Editorial: Houston and oil politics

June 11, 2001
Demographic trends of the US oil and gas industry point to a political future even more difficult than the present. And the present is difficult enough.

Demographic trends of the US oil and gas industry point to a political future even more difficult than the present. And the present is difficult enough.

Politicians eager to score popular favor at the industry's expense don't worry about the merits of their accusations. Suspicion toward the oil and gas industry runs so deep that, at the national level, support flows automatically to any statement antagonistic toward petroleum, regardless of the facts.

Political hostility toward oil has roots in history: the Standard Trust, the Arab embargo, the Exxon Valdez oil spill. It has intensified in step with environmental sensitivity. And it has congealed into a powerful bias that exaggerates petroleum's environmental disadvantages, disregards its contributions to human well-being, and makes its price a trigger for public indignation.

Shrinking minority

National politics will always challenge the oil and gas industry, of course. The people who work in the business and who therefore understand its operations and markets constitute a small and shrinking minority of American voters. For the rest of the population, contact with oil and gas occurs exclusively in retail commerce. Those Americans don't understand the industry's intricacies and never will. And they are suspicious, often fiercely so.

Over the past decade, this unpromising political calculus has worsened. Part of the reason is shrinkage of the industry's population. Independent Petroleum Association of America estimates that oil and gas employment in the US dropped to 1.36 million workers in 2000 from 1.54 million in 1990.

The shrinking labor force, moreover, is migrating toward Houston. Two analysts at the Houston Branch of the Federal Reserve Bank of Dallas recently documented the trend.

In a report on what they call "surprisingly weak" job growth in oil and gas extraction, Robert W. Gilmer and Albert Mitchell note that industry employment in many oil towns has disengaged from two key indicators of upstream health: oil and gas prices and drilling.

Although the indicators have rebounded, Gilmer and Mitchell report, industry employment continues to fall in Dallas, Tulsa, Denver, Wichita, Los Angeles, and New York City, as well as smaller cities including Amarillo, Wichita Falls, Corpus Christi, and Laredo, Tex.

By contrast, upstream employment has turned up in Houston; Lafayette, New Orleans, and Houma-Thibodaux, La.; Midland-Odessa and Ft. Worth, Tex.; and Oklahoma City. Even in those cities, however, oil-related employment is 13% below its 1997-98 peak. And announcements of job transfers-mostly to Houston-raise questions about how long the link between activity and employment cycles will hold up in the smaller towns.

There is nothing wrong-and much very right-about Houston and its allure to oil and gas companies. But displacement of industry workers to a single city has political effects that the industry must not ignore.

Concentration of oil industry employment in Houston tends to isolate the industry geographically. And geographic isolation becomes political isolation. With industry expertise ensconcing itself in Houston, constructive discussion about energy becomes difficult to find elsewhere.

This doesn't mean that oil and gas companies now based in Houston should decamp to Des Moines or Tampa. It does mean they should understand the political disadvantages that develop from virtual absence from places like those, where antagonism toward petroleum comes easily, and from a rapidly diminishing presence in cities once proud to be known as oil towns.

Oil and gas companies should adjust their public relations efforts accordingly. They need more public relations representatives generally and more of them outside Houston specifically. They need people on location to discuss the industry and its achievements and problems in Des Moines and Tampa, in Tulsa and Los Angeles. They certainly need them there when gasoline prices double.

Balanced attention

The goal shouldn't be to educate the public in the complexities of oil operations and markets. People who don't work in the business don't need to know the business. And they won't.

The aim should be balanced attention to the industry's views on issues and its explanations about market phenomena. It should be to have people think about the oil industry the way someone thinks about a friendly neighbor's business. That's all that's necessary. It's all the industry should hope to achieve. It just won't happen from a distance.