Blurts and policies

Jan. 15, 2018
What can be said about energy-policy improvements from the administration of a president who brags on television about being "like, really smart?" Does the behavior invalidate the policy? To that question, Democratic opponents of President Donald Trump of course have a ready and distracting answer.

What can be said about energy-policy improvements from the administration of a president who brags on television about being “like, really smart?” Does the behavior invalidate the policy? To that question, Democratic opponents of President Donald Trump of course have a ready and distracting answer.

Timing of the latest improvement to energy policy is unfortunate. While the Department of the Interior was issuing a draft proposal to open 90% of the Outer Continental Shelf to oil and gas leasing during 2019-24, attention focused on a sensational book about life inside the White House over the past year. Analysis of the leasing draft inevitably became overwhelmed by a new surge of speculation about Trump’s fitness for office. Trump characteristically responded by boasting of his stability and intellectual superiority, making even supporters cringe. Alas, Trump acts how he acts. How he acts might not be how many people were taught to act when they were children. But he will not change. And he’s the president.

Rescuing energy

Interior’s proposal represents the latest in a series of efforts over the past year to rescue energy from federal imperiousness hostile to hydrocarbons. It deserves to be examined outside the context of presidential idiosyncrasy. The department initially proposed to hold 47 sales, during the planning period, of leases off Alaska, the East and West Coasts, and Eastern Gulf of Mexico as well as in the currently active Western and Central Gulf. Its move is as substantial as it is controversial.

The proposal envisions exploration that would give the US an overdue assessment of most of the OCS. Whatever production resulted from the effort would boost the economy, raise money for the federal and coastal-state governments, and expand domestic supplies of oil and natural gas. If implemented, the program would be good for America. That, not Trump’s braggadocio, should be the standard by which it is judged.

No assurance exists that all or even much of the envisioned drilling and production will occur, however. The draft proposed program starts a sequence of steps to develop a 5-year leasing plan, including the drafting of an environmental impact statement. The process offers many opportunities for opponents to comment and file lawsuits. Once a 5-year program is in place, individual lease sales must survive another cycle of proposals, comment periods, and environmental reviews. After sales are held and leases are issued, operators must win approval for exploration and, if they discover hydrocarbons in sufficient amounts, development and production.

States resistant to drilling and production off their shores have strong leverage under the Coastal Zone Management Act. Individual lease sales and operators’ plans for exploration and development must be deemed consistent with state plans for coastal protection required by that law. States can object to consistency determinations and at least delay lease sales, or operations under individual leases, with plan adjustments and appeals. Sometimes, all they must do is fuss. After meeting with Florida Gov. Rick Scott Jan. 9, Interior Sec. Ryan Zinke removed the Eastern Gulf from lease-sale planning.

Delays imposed by lawsuits and consistency disputes increase costs of economically sensitive offshore work. With oil prices subdued, growth in oil demand moderating, and oil and gas companies under pressure to return cash to shareholders, the producing industry will approach the government’s new offshore ambition—and the environmental fights already developing against it—cautiously. Odds never favored massive leasing of 90% of the OCS by 2024.

Important program

Still, the draft program is welcome and important. It not only promises benefits generated by OCS exploration and development at some scale but also reverses costly obstructionism imposed at the end of Barack Obama’s presidency. By last-minute fiat, Obama banned leasing on most of the unleased OCS.

Interior’s draft does more than revert to normalcy, of course. But overreaction is warranted. Obama wanted to foreclose activity important to the country. That he lacked Trump’s penchant for the baneful blurt doesn’t redeem his baneful approach to energy.