Oil and Gas Rules Colorado

Colorado Gov. Jared Polis makes a point during an appearance at The Energy Summit, which was staged by Colorado Oil and Gas Association, Wednesday, Aug. 28, 2019, in Denver. Polis was questioned about new rules that he signed into law that increase regulations on the industry.

Kelly Sloan

Kelly Sloan

You can say at least this much for Gov. Polis — he’s proving unafraid of strolling into lion’s dens.

For instance, it took a great deal of confidence for him to show up at the Colorado State Fair rodeo a week after extolling the virtues of plant-based “burgers” at the Department of Agriculture, but show up he did. The reception he received was pretty much what you would expect from the cowboy-hatted fans of a sport which evolved from and celebrates the traditions of the western ranching culture, who felt personally insulted by the Governor’s Impossible lunch. He received a much gentler reception a couple months earlier at the Western Conservative Summit, but it’s safe to presume that the general temperature of that audience approximated what one would imagine of an ACLU convention if the guest speaker were J. Edgar Hoover.

It was in that rather courageous vein that Mr. Polis accepted an invitation to speak at the Colorado Oil and Gas Association’s 2019 Energy Summit last week. The governor took the stage with COGA’s eminently capable president, Dan Haley, to answer some of the industry’s more pressing questions, focusing, naturally enough, on the recently passed oil and gas law, SB 181.

The reaction of the attendees at the conclusion of Polis’ remarks was nearly universal, some version of “did he really say what I think he just said?”

What he said to Haley and the audience was that, concerning SB 181 and the rules being spun off from it, they should all quit worrying; that their fears of negative impacts on the industry were “silly”, and that they all ought to be paying far closer attention to what is happening in Venezuela than at the State Capitol. He even mentioned that the industry should thank him for the stability delivered by 181. (This last point especially is a bit perplexing; although he could have meant it in the same sense that a person who has had their home foreclosed after months of agony now has “stability”.)

Now in fairness, defending the indefensible is no easy task, and 181 is by no means an easy sell, especially to the industry it was designed purposely to target. So a little legerdemain is expected and excusable.

The point the governor was trying to make was that there are other pressures exerting themselves on the oil and gas business besides regulatory. What he was saying in effect was, “look, you guys are a commodity-based industry and you live and die on the global price of that commodity. You can’t blame me for everything.”

He’s correct to that extent. Commodity prices are subject to a myriad of determining factors, and a commodity as volatile and indispensable as oil is inescapably bound to geopolitical forces acting on it. So yes, what happens in Venezuela, Russia, the Middle East and elsewhere will have a direct bearing on world (and ultimately local) oil prices, and yes, that price will be a major determinant in how the industry operates.

But everyone in the industry knows that. The corollary to the governor’s statement is that the global nature of energy pricing means that that same market pressure is exerted in Colorado, as in Texas, or North Dakota, or Alberta. At that point other factors began to have a discretionary impact on business activity, political and regulatory among the most prominent. It is here that Polis’ insistence that state action is largely irrelevant falls short.

One must also wonder what the environmental left, which constitutes a great portion of his base, thinks of his account of the impotence of regulation. The point he slyly tried to get away with making was that pricing alone, not regulation, drives the business, and all his regulatory effort does is to make the business safer. But for the zealots, many of whom were instrumental in crafting the new laws, that was not the point at all; for them there is no such thing as “safe” resource extraction; they view it as a parasitic activity and were counting on the functionality of the state to grind it to a halt. What is all of this talk of “safer”?

Well, they needn’t worry; governmental action has a marvelous track record of gumming up the works, the governor’s optimism notwithstanding. But should he, per impossible ever wind up on the greens' enemies list, I hope he is welcomed into their den with the same magnanimity with which the oil and gas industry welcomed him into theirs.

Kelly Sloan is a political and public affairs consultant and a recovering journalist based in Denver. 

 

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