Unsound politics threaten oil, gas future
CHARLESTON – The outlook for new jobs created in West Virginia as a result of booming natural gas production from the Marcellus formation is, as many sources have pointed out, “hopeful.” The prospect of more than 50,000 jobs over the next 20 years and annual tax revenues pushing $1 billion offers great hope for Mountaineers. Factor in the additional employment and revenues provided by oil production in West Virginia and the future looks even brighter.
But along with optimism there is a harsh reality to be accounted for and that is politicians’ tendency to adopt policies, enact laws and impose regulatory regimes that do more to harm the energy industry than assure the welfare of society.
In a recent report by the Manhattan Institute for Policy Research, energy expert Mark Mills writes with a national perspective: “Expanding production and encouraging exports will jumpstart great swaths of our economy, help our balance of trade, and put millions on the payroll.”
The boom in oil and gas drilling is reshaping the nation’s economy. West Virginia’s oil and natural gas producers rightfully own a share of that future, but for them to be successful, they have to know that their government isn’t working against them.
Consider exports. With the outlook for increasing natural gas production all across the country making the United States self-sufficient, producers welcome the development of a robust LNG export capability to help assure markets for their output.
Washington, however, seems to be resistant. Well over a dozen requests for licenses to export LNG are bottled up in the Department of Energy because the countries that would get the gas don’t have free-trade agreements with the United States. And the chairman of the Senate Energy and Natural Resources committee, Oregon Democrat Ron Wyden, has urged the Obama administration to restrict LNG exports.
The bulk of oil and gas operations in West Virginia are carried on by small and mid-size businesses, which are the state’s main job creators. They also are exactly the kinds of enterprises most hard-hit by mandates from Washington such as Obamacare and misguided tax policies. As an example, the Administration’s long-lived insistence on higher taxes on incomes over $200,000 – since raised to $400,000 – also would have hit hardest on small business job creators.
In the area of regulation, we can’t ignore the fact that the Obama administration has a panel of 14 agencies examining how the government might impose additional federal regulations on the use of hydraulic fracturing in oil and gas production on top of state regulations.
The two recent movies about “fracking” lack balance and regard for facts and were produced to incite fear in the populace and their elected representatives. Fear of the unknown or of the “made up” is no way to govern or regulate. West Virginia’s oil and gas producers are responsible corporate citizens who do not resist reasonable regulation to protect health and the environment. And in fact, that’s exactly what the state’s regulations are doing.
During the presidential campaign, President Obama talked about utilizing all energy forms – “all of the above” as he put it. But as one observer said recently, that seems to translate as “all from above” and none from below the surface.
There’s no getting around the fact that what happens in Washington affects our energy industry in West Virginia. William O’Keefe, CEO of the George C. Marshall Institute in Washington, recently wrote “Unless the White House adopts a different model going forward, we are likely to see an economy that underperforms because of uncertainty by the private sector, excessive regulatory burdens, and hostility toward fossil energy.” So we need to be vigilant.
West Virginia is not alone in the struggle for reason in government oversight of the nation’s natural resources. All the states that produce oil and natural gas share these concerns. But for us, responsible development of our energy resources is especially important to our economic wellbeing.
In the past our state economy also has relied heavily on the third fossil fuel – coal – which has taken a beating in Washington. It is doubly important that the hope for the future that derives from oil and gas operations not be dimmed by unsound or irrational political decisions.
EDITOR’S NOTE: Demarco is the executive director of the West Virginia Oil and Natural Gas Association.