Industry

Energy industry scores victories in US midterm elections


The US oil and gas industry scored important victories in the midterm elections, defeating proposals for what would have been the country’s first-ever carbon tax in Washington state and new restrictions on production in Colorado.

Overall, the election results were favourable for the US renewable energy industry, which will receive a boost from Democrat victories in several key races for governor, including in Nevada, New Mexico and Maine. Much of US energy policy is set at the state level, and control of governorships and legislatures can have significant effects on critical regulations and tax incentives.

There were setbacks for the oil industry, including new offshore drilling restrictions in Florida and failure to repeal a petrol tax increase in California

However, oil companies were successful in fending off threats in two high-profile votes.

One of the most watched ballot propositions on Tuesday was Washington state’s revived attempt to introduce a carbon tax, an idea that was put forward by a bipartisan campaign backed by leading companies, including ExxonMobil, as way for the US to address climate change.

The plan faced strong opposition from oil companies with refineries in the state, including BP. By early Wednesday morning it seemed clear that it had failed.

The Western States Petroleum Association, backed by oil companies and business groups, raised $31.6m to fight the measure, a record for the state. It said its members believed that climate change should be addressed at national and international levels. “State-level policy in Washington would have a negligible impact on mitigating climate change but could have a significant negative impact on our state’s businesses,” it warned.

There was another important victory for the industry in Colorado, which is the fifth-largest oil producer and sixth-largest gas producer in the US. Proposition 112 would have forced all new wells drilled and brought into production to be set back at least 2,500 feet from occupied buildings, a rule the industry said would “devastate” the state’s economy. By early Wednesday the proposal was poised for defeat.

Chip Rimer, chairman of the board of the Colorado Oil and Gas Association and a senior vice-president at Noble Energy, said: “We appreciate our fellow Coloradans’ support for responsible energy development. This measure was an extreme proposal that would have had devastating impacts across the state on jobs, education and numerous other programs important to each of us.”

The oil industry, however, had a setback in Florida, where voters approved a strange hybrid amendment to its constitution banning both offshore drilling and the use of ecigarettes in the workplace. That vote formalises the state’s long-entrenched resistance to offshore exploration.

The Trump administration has suggested the state’s waters could be among the areas it wants to open up for oil and gas development, but Ron DeSantis, Florida’s new Republican governor, has opposed the idea, despite his support for the president.

Wednesday, 7 November, 2018

In California, voters rejected a Republican plan to repeal a recently passed petrol tax. Proposition 6 would have reversed a 2017 increase to fuel taxes and vehicle fees in the state that Republican opponents said were levied without voters’ permission. Opponents said it would deprive funding for infrastructure and transit projects in the state.

Meanwhile the renewable energy industry made gains in some states. In Nevada, a measure opening up the electricity market to greater competition, which had been opposed by environmental groups, was defeated, while a proposed constitutional amendment compelling utilities to source 50 per cent of the electricity from renewables by 2030 was on course for success. The amendment now has to be backed again in another vote in 2020 to take effect.

Beyond ballot measures, the renewable energy industry could stand to benefit from Democrat victories in several key races for governor.

Nevada was one of several states where control of the governorship passed from a Republican to a Democrat, with implications for energy policy. Michelle Lujan Grisham, the new governor of New Mexico, has backed sourcing 50 per cent of the state’s electricity from renewables by 2030, while JB Pritzker, who won in Illinois, has talked about putting the state on track to use 100 per cent “clean energy” from renewable sources by 2050.

Many of these new Democratic governors are also expected to join the states fighting against President Donald Trump’s attempts to weaken environmental regulations, including his plan to make future vehicle fuel economy and emissions standards less stringent than the rules put in place by the Obama administration.

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