Numbers and evidence

Dec. 19, 2011
If energy policy is to get right, the US government must learn to trust—or at least not dismiss on sight—information from industrial sources.

If energy policy is to get right, the US government must learn to trust—or at least not dismiss on sight—information from industrial sources. This observation applies to information about oil and gas from the oil and gas industry. It applies especially to such information because oil and gas dominate the energy market, notwithstanding political wishes to the contrary.

But don't try telling this to Rep. Ed Markey (D-Mass.), ranking member of the House Committee on Natural Resources. In an exchange with the American Petroleum Institute in which he proved more enlightening about his own prejudices than about the subject at hand, Markey tried to debunk claims about the employment benefits of resource development. His recurring point: Facts adduced in support of the claims can't be believed if they come from the oil and gas industry.

Challenges ad campaign

Markey wrote API Pres. and Chief Executive Officer Jack N. Gerard on Nov. 21 to challenge an API advertising campaign asserting that increased development of oil and gas resources would boost American employment. The ads say policy changes that include increased leasing of federal land could create 1.4 million jobs by 2030, 1 million of them in just 7 years. The estimates come from studies by the consulting group Wood Mackenzie.

In his letter to Gerard, obviously written to appease his liberal constituency, Markey tried to discredit Wood Mackenzie's work. To his first reference to the firm he attached the qualifier, "whose chief clients include oil and gas companies." Later, after asking whether the Wood Mackenzie studies had been subjected to peer review, he asked, "If not, why should we trust studies that produced the results the self-interested sponsor—API—was looking for?"

Markey's 11 questions to Gerard were really statements in disguise, of course. To cite just one typically bombastic example, the congressman asked: "Why should the American people trust the self-interested claims of API [about revenue effects of limiting tax preferences for the industry] over the neutral Congressional Budget Office, Joint Committee on Taxation, and Congressional Research Service?" (Answer: Because those groups mostly estimate the total value of tax measures without accounting for activity declines that would follow their elimination.)

Gerard responded comprehensively to Markey's inquisition and held a press briefing to deflate the congressman's bag of propagandist wind. "His letter illustrates the typical misunderstandings about important industry facts and how that misunderstanding can lead to public policies that hinder, rather than help, job creation and economic growth," the API chief said.

For example, Markey calls tax mechanisms peculiar to the industry "subsidies." Although the characterization occurs frequently, it is, except in limited instances, false. Markey also contrasts Wood Mackenzie job estimates to a much lower Bureau of Labor Statistics number for salaried workers in oil and gas extraction, which is hardly the only group for which expanded resource development would promote job growth. And the congressman repeats ludicrous arguments that leases on which drilling hasn't occurred indicate "the industry is not currently developing all available resources."

In many other ways, Markey's questions reflect ignorance of industry realities that would be laughable if it did not so strongly undermine energy policy-making in the US. The congressman's glaring misapprehensions discredit his arguments far more than oil and gas clients do Wood Mackenzie's estimates about the employment potential manifest in expanded resource development.

Clear connections

While numbers are always open to question, the phenomenon is not. Where resources are under active development, in oil and gas plays with names like Bakken, Eagle Ford, and Marcellus, economies are booming and employment is brisk. And because the jobs attach to profitable enterprise, they come at no expense elsewhere in the economy—a key to employment durability.

These connections are clear, even to those who distrust oil and gas companies. They don't dissolve just because an observer who works for resource developers calls attention to them. Prosecutorial questions about the plainly evident provide no solid basis for policy-making.

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