COMMENT API'S O'KEEFE: ENVIRONMENT STILL TOP ISSUE FOR U.S. INDUSTRY
William F. O'Keefe
Vice-President and Chief Operating Officer
American Petroleum Institute
Remarks to the 1991 API Pipeline Conference, Dallas.
Today's political climate presents difficult challenges to every sector of the industry.
A look at the political agenda in Washington shows why: congressional reauthorization of Resource Conservation and Recovery Act involving possible federal regulation of exploration and production wastes, development of clean air and oil spill regulations under legislation passed last year, new used motor oil recycling legislation, and efforts by the Environmental Protection Agency to promote voluntary action to speed reductions in emissions of chemical substances without regard to the efficacy of such reductions.
And, of course, there are the new EPA regulations on toxicity characteristics that are of particular concern to you.
Every one of these is driven by the heightened environmental commitment that has become part of our social fabric. Even efforts to open the Arctic National Wildlife Refuge, which we used to think of as a leasing or access issue, are hamstrung by environmental politics.
INTENSE ISSUES
The fact is, the intensity of environmental issues is so strong and the political will is so weak that conventional wisdom, rhetoric, and hyperbole dominate science, fact, and analysis in setting public policy.
As a result, industries, especially the U.S. petroleum industry, are being forced to take uneconomic, costly, often unnecessary steps in the name of environmental protection. Our difficulty is that we're seen as a major environmental problem, not a national asset.
Last year, as the Clean Air Act evolved, we fought for reformulated gasoline provisions that would make economic and environmental sense. We said: "The government should set tough but realistic standards, then let oil companies find the best way to meet them."
Instead, Congress largely specified a formula for new, cleaner fuels and performance standards without any scientific basis for its action. It could have been worse. We fought off even more extreme proposals. But, still, that compromise has resulted in requirements that will be far more costly and difficult to meet than was necessary.
That outcome occurred even though we had a solid case for a more reasonable approach and, through the oil-auto program, were developing data that could have been used to set scientifically derived standards.
Why? Because we were seen as the problem, and politicians get reelected by solving problems.
In some instances, congressmen told us we were right. They agreed with our case, but they couldn't help us because then they wouldn't be around to help us. We were seen as the problem, and constituent pressure forced them to vote the other way.
POLITICAL, SOCIAL TRENDS
Two years ago, two CEO task forces looked into what could be done about the "sea change" affecting our industry: increased public hostility, less political support from traditional allies, and a growing willingness to legislate, litigate, and regulate the industry.
One task force identified political and social trends that would have the greatest impact on the industry during the 1990s-trends like conservation, energy security, the role of natural gas, and globalization of the industry. But the No. 1 trend was increasing public concerns about the environment.
The other task force concluded that perceptions of the industry-those of the general public and those of opinion makers-were becoming more negative. People thought we were competent, but they just didn't trust us. And that lack of credibility, in turn, was contributing to our political vulnerability.
The challenge is clear. There is a large and growing gap between the public's expectations for the environment and its perceptions of our performance. The American people expect greater environmental progress. They think most industries-and our industry especially-will resist. So they support new, often punitive regulatory proposals to make us comply and to make us see the error of our ways.
As a result, much of politics has become a form of demonology. The exorcism of choice is analogous to burning at the stake.
ENVIRONMENTAL PROGRESS
It's in our interest, the consumer's interest, and the nation's interest to promote environmental progress in more reasonable and efficient ways. The effectiveness of that effort will depend on our credibility-on establishing an improved public image so that we don't lose votes simply because of who we are.
That means we have to do things differently-to change the way we operate and to demonstrate that we share the public's values and we're making environmental progress. We have to communicate our commitment, our plans, and our progress to a skeptical world.
Our motto has to be "Look good by doing good." That is the route to improved credibility and improved effectiveness in the policy making arena.
API and our members have initiated two long term programs to achieve this objective.
One is our Environmental Excellence Program, which focuses on performance.
A year ago, our board approved a set of guiding environmental principles. With these as the foundation, we have begun programs to revise 90 equipment standards, encourage used motor oil recycling, provide greater protection for groundwater, further reduce emissions of air toxics, help prevent accidents wherever we operate, and document our environmental progress.
These are just some of the actions that make up the environmental excellence program. Others will follow.
Company CEOs began these efforts and continue to strongly support them. And dedicated company people are making them work.
COMMUNICATIONS PROGRAM
Our actions all will be matched by a communications program. It will tell the public about the industry's commitments commitment to action-to protect the environment we all share.
The foundation of this long term communication program is in-depth public opinion research. Research is a key component because to communicate effectively we need to better understand why people feel the way they do and the type of actions that can change those feelings.
The public's negative view of the industry is based on performance gaps between what people ideally want from oil and the petroleum industry and what they perceive the industry gives them. They believe we are driven solely by economic considerations-profits and losses-and that this prevents us from sharing some of the values they care about the most: human health and safety, family well-being, environmental quality, and secure energy for the future.
According to the research, changing the public's perceptions and improving our credibility involve being seen as a good corporate citizen and demonstrating energy/environmental stewardship.
Of course, people don't think in terms of corporate citizens and energy/environmental stewards. They think about specific qualities that can be classified that way.
To the public, being a good corporate citizen means helping assure that the country doesn't run out of energy-that the U.S. achieves a greater degree of energy security. And it means showing concern for consumer needs and providing affordable energy supplies.
Demonstrating energy/environmental stewardship means showing we are serious about environmental protection, providing leadership on energy policy, and demonstrating concern about the community.
WHAT CONCERNS PEOPLE
The research tells us several recent initiatives dovetail with areas of most concern to people. The public places highest priority on environmentally safe operations and strongly favors steps to reduce threats to groundwater, reduce the number of oil spills, reduce toxic emissions from operations, and more effectively recycle used oil.
We are responding with clear, concrete actions: our joint research with the auto industry on cleaner burning fuels and vehicles, creation of the Marine Spill Response Corp., and the Environmental Excellence Program.
The public also strongly supports efforts to achieve energy efficiency and adequate energy supplies for the future. Of course, oil companies have been working on alternative energy sources for years, but public expectations for alternatives are skewed by serious misperceptions about their technical and economic viability.
Reconciling perceptions and reality is tricky. We have to acknowledge the potential of alternatives without inadvertently getting trapped into confirming environmentalists' unrealistic assertions. And we have to reconcile the public's perception that the world will soon run out of oil with the reality that proven reserves have increased 50% since 1984.
Understanding what the public thinks-and why-can guide what we do and what we say. We know a lot has been and is being done to improve our long time environmental performance. But clearly more must be done.
And we have to find a better way to talk with the public, not just to it. Even as we strive to communicate more effectively, there are no assurances we will make great progress quickly or even that we'll ultimately succeed. But the stakes are too high for us not to try. We have to take steps, on the basis of reasonably solid evidence, to improve our public standing and political posture.
That's what our two long range strategies aim to do-improve the industry's environmental performance and communicate action and progress to the public and to opinion leaders.
EVERYBODY'S JOB
Let me emphasize again that your company CEOs have initiated these projects-they are the driving force for these initiatives. But reducing public hostility and improving the political climate are the jobs of people at every level of this industry, from the board room to the service station. It involves CEOs and presidents, but ultimately it depends on refinery workers, tank truck drivers, barge operators, and pipeline managers.
It's our job in Washington and your job across the country. We all have to recognize the seriousness of the public's environmental concerns. They are no passing fad. And they call for a new way of thinking. A defensive posture will only make our task harder. We must identify problems early, accept responsibility for those we cause, and then solve them. We have to anticipate problems and prevent or minimize them.
In short, our performance has to come closer to public expectations.
In communicating with the public, we have to rethink not only the what but the how. If we tell the public what we have done after the fact, we deny them any opportunity to buy into our efforts or to affect our decisions. Experts in effective communication counsel that we shouldn't communicate as a result what we have not already stated as a goal.
We particularly need to emphasize environmental awareness and action at the local level -where oil companies meet the American people every day. Local efforts obviously include pipeline operations that affect many thousands of communities. The level of your environmental performance and the effectiveness of your communication determine your standing in those communities-and that means the industry's standing. Improved local attitudes ultimately affect how we're viewed in state capitals and in Washington-where environmental laws and regulations are made.
The job facing all of us is a tough one. And we have to be realistic. We can't eliminate all hostility. We can't expect a politically neutral climate. But we can close that gap between public expectations and public perceptions of our performance.
If we don't do that, the tide of environmental regulation may continue to grow.
BEYOND SELF-INTEREST
My comments have focused on our self-interest. But these long term initiatives go beyond self-interest. They affect our ability to promote economic growth, and that will benefit all Americans as well as future generations.
Our industry continues to play a vital role in the nation's economic well-being. Our technologies are second to none.
At a time when expertise in other industries has shifted overseas, it's oilmen from Houston who are fighting well fires in Kuwait. It's American oil companies that are being asked to help other nations, including the Soviet Union, develop their oil and gas resources. And America's pipeline system remains an unprecedented marvel.
People in every segment of the oil industry can take justifiable pride in past accomplishments.
But we're going to live in the future and it's future accomplishments that can renew our public esteem. That depends, I will emphasize once more, on closing the gap between public expectations and perceptions of our performance.
Copyright 1991 Oil & Gas Journal. All Rights Reserved.