Four more years for US President Barack Obama means 4 more years of regulatory siege on the oil and gas industry.
Obama's reelection is, of course, momentous. It occurred without the president's having diverted at all from the large-government, big-spending course set in his first term. While the conviction is commendable, the course is disastrous, however acceptable it evidently has become to a majority of voters.
For the oil and gas industry, the first Obama term was contentious. The second term will be worse. In it, the industry can expect:
• Continuation of the effort to eliminate tax preferences essential to the recovery of drilling capital and the industry's competitiveness in capital markets.
• Federal regulation of hydraulic fracturing, which if implemented with the zeal characteristic of regulation in the first term will retard drilling in unconventional resource plays.
• Difficulty winning approval of large oil and gas projects.
• Slow oil and gas leasing of federal land, shortening of lease terms, and penalties for work government officials determine not to be expeditious.
• Revival of an Environmental Protection Agency proposal to toughen ozone standards.
Other problems loom. The Obama approach to energy consistently has been to discourage production and use of hydrocarbon energy and to encourage development and use of costlier substitutes. The president will feel no political compulsion to retreat from that cost-blind strategy in his second term; if anything he'll press it even harder. Industry representatives in Washington, DC, will be busy.
More broadly and more importantly, the industry must adapt to a political swerve Americans have ratified by reelecting a president dedicated to governmental activism, astronomical federal spending, and heavy-handed regulation of business, especially oil and gas.
Americans have chosen political liberalism. They have chosen to be governed aggressively. They have accepted Obama's fantasies about energy.
America's political ideology has changed. It won't change back until more than half of Americans who vote tire of funding more governance than most of them probably want.
