The government shutdown and the furlough of employees of regulatory agencies like the EPA may be chalked up to a victory by the energy industry. The oil and gas industry has remained, for the most part, silent during the government shutdown, yet when leases were put on hold during the sequester, industry groups blamed Obama.
While regulatory agencies are temporarily shut down, the potential to gain new mining and drilling leases is also on hold. The Interior Department is no longer processing new permits; however, oil and gas production on federal lands continues, even though parks and lands are closed to the public.
Industry giants like the American Petroleum Institute (API) and the Western Energy Alliance (WEA) have had little comment on the shutdown, except to stress their annoyance with the general regulatory process. Two weeks ago, API issued a statement calling for a “government with smarter regulations, expanded access to federal lands and approval of the Keystone XL pipeline,” POLITICO reports.
The API statement also said that “this is another reminder of how critical our industry is to the economic health of our country,” and noted that the industry contributes $85 million a day to the government, in revenue from taxes and fees.
But, as ThinkProgress notes, industry reactions have been much stronger in the past when land leases were put on hold by the government. In May, when the Interior’s Bureau of Land Management (BLM) delayed small lease sales due to automatic budget cuts known as sequestration, industry members were outraged.
In a press statement, the Institute for Energy Research, a Koch brothers-backed non-profit that advocates climate change denial and deregulation of utilities, said that the Obama administration was trying to “maximize the sequester’s harm to the U.S. economy,” according to ThinkProgress.
At the same time, the API conducted a national press call, during which their chief economist accused the federal government of stifling jobs, energy development, and economic growth with their “short-sighted political games.”
During the aftermath of BP’s 2010 Gulf oil spill, a coalition of energy companies accused the Obama administration of “holding drilling permits hostage.” Conservative politicians accused President Obama of creating a “permitorium,” and said the administration’s “radical policies” were “killing American jobs.”
Industry responses, if anything, have been much more subdued during the Republican shutdown. Kathleen Sgamma, vice president of the WEA, even made light of the BLM’s current hold on new drilling permits, saying that “a few weeks of government shutdown are minor.” Instead Sgamma focused on what she considers the lengthy regulatory processes of buying leases and obtaining permits. Oil industry representatives said they are “accustomed to the delays,” according to the Houston Chronicle.
However, the lesson of the shutdown to industry members may be to “be careful what you wish for.” Although the energy industry seems poised to sit back and stay quiet about radical Republican strategies and enjoy the lack of regulatory oversight, the shutdown is affecting its companies, and the effects will become more significant over time.
Based on the BLM’s average permitting levels, the Center for American Progress estimates that the first ten days of the shutdown “resulted in more than 135 drilling permits not being used,” ThinkProgress reports. The BLM cancelled an upcoming auction of oil and gas leases in New Mexico, and more cancellations are likely.
And government data about the nation’s oil and gas resources is about to stop coming, “leaving crude traders and analysts in a lurch,” according to the Chronicle.
Former Interior Secretary Ken Salazar noted that, although offshore drilling permits are still being issued, the Bureau of Ocean Energy Management is not processing exploration plans for individual well approvals, which could start to hurt production in the Gulf.
The shutdown could damage energy company operations in the future; an extended shutdown could create a bottleneck, slowing any projects that require government approvals or permits.