WATCHING WASHINGTON INDEPENDENT OILMEN: 'A DYING BREED?

With Patrick Crow Energy Sec. Hazel O'Leary blundered into the headlines fast week when she was credited with some untypically unpolitic remarks about U.S. independent oil producers. After interviewing her at a London meeting the Associated Press reported O'Leary "suggested the industry's smaller domestic players may be a dying breed too feeble to salvage in an era when Big Oil is setting its sights overseas." O'Leary later denied using the words "Dying breed."

Nov. 1, 1993

3 min read

Energy Sec. Hazel O'Leary blundered into the headlines fast week when she was credited with some untypically unpolitic remarks about U.S. independent oil producers.

After interviewing her at a London meeting the Associated Press reported O'Leary "suggested the industry's smaller domestic players may be a dying breed too feeble to salvage in an era when Big Oil is setting its sights overseas."

O'Leary later denied using the words "Dying breed."

The story quoted her as saying, "I've got an obligation to help this industry but I don't have an obligation to help this industry beyond reason. I haven't gotten the answers for the mom and pop businesses."

SECURITY ISSUE

In the AP story, O'Leary said equating U.S. oil production to national security could be an outdated idea and called for "a careful analysts to set up the proposition of whether or not the industry is, for the long term, important for the economic security of the U.S."

O'Leary said domestic oil postings of $13-14/bbl would be too low, and "the free market is very unkind to an industry at home that is very mature."

Comments attributed to her were all the more important because this month the Department of Energy is scheduled to release an oil and gas initiative designed to boost U.S. production. Independents have been increasingly frustrated about that plan because its drafters have said it will not include an oil import fee, floor price, or production tax incentives. O'Leary's alleged comments were the last straw.

Gene Ames, Independent Petroleum Association of America president, said O'Leary's remarks "have no bearing on reality" and the secretary apparently does not realize independents produce 60% of U.S. gas and nearly 40% of U.S. oil.

He said, "I am astonished that Sec. O'Leary would go to a financial conference abroad and essentially undermine our ability to raise financing through capital markets."

Tom Coffman, president of the Texas Independent Producers and Royalty Owners Association said, "He simply cannot believe the Clinton administration shares the secretary's viewpoint arbitrarily dismissing the independent producer as a dying breed too feeble to salvage."

Oil state senators criticized O'Leary's attributed remarks with unusually strong languages Sen. Robert Dole (R-Kan.) said the quotes "suggest the secretary believes it might be no problem were the U.S. to become totally reliant on imported oil ... and that her thinking and actions are driven by multinational oil conglomerates."

CALMING THE STORM

O'Leary tried to calm the uproar, issuing a statement brimming with support for independent oilmen and acknowledging their contribution to U.S. production.

She said DOE has been trying to help independents by working to increase gas markets and fund more oil and gas research and development. It was not until the brushfire of criticism became a firestorm that O'Leary scrambled for damage control, saving the AP story did not reflect anything she or DOE stands for.