With the government shutdown entering its third week as a result of House Republican demands that Obamacare be defunded or repealed, new reports are showing that the shutdown is having growing effects on onshore and offshore oil and gas activities. Yet the major trade associations for the oil and gas industry have largely refrained from criticizing the shutdown, describing its impacts on their members, or calling on Congress to end it.
The impacts of the government shutdown on the oil and gas industry have become reality. The Bureau of Land Management (BLM), for example, announced this week the cancellation of a 5,554 acre oil and gas lease sale in New Mexico that included what industry officials in the state told Energy and Environment News are “good tracts of BLM land” in the oil-rich Permian Basin. Unless the government shutdown ends soon, the BLM will also likely be required to cancel a lease sale scheduled in Montana on October 22.
But the postponement has yet to provoke a reaction either from the American Petroleum Institute — the U.S.’s largest oil and gas trade association — or the Western Energy Alliance, a trade association that represents oil and gas companies that operate in the West. Indeed, as Politico reported, the American Petroleum Institute has barely commented on the shutdown at all, aside from a statement noting that “the industry contributes $85 million per day in revenue from taxes and fees to the government.”
This silence of these groups greatly differs from their outraged reactions to previous cases when lease sales have been canceled by the government. For example, when the BLM was forced in May to postpone a 3,300 acre California lease sale because of automatic budget cuts under sequestration, the American Petroleum Institute convened a national press call with reporters to claim that the postponement was evidence that the Obama administration was preventing the country from fully developing its energy resources. And the Institute for Energy Research, a non-profit funded by the Koch brothers, claimed that the postponement of the California lease sale in May was part of “the Obama plan to maximize the sequester’s harm to the U.S. economy.”
In addition to refraining from reacting to the lease sale cancellations this week, a spokeswoman for the WEA even sought to downplay the impacts of the halt on BLM’s issuance of permits during the shutdown, saying that the effects of “a few weeks of government shutdown are minor,” noting instead her concern for overly burdensome and lengthy environmental review processes. But the Center for American Progress estimates that, based on BLM’s average annual permitting levels, the first ten days of the shutdown resulted in more than 135 drilling permits not being issued.
WEA’s diminution of the shutdown’s impacts on energy activities also contrasts with oil and gas trade groups’ vociferous response to a slowdown of permitting activity in the shallow waters of the Gulf of Mexico as a result of the 2010 Deepwater Horizon oil spill. At the time, a coalition of companies that operate in the Gulf’s shallow waters blasted the Obama administration for “holding drilling permits hostage,” while conservative politicians claimed that the administration had imposed a “permitorium” that was among its “radical policies that are killing American jobs.”
Although offshore oil and gas permitting is continuing during the shutdown, offshore energy operations still face potential costs and delays. The Bureau of Ocean Energy Management (BOEM), for example, is unable to review and approve exploration and development plans for offshore drilling projects which could potentially affect timelines for those projects.
The shutdown is also problematic for the oil and gas industry because, as Jennifer Dlouhy reports, “government data about the nation’s oil and gas stockpile is about to stop flowing, leaving crude traders and analysts in a lurch.” The longer the shutdown, industry observers told Dlouhy, the greater the impacts on the energy industry. Considering the fact that the Energy Information Administration just shuttered its doors Friday afternoon, these effects will be felt even more acutely.
With reports that business leaders are growing increasingly frustrated and concerned with House Republicans’ policies and strategies, it remains to be seen whether the oil and gas industry’s largest trade associations will also speak out about the shutdown’s damage to its members and call for the government to be re-opened.
Matt Lee-Ashley is a Senior Fellow with the Public Lands team at the Center for American Progress.