After spending much of its history as “energy helpless,” the United States today is experiencing an energy golden age. But amid record-setting production of both traditional and renewable resources, we still face challenges.
With the oil industry facing unprecedented market disruptions from the spread of the coronavirus, to a fierce national election that will largely determine if the energy sector will continue to grow or be hit with limitations on their license to operate, we need to start applying some “energy realism” to our plans for the future.
Because despite the extraordinarily strong hand that the United States has been dealt when it comes to energy, the efforts of a few misguided policymakers have proven more than sufficient to derail investment and stop progress in its tracks.
Americans can listen to progressive presidential hopefuls call to restrict fossil fuel activity on television daily, but to see the real-world effect of such efforts in action, look no further than Whatcom County in Washington state.
For years, Whatcom County’s economic center has been the Cherry Point Industrial Complex. The companies operating at Cherry Point support 10,000 jobs, pay around $200 million in state and local taxes, and invests millions more in the surrounding communities in the form of philanthropic giving, volunteer time and other direct contributions to causes like wetland resources and environmental sustainability.
Never content to let a good thing go undisturbed, local officials in Whatcom County are pushing for drastic changes to the permitting and approval process that has long effectively governed investment and expansion at Cherry Point.
The proposed changes are being justified by a majority of the County Council as environmental reforms — a common argument that has been regularly leveraged across the United States to stop development, expansion and investment. Whether it’s a pipeline in Northeast, a wind farm in the Midwest, or a transmission line in the Southwest, the country is littered with important projects that were abandoned due to misguided local policy — often with serious negative repercussions for those that call the communities home. (Just ask New Yorkers how they feel about a recent pipeline impasse that led to a temporary moratorium on new natural gas connections.)
In the case of Whatcom County, the changes proposed are particularly self-defeating. In placing new restrictions on the companies operating and investing at Cherry Point, the County Council is in effect implementing a de facto ban on expanding and improving, not just the huge refineries operating at the site but also on the renewable and green energy companies vying to produce clean energy at the site.
Stakeholders in Washington have warned for months that the changes proposed by the County Council threaten future growth at Cherry Point. And if anyone was tempted to dismiss their concerns as nothing but alarmist messaging, a recent announcement shows just how warranted those concerns were.
After years of work, the developers of a joint renewable biodiesel project proposed by Phillips 66 and Iowa-based Renewable Energyannounced in a press release that they would abandon their efforts to build a major facility at Cherry Point. The reason for the withdrawal? Lengthy permitting delays and uncertainty. While Whatcom’s years-long effort to make permanent this plan was not specifically cited as the main cause, the County Council’s efforts coupled with Washington state’s continuing war against fossil fuels couldn’t have helped.
It’s a real loss for the community — an unforced error that will cost jobs, tax revenue and investment. The withdrawal will also take a promising expansion of the county’s green energy sector out of commission — a troubling sign given the fact that the council’s new rules also make it harder for traditional refineries in the area to invest in advanced emissions reducing technology.
But as harmful as these effects may be, perhaps the greatest damage caused by Whatcom County’s proposal — and others like it nationwide — is in the message it sends to investors and developers. Steps like these show companies that Whatcom County — and other communities pursuing similarly misguided policies — isn’t a favorable place to do business. That much is clear. But through a broader lens, the dynamic in Washington state also serves as a case study for the type of action that can undermine and undo all the good things the nation’s energy sector has going for it today.
Ample resources and favorable federal policy matter a great deal, but as Whatcom County shows, local policy is a wildcard that can derail even the most powerful economic engine — a blueprint for failure that nobody wanted.
The future is still positive for the American energy sector. But as we move forward, investors and other stakeholders must account for the fact that a handful of county bureaucrats can stop it all on a dime.
Dan K. Eberhart is CEO of Canary, an independent oilfield services company in Denver. He wrote this for InsideSources.com.