Editorial: Massachusetts and oil

Jan. 25, 2010
The US oil and gas industry has reason to treat with care the Republican takeover of a US Senate seat held for decades by the late Ted Kennedy representing steadfastly Democratic Massachusetts.

The US oil and gas industry has reason to treat with care the Republican takeover of a US Senate seat held for decades by the late Ted Kennedy representing steadfastly Democratic Massachusetts. It can assume no easing of antagonism from Democrats leading Congress and occupying the White House. And resurgent Republicans do not uniformly or automatically support oil, gas, or the companies that produce, process, and transport them.

State Sen. Scott Brown's special-election defeat of Massachusetts Atty. Gen. Martha Coakley, a Democrat, shook Washington, DC, of course. The vote clearly repudiated health care legislation shoved to the center of the political agenda by President Barack Obama and the liberal congressional leadership. It also probably showed revulsion for the political favors with which Democratic leaders finagled support for the measure. Less clearly but more broadly, the vote expressed concern about a government trying to intrude in unprecedented ways into individual lives and the national economy.

Ideological problems

The extent to which ideology and not just health care motivated Massachusetts voters aggravates problems for Democrats. Whatever its amplitude, the ideological signal means Democrats have lost more than the legislative clout that comes when the controlling party has enough votes to block opposition filibusters. They also have lost at least some claim to a mandate for liberal transformation of the economy and for reinstatement of aggressive governance.

On balance, this clarification of the national mood is good for the oil and gas industry. If nothing else, it should slow the crusade for big-government liberalism, with its inevitable preference for state-sponsored energy, under way since the general election of 2008. And another likely casualty of this retrenchment is Senate legislation for a cap-and-trade response to climate change.

Even before the Scott victory, senators were becoming reluctant to vote on a controversial cap-and-trade bill after the battering some of them were taking over health care with off-year elections due next November. Nevertheless, Sens. John Kerry (D-Mass.), Lindsey Graham (R-SC), and Joe Lieberman (I-Conn.) have been working quietly on a compromise. Kerry recently insisted the Senate could pass a bill this spring.

That his confidence now looks unfounded should especially relieve refiners, who would shoulder a heavy, disproportionate load under any cap-and-trade law resembling the bill passed by the House. But it should relieve all of the industry. The cap-and-trade approach to mitigation of climate change is deceptive, intrusive, and corruptible. Its implementation would distort energy markets—never good for economic energy forms—and channel undue blame to the oil and gas industry when costs and systemic flaws became clear.

Perils remain, however. No one should confuse this sudden shortening of the governmental leash with public adoration of the oil and gas industry. The industry remains unpopular. It gains little from an ideological chastening of its antagonists in Congress and the White House. Political threats have eased, not vanished.

In lieu of cap-and-trade, Democrats now are talking about a less-controversial energy bill able to win bipartisan support. Under discussion is legislation passed by the Senate Energy and Natural Resources Committee that would raise the renewable fuel standard for electricity and expand oil and gas leasing in the eastern Gulf of Mexico.

Lurking harm

For the industry, the measure has obvious appeal. But it quickly could absorb harmful energy ideas, of which plenty still lurk in a political atmosphere that remains toxic. For example, new oil and gas taxation, such as Obama included in his budget proposal last year, has a way of reappearing whenever Democrats—and some Republicans—discuss energy. And hydraulic fracturing, crucial to burgeoning shale gas plays, is fast becoming a target of environmental obstructionism and might come under assault in any new energy bill.

Stung by health care's likely collapse and the icing of cap-and-trade, lawmakers will feel new pressure to make law before November. Energy is a perpetual cause for misplaced activism, an easy platform for populist rant, and a ready vehicle for political revenge. The combination can mean trouble for oil and gas, however satisfying industry officials may find the political shock in Massachusetts.

More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com