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NJ Daily / POWER PLAY

Playing Nice?

Don’t look now, but President Obama and big oil are finally starting to connect.

Oil leader: Jack Gerard(Richard A. Bloom)

photo of Amy Harder
May 8, 2012

Don’t let the political food fights over the Keystone XL pipeline and tax breaks for big oil fool you: The White House and the oil and natural-gas industry are getting along better than they have at any time under President Obama’s watch.

Even the industry’s top lobbyist will concede as much.

“Our communication has improved dramatically over the past three or four months,” Jack Gerard, president of the American Petroleum Institute, said in an interview with National Journal Daily. “I think the administration’s movement on some of these issues is a reflection of a better understanding of the oil and natural-gas industry.”

 

The softer line is a shift from the relentless bashing that API—and Gerard in particular—has laid on the White House over energy policies since Obama took office. It seems even more surprising when one considers that Gerard, an elder in the Mormon Church, is a very close friend of Obama’s presumptive Republican rival, Mitt Romney.

Since Obama ardently touted natural gas in his State of the Union address in January, the White House has taken several regulatory actions that provide a basis for Gerard’s newfound praise of the administration—and consternation for environmentalists.

The Interior Department proposed a rule last week that would require companies drilling for oil and gas on public lands to disclose the chemicals they use during hydraulic fracturing, or “fracking,” in shale deposits. Unlike draft proposals that had been leaked before the official rollout, the version announced last week requires disclosure after, rather than before, completion of the fracking process.

Sounding more like an industry executive and less like an environmentalist, Interior Secretary Ken Salazar explained the decision this way: “Requiring the information before the fracking occurred would have caused, in our view, delays that were not necessary.”

Meanwhile, the Environmental Protection Agency’s first-ever air-emission regulation for fracking, announced last month, gives drillers an extra three years to comply with the rule. Companies were originally required to comply just months after the April announcement.

In its reactions to the EPA and Interior rules, the oil and gas industry said it was pleased that the White House had listened to its concerns. The industry is even happier about rules that are noticeably absent from the regulatory scene.

The White House is pressing the indefinite pause button on two EPA rules that the industry maintains would hinder economic development and cause higher gasoline prices: stricter sulfur standards for gasoline and the first-ever greenhouse-gas standards for oil and gas refineries. Both were supposed to be issued early this year, but now neither is expected at least until after the election.

“As it relates to some of the regulations that have been talked about, some of the extreme provisions they have promoted in the past have been moderated,” Gerard said. “We hope it’s because they better understand oil and natural gas.”

Some lobbyists for major oil and gas companies privately acknowledge the same shifting dynamic.

“My assessment of the past versus the present is they’re starting to better understand what the business community is talking about,” said one lobbyist for a major oil company, who spoke candidly only on the condition of anonymity. “They seem to be really trying to make an effort to stop things before they become explosive, and a lot of that seems to be coming from [White House energy and environment aide] Heather Zichal and the Office of Management and Budget.”

Asked whether it’s a genuine shift or a temporary election-year change, the source added: “I think it’s a legitimate change in course.”

Some industry lobbyists are convinced that the White House is doing nothing more than temporarily recalibrating its messaging to win over independent voters leading up to Nov. 6. And most industry lobbyists—including Gerard—would prefer the administration let the states take the lead on fracking regulations, which affect both oil and natural-gas production.

But given the reality that the Obama administration is going to be regulating fracking, the general consensus within industry seems to be that the White House has done better than expected—at least for a Democratic president.

Of course, regulatory issues aren’t as politically salient as the oil-sands pipeline or big oil subsidies. They won’t help either side get their chosen politicians elected in November. So don’t expect the industry to back down on Keystone or Obama to stop calling for an end to oil subsidies.

But the politics of energy often ignore real compromise taking shape on regulations that will make a concrete difference in how the industry operates throughout the country.

“The disagreements between the Obama administration and the oil industry have always been overstated, often by both sides at once, for various political reasons of the moment that seem to serve the temporary interests of each,” said Paul Bledsoe, a senior adviser at the Bipartisan Policy Center and former energy aide in the Clinton White House.

“It’s really good to see the actual agreement on policies beginning to reflect itself better in relationships between the industry and the White House,” Bledsoe added.

This article appears in the May 9, 2012 edition of NJ Daily.

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