suggested path forward. While internal policies & procedures at the Dept. of Interior have changed, the basic framework of environmental review remains (virtually) unchanged. These internal adjustments are routine with EVERY administration change in Washington. So, nobody is getting a "hall pass." I say let the House subcommittees investigate all they want. While you are looking at industry involvement with the EPA, go ahead and look a little further back at environmental groups "cozy" relationships with the EPA during the Obama administration. Further, look at all the "sue & settle" cases and endless litigation & nuisance FOIA requests foisted on various federal agencies that are often wasting taxpayers money. NOTHING quite like shining a little light on environmental regulations and educating the electorate on the many subversions of the public review process. Cleanup on Aisle 3!
In closing, everybody play FAIR. In order to (finally) work towards any coherent national energy strategy & needed policy, this will require COLLABORATION...not endless CONFRONTATION. Vilification of energy PROVIDERS does NOTHING to forward a sensible. thoughtful debate as we transition our energy systems away from fossil fuels over the decades to come. Like many other critical issues of the day, continued inaction & disinformation on energy imperatives does our country (ultimately) a tremendous & consequential disservice...
Election results and the various public forums show that the divide in our country is not getting any better. While I'm at it, the division between us and the rest of the world is not getting any better, either. Trace this out to its logical conclusion and I think - in the case of fossil fuels -- we may want to burn oil, but do it wisely and knowing what we are doing or not doing.
So in the interest of promoting constructive conversation on U.S energy policy & pursuing actual SOLUTIONS, I offer all these environmental "activists" a couple basic challenges rooted in energy imperatives: 1.) What CLEAN, SCALABLE & SUSTAINABLE alternative do you propose to REPLACE 95% of our transportation fuels and 65% of our electric generating capacity? If you add in nuclear power, then that will be 85% of our electricity. 2.) Stop FABRICATING and promoting FEAR as your primary fundraising technique. One example: Go out to the Sierra Club website and read their "manifesto" on hydraulic fracturing, AKA "fracing." While they claim systematic groundwater contamination as a result of fracing, there is absolutely NO EVIDENCE of same. I believe there are (now) 26 university peer reviewed scientific studies generated since 2011 along with a 2016 vintage EPA (Obama era) comprehensive study that just don't support their assertions. I have not seen ONE of these refuted. Just FACTS. This type of behavior ("vilification" program) is just NOT HELPFUL and confuses the issues in an (already) complex energy arena. If you sincerely want to improve the environment, then you can do MUCH BETTER.
Further, I have a couple more constructive suggestions & a REAL challenge for the environmental activists: 1.) Why not participate & fund (partner) with government agencies and extraction industries on needed (comprehensive) air & water studies to promote best practices & better environmental stewardship? 2.) In the NEPA process, instead of "sue & settle" tactics & endless FOIA nonsense that tie up agency resources & subvert the public process, why not actively & CONSTRUCTIVELY participate in EA & EIS development, rather than coming in after a Decision Record & "cherry picking" the results? Look no further than the Mountain Valley, Atlantic Coast & Keystone pipeline projects as the latest examples. Just because you can find a federal district court judge that will give you a favorable ruling on a procedural fine point DOES NOT make you a SAVIOR of the planet, despite what you claim in the media!
Let's face it. Fossil fuels will be a necessary component of our energy systems for DECADES to come. If ANYONE amongst the environmental activists can produce ANY scientific evidence to refute the PHYSICS, then come on in...the water is fine! There is no EASY BUTTON in the energy transition space. Like healthcare, REPEAL (of fossil fuels) necessitates REPLACE. Based on developments I have observed over the past 20 years (or so), many of our environmental activist friends are not even at the STARTING LINE in this critical debate. DRAMA & THEATER is no substitute for sound ENGINEERING, rigorous SCIENCE and sensible POLICY. Welcome to energy...Where you gotta go to work & bring your "A game" every day...