Elections Have Consequences

Elections Have Consequences
Man Voiter Putting Ballot Into Voting box. Democracy Freedom Concept

Undoubtedly, the year 2020 will be remembered for many reasons. Another one of those reasons is upon us as we near Election Day on November 3. It is a presidential-election year, and it seems we are told every four years that it is the “most important election” in a generation, our lifetime, American history, etc. At that moment, it often feels as if it might be true.

But can there be any debate that, given the economic gut punches that have been delivered to the oil-and-gas industry this year, this election will be the most important for energy policy since Jimmy Carter wore his cardigan sweater and admonished us to adjust our thermostats because we were running out of oil? Nothing quite as inspiring as being told by your leader to accept defeat and retreat.

Instead, of course, the oil-and-gas industry decided to do what it does best, and it proceeded to embark on the shale revolution and prove the doomsayers wrong again. How could an industry that has been producing a “finite” resource for over one hundred years discover a way to find even more reserves that are yet to be produced? We no longer were depleting an ever-diminishing resource; we have now actually replenished the resource with more reserves than have ever been known. That counterintuitive reality never ceases to amaze me.

We are at heart, of course, economic creatures – especially Americans, where the unalienable rights of life, liberty and the pursuit of happiness make up our DNA. Left to our own devices, we ultimately make decisions that are in our economic self-interest. When it comes to energy sources, as an economic proposition, it is incontrovertible that oil and natural gas are the most abundant, affordable, and powerful options available today. It is also beyond debate that the U.S. continues to be blessed with massive domestic reserves of both oil and natural gas.

You would think that the previous paragraph would be cause for great and constant celebration—that we live in a country where the best energy options exist in abundance and our economic system encourages the exploration, production, and development of those natural resources. But, as we know all too well, there is a large and growing movement to turn away from the energy sources that have fueled the countless economic and technological advances over the past century in the U.S. and around the world. That movement has found a home in the Democratic Party and its presidential nominee Joe Biden.

In July, Biden released a $2 trillion plan, charting a markedly different energy path with the goal of achieving net-zero greenhouse-gas emissions by 2050. Even more ambitious, Biden is also calling for the nation’s electricity grids to rely entirely on “clean” energy sources by 2035. To accomplish this, the plan states: “We will dramatically expand solar and wind energy deployment through community-based and utility-scale systems. Within five years, we will install 500 million solar panels, including eight million solar roofs and community solar energy systems, and 60,000 made-in-America wind turbines.”

Apart from the fundamental disconnection that even that many solar panels and wind turbines could effectively replace what oil and natural gas can deliver, the other unavoidable, yet typically unaddressed, reality is that there isn’t enough available land in the right locations for such a massive plan to be executed. One significant reason is that there is also a large and growing resistance by landowners and local communities to prohibit the installation of these solar and wind farms—and in the most ironic places.

While California never shies away from lecturing the rest of the country on the need to stop the use of all fossil fuels and replace them with renewable sources, they seem to have trouble practicing what they preach. As energy analyst and author Robert Bryce reported in a Forbes article after Biden released his plan: “In 2015, the Los Angeles County Board of Supervisors voted unanimously in favor of an ordinance banning large wind turbines in the county’s unincorporated areas. Last year, San Bernadino County, the largest county in the country, passed an ordinance that prohibits large renewable-energy projects in much of the county. As Sammy Roth of the Los Angeles Times explained it, county officials were ‘bending to the will of residents who say they don’t want renewable energy projects industrializing their rural desert communities.’” The same results were in Humboldt County (Northern California) and Santa Barbara County; in fact, since 2013, California has added only 200 megawatts of new wind energy. California currently is ranked fifth in total wind-energy capacity in the U.S. (6,000 megawatts) —way behind Texas, which is first (30,000 megawatts). Maybe Texas should be lecturing California.

Of course, the continued forced, taxpayer-subsidized march to electric vehicles would continue in a Biden administration, whose proposal states: “Reduce harmful air pollution and protect our children’s health by transitioning the entire fleet of 500,000 school buses to American-made, zero-emission alternatives within five years. Lead by example in the public sector by transitioning the 3 million vehicles in the federal, state and local fleets to zero-emission vehicles. Support private adoption of affordable low-pollution and zero-emission vehicles by partnering with state and local governments to install at least 500,000 public charging stations from coast to coast. Make charging infrastructure accessible, with strong labor, training, and installation standards, through federal grants to states and localities.”

Biden and the Democrats have made their proposed energy policies abundantly clear, and the oil-and-gas industry should be concerned. Some are already waving the white flag. BP recently announced that they plan to reduce their oil-and-gas production by 40% by 2030 and replace it with renewables. In response to the Biden plan, others in the industry are trying to put lipstick on the pig by stating that it was not as bad as they had feared. “‘At first blush, the plan is a masterpiece because he gives something to everybody,’ said Charif Souki, Executive Chairman of Tellurian, a gas producer that is planning a major export terminal in Louisiana.” Spoken like someone who fears that he sees the handwriting on the wall and is desperate to salvage something ‒ if there is to be a changing of the guard.

But will there be such a change? Economically, implementing the Biden plan makes little or no sense. Government, however, is perfectly capable of acting illogically and snatching defeat from the jaws of victory. On November 3, at least with respect to our energy future, the question is—will voters act in their economic self-interest? If not, how soon will they realize their mistake?

About the author: Bill Keffer is a contributing columnist to SHALE Oil and Gas Business Magazine. He teaches at the Texas Tech University School of Law and continues to consult. He also served in the Texas Legislature from 2003 to 2007