Money to Burn

Oil and Gas Interests Are Spending Big to Keep Their Allies in Office

Autumn 2012 Sharon Kelly

When Barack Obama visited Ohio in mid-March during one of his many swings through the crucial battleground state, John Kasich, the state’s Republican governor, made a point of pulling the president aside to put in a good word about a topic of growing importance in Ohio: natural gas fracking.

“I was telling him that what we’re doing in Ohio is, we’re setting standards so that we can have a safe environment and at the same time have economic development,” Governor Kasich recounted telling the president during a NCAA basketball game in Dayton.

Chris van Es, www.chrisvanes.com

This sort of advocacy isn’t free. In the past four years the oil and gas industry has given more than $200,000 to Kasich, making him the state’s top recipient of campaign contributions from oil and gas companies. Since 2001, Kasich received more than twice as much money from fossil fuel interests as any other state office holder.

For the industry, this is money well spent. Soon after taking office in January 2011, Kasich opened 200,000 acres in Ohio’s state parks for drilling and appointed a former oil and gas executive to run the state’s Department of Natural Resources. Even after the industry’s statehouse allies annoyed the governor by blocking his modest plans to impose a small severance tax on drilling, Kasich’s loyalty remained firm. In May, the governor approved new fracking rules for the state that will, among other things, prohibit Ohio citizens or local governments from appealing any drilling permits, prevent doctors from disclosing whether patients’ ailments might be related to drilling, and allow for well casings to be set within 50 feet of groundwater aquifers – half the distance recommended by the American Petroleum Institute. EcoWatch has called the legislation, parts of which were written by the gas industry and its lobbyists, “one of the worst fracking laws in the nation.”

As a political swing state on the cusp of a drilling boom, Ohio is at the cutting edge of the nation’s debate over how to meet our energy needs. The statehouse wrangling over gas regulations – along with the huge amounts of money being spent there to influence voters ahead of the fall election – provides a window into how the fossil fuel industry plays an outsized role in shaping politics and policy.

The American energy industry is at a pivotal moment. New technologies like horizontal drilling and hydraulic fracturing (or fracking) have opened vast deposits of petroleum and methane that were previously inaccessible. While the glut of natural gas has helped to drive coal’s share of US electricity generation to an all-time low (and, in the process, has flattened out the country’s carbon dioxide emissions), it has also put drilling companies in a financial squeeze. Caught between low gas prices and the high costs of shale gas extraction, many companies are looking for ways to either cut corners or increase prices via a rise in demand. Natural gas producers are pressing hard for gas exports, increased reliance on natural gas for electricity generation, and subsidies for trucks and busses that run on natural gas. Oil companies, meanwhile, are demanding more shale drilling on public lands. And environmentalists, of course, are pushing back against these efforts, arguing that the drilling rush is endangering water quality and wildlife habitat and reducing the market incentives for creating the kind of renewable energy system that will further reduce CO 2 emissions.

The high stakes translate into a political battle royale as the fossil fuel industry commits to spending whatever it takes to influence voters and elect politicians who are sympathetic to its interests.

The oil and gas industry has been a political juggernaut since the days of John D. Rockefeller and Standard Oil, and few sectors of society can match the industry’s influence in Washington. Since the 1970’s, when the nation’s cornerstone environmental laws were set in place, the oil and gas industry has again and again won major exclusions from environmental laws like the Clean Air Act, the Clean Water Act, and the Safe Drinking Water Act. Drillers’ waste is exempt from many standards on handling hazardous waste, and the so-called “Halliburton loophole,” passed in 2005, ensured that fracking lay outside of the purview of federal rules designed to protect the nation’s aquifers. The industry’s political clout is perhaps best demonstrated by the largesse it continues to receive from taxpayers – more than $55 billion in federal subsidies between 2011 and 2015 – even in an era of austerity.

In recent years, oil and gas companies have put their political machine into an even higher gear. In 2009, the American Gas Association spent more than $1.1 million on federal lobbying, nearly double the $581,000 it spent in 2006. According to a report from Common Cause, federal campaign contributions from fracking industry employees and their political action committees (PACs) have skyrocketed since the drilling rush began. In 2006, the fracking industry made about $1.6 million in campaign contributions; by 2010 that figure had grown to $4.5 million. So far in this election cycle, the oil and gas industry as a whole has made more than $30 million in campaign contributions to members of Congress and to fossil fuel PACs, putting the industry on track to break the record $37 million it spent during the 2008 election.

By comparison, as of late July alternative energy companies had made less than $1.4 million in contributions to federal campaigns.

The industry is also focused on speaking directly to voters to try to sway the outcome of the fall election. Just two industry associations – America’s Natural Gas Alliance and the American Petroleum Institute – have poured well more than $125 million into multimedia ad campaigns over the past three years. In January, the American Petroleum Institute (API) launched a saturation-style ad campaign dubbed “Vote 4 Energy.” The campaign by API features mainstream-looking people proclaiming that they are “energy voters” who support American jobs and drilling for domestic oil and gas. Jack Gerard, president and CEO of API, said during a January 4 speech: “API worked to ensure that energy issues were prominent in policy discussions in several early primary states last year, and we will ensure they remain front-and-center in all states.”

As a result of such paid media campaigns, television viewers are far more likely to see commercials extolling the benefits of natural gas than they are to see news reports on the controversy, according to an analysis by the media watchdogs at Fairness and Accuracy in Reporting. Five broadcasters – ABC, CBS, NBC, CNN, and Fox – produced a total of nine news segments focused on fracking between January 2009 and November 2011, amounting to less than an hour of coverage. By contrast, 530 ads for “America’s oil and gas industry” or “America’s natural gas” aired on those stations during the same time period. Those 500-plus ads total four and a half hours of broadcasting.

— Let’s Not Even Talk About It — Four senators voted against even having a debate on the issue. Each of those senators counts the oil and gas industry among his or her top 10 donors. Oil and gas groups are … Jim Inhofe’s largest donor ($472,000)

Mary Landrieu’s third largest donor ($424,700) Mark Begich’s fourth largest donor ($145,405)

Ben Nelson’s tenth largest donor ($193,550)

While spending the tens of millions of dollars necessary to influence the national political discussion, the gas industry has boosted its lobbying of and campaign contributions to legislators in states that sit above the gas-rich Marcellus shale. In New York State, the gas industry spent $668,984 in 2009 on lobbying government officials, a six-fold increase from 2006. In Pennsylvania, which only began requiring lobbying reporting three years ago, lobbying expenditures went from $579,854 in 2007 to more than $1.6 million in the first two quarters of 2010 alone. Political donations from the energy sector to Pennsylvania politicians and PACs spiked from $4 million in 2008 to $7.5 million in 2010 – the very same time as the fracking industry there was starting to take off.

Especially at the national level, the oil and gas industry’s political contributions are intensely partisan. Eighty-eight percent of the industry’s donations to federal candidates go to Republicans. In the 2012 election, the fossil fuel companies have a fresh opportunity to usher more Republican allies into office. The relatively sudden appearance of a domestic drilling industry has given oil and gas companies a chance to recast the perennial debate over energy production. Today, discussions over energy don’t just center on environmental worries and national security concerns, but also include the potent issue of job creation. In economically struggling places like Ohio and Pennsylvania, domestic energy production could be a wedge issue that splits the traditional Democratic constituencies of trade unionists and environmentalists – and helps deliver more seats to the fossil fuel-friendly GOP.

“If you go into certain regions of Pennsylvania, like out in the southwest for example, you get strong support from unions, business, Democrats and Republicans for the natural gas industry,” says Terry Madonna, political science professor at Franklin and Marshall College. “The environmental community is deeply concerned about chemical disclosures, air and water pollution.”

A good example of this wedge effect is the heated race for Ohio’s US Senate seat occupied by Sherrod Brown, a Democrat fighting for re-election against Republican John Mandel, the Ohio state treasurer. Brown, who has a reputation as one of the Senate’s most progressive members, is struggling to avoid being outflanked on the drilling issue. “Energy is about jobs to me,” Brown has said. But Mandel keeps hammering him on the issue. In a December op-ed in The Wall Street Journal , the Republican challenger accused Brown of siding “with Washington bureaucrats and fringe extremists in the attacks on our natural resources.”

The Price of Power Each year the federal government provides at least $10 billion in subsidies to the oil, gas, and coal industries (some estimates say the figure is as high as $52 billion). In March the US Senate considered a motion to repeal the tax benefits for the largest oil and gas companies. The effort fell nine votes short of the 60 votes needed to reach the Senate floor. Senators who voted to maintain the subsidies received about six times as much money from oil and gas producers, petroleum refiners, and marketers as senators who voted to scrap the public payouts. Source: Maplight.org | Click this image to see a larger version Even more lopsided was the giving by interest groups such as the American Petroleum Institute and the US Chamber of Commerce who were opposed to the motion. Donations to subsidy supporters outpaced donations to opponents 14-to-1.

Residents in Ohio seem torn. For many, the prospect of fracking-related jobs is hard to pass up. But Ohio is also one of the states where geologists have traced a spike in small earthquakes to wastewater injection from gas wells. Many voters are worried that current environmental regulations are insufficient to prevent gas-drilling contamination of water supplies. Seventy-two percent of Ohioans say there should be a halt to hydraulic fracturing until more is known about the process, a January Quinnipiac University poll found.

Republicans who have heard of fracking favor the process by a wide margin, a recent survey by Pew Research found. “But among Democrats who are aware of fracking, there is a wide ideological gap,” Pew concluded. While the majority of liberal Democrats oppose fracking, conservative and moderate Democrats are evenly split between support and opposition.

The oil and gas industry and its ideological allies see a political opportunity in such surveys. In February, the US Chamber of Commerce launched a $2.5 million ad campaign in Ohio charging that Senator Brown “voted to block American energy production and increase energy taxes.” And in June a newly formed political group called American Commitment – whose donors do not by law have to be disclosed – launched a $1.2 million ad campaign against Brown for his votes to maintain mercury emissions regulations on coal-fired power plants. The ad claimed that Brown’s vote would “raise our electricity costs.”

Political analysts say it is unclear whether drilling will help or hurt Senator Brown and President Obama in the upcoming elections. Herb Asher, a political science professor at Ohio State University, says that despite controversy over fracking, the drilling boom could bolster economic optimism. “This might help the president carry Ohio,” Asher says.

While it seeks to re-frame the energy debate to center on job creation, the fossil fuel industry and its elected helpmates are fighting to silence its critics. See, for example, the manufactured scandal around EPA administrator Al Armendariz.

When Armendariz was appointed by the Obama administration to head EPA’s Region 6 – home to oil and gas states like Texas, Oklahoma, and Louisiana – he said he planned to rigorously enforce environmental laws in the area. Armendariz soon launched efforts to rein in air pollution and investigate reports of water contamination by Range Resources, one of the country’s top gas drillers.

For having the temerity to do his job, Armendariz came under intense criticism from some of the industry’s staunchest supporters in Congress like Oklahoma Senator James Inhofe. “I have been made aware of a number of actions initiated by the EPA Region 6 Administrator Dr. Al Armendariz, which have alarmed state and local officials and regulated industries,” Inhofe wrote in a July 2010 letter objecting to the way Armendariz planned to enforce the Clean Air Act and questioning his focus on emissions from natural gas production. Over the course of his career, Inhofe has received $1.39 million in campaign contributions from the oil and gas industry, making him one of the Senate’s top recipients of fossil fuel donations, according to the Center for Responsive Politics.

Inhofe’s complaints gained little traction until last April, when the senator released footage of Armendariz speaking at a 2010 town meeting in Dish, Texas. “The Romans used to conquer little villages in the Mediterranean. They’d go into a little Turkish town somewhere, they’d find the first five guys they saw and they would crucify them,” Armendariz says in the video, as he tries to explain how to get the oil and gas industry to abide by environmental regulations. “Find people who are not compliant with the law, and you hit them as hard as you can and you make examples out of them, and there is a deterrent effect there.”

Read more in this special report on the environmental pollutant called money in politics.

While certainly impolitic, the statement represented a more-or-less sound philosophy of law enforcement. Nevertheless, the industry attack was immediate. The Wall Street Journal complained that Armendariz wanted to crucify the oil and gas companies, and soon Republican members of Congress were calling for Armendariz to resign. “Administrator Armendariz’s words reflect his disdain for the oil and gas industry and make clear that his decisions are made without an ounce of impartiality,” Representative Ted Poe of Texas, one of the first to call for Armendariz’s dismissal, said. “He should be fired.”

Within two weeks of the video’s release, Armendariz, a scientist who had been appointed to his post with the strong backing of Texas environmental groups, was forced to step down. In this current election cycle, Representative Poe’s biggest campaign contributor is – you guessed it – the oil and gas industry.