Congressman Jodey Arrington attends Energy Roundtable in Howard County
Oil and gas producers from the West Texas Region gathered together this past week for an Energy Roundtable in Howard County. Joining in that conversation was Congressman Jodey Arrington who made a visit to Big Spring to take part in that discussion.
“We are the energy epicenter of the United States,” Congressman Jodey Arrington said. “Nobody produces more oil and gas; no one produces more wind energy than West Texas. Ironically and they peacefully co-exist.”
In recent months the oil and gas industry has been a focus of attention not only in West Texas, but across the nation. The price war between Saudi Arabia and Russia brought attention to the oil market as their overproduction of oil flooded the market, filled reserve tanks, and drove oil prices to a historic low.
“The oil and gas industry has been hit hard by what I call a one-two punch,” Congressman Arrington said. “First of the blows came from the Saudi/russia trade war and market manipulation, and the second was the demand crisis that came from the COVID -19 and the shutdown of our economy.”
Arrington, on behalf of his district -which includes Big Spring and the West Texas region - has been part of the leading voice in Washington on the energy industry and in proposals for support that would allow for a strong rebound from this crisis. Recently, a letter was sent to President Trump outlining some recommendations that would support the industry. According to Arrington, on the top of that list was getting the economy back up and running.
“The first thing we need to do is open the economy across the country and recognize that the risk of COVID are going to be with us for awhile and we have to manage that,” he said. “That’s the new reality.”
As the re-opening begins to progress – Texas will be moving into Phase 3 of reopening on June 12 – the community will need to lean into the process and municipalities at the local, state and national level will need to provide confidence through increased testing, PPE (person protection equipment) and other avenues depending on the area.
“It’s important to have the hospital beds and protective measures, but it’s also about getting people back out into the market places and businesses back online because that will bring demand back and when demand comes back we will start to bring down the supply glut and calibrating supply and demand to that point where the price can stabilize. That will get us back to a point where we can have affordable fuel for the country, but we can also support the jobs – in West Texas - across the energy industry. This part of the process is critical to our country’s economy, recovery, and our national security.”
While the energy market as a whole is important to the recovery of the economy, Arrington stressed the importance of the independent producers.
“If the independent producers aren’t able to survive this economic crisis then the country will suffer long term. They are critical to innovation, to healthy competition in the industry,” he said.
The independent producers, including those in the West Texas region, are one of the balancing forces when it comes to ensuring a monopoly or over dependence doesn’t occur in the market. Through the balance domestic independence is able to not only take root, but sustain. The West Texas region has experience the booms and the busts for decades and have come to understand the balance it brings to the industry.
During the roundtable, those in attendance discussed not only the current state of the market, but also hinderances to getting back up and running. While there have been billions of dollars poured into the economy through the unemployment insurance program – set to expire at the end of July - and the PPP (Payroll Protection Program) some of the efforts have contradicted each other and acted as a barrier from the aide.
“The need for flexibility for the PPP loan was one of the big concerns that was raised. While the funds to help with liquidity are appreciated, the tight window to use them combined with the unemployment insurance program were making it difficult to get people back to work,” he said. “For these independent companies it’s hard to break even right now, even if we were to turn the economy all the way back on it would be hard to be profitable because of the price.”
According to Arrington, one of the recent bills that was passed out of the House was increasing the eight week window to a 24-week window. This will allow a bigger window of opportunity for those funds to be used and provide actual support for the businesses.
“Remove the barriers to employment by not having an unemployment system paying more than what they can make at work; make sure mainstream lending programs are accessible and meaningful for this particular industry where they are;
get the economy back online and open this country up. Do it responsibly, safely, but I am convinced and have total faith in the American people, our communities and business leaders that they will do that.”
While there are several plans to focus on the immediate future for oil and gas, as the economy has seen and those in the oil and gas industry have come to understand, planning for the future is key to success.
“The long term making sure our country, our nations leaders and the next generation of Americans value our conventional fuels and what having an ocean of shale energy has done for this country’s economy, national security and energy independence, and what its done for working families,” Arrington said.
The energy industry has gone through major transformation and advancements over the past decade. The progress in the industry has brought the capability for lower electric bills, gas bills, and other day to day cost of fossil fuels. The reduction of energy poverty through export capabilities in other countries and reduction of air pollutants. Since the Clean Air Act of 1990, which was passed under the leadership of President George H.W. Bush, there has been more than a 70% decline in the six key pollutants while the economy has grown by 30%.
“As we’ve expanded energy production of fossil fuels we’ve seen a precipitous decline in greenhouse gas and other pollutants and that’s a great story,” he said. “The long term challenge is that we need to ensure we are telling that story so we don’t find ourself in a place where folks believe fossil energy is a bad thing.”
He continued, “We can balance stewardship of our natural resources; promote cleaner air and environment and still have an abundance of energy and develop our natural resources on the fossil and conventional side and grow our economy. We’ve done it. We did it not because of government regulation and intervention, but through innovation and competition.”
The Energy Roundtable
“I’ve never been around more free-minded market people in any industry than those in oil and gas. These guys are tough, resilient and they know the cycles of boom and bust, up and down, supply and demand. They know those dynamics and have learned how to survive them,” Congressman Arrington said. “Many in that industry will tell me, that natural evolution is a healthy thing and it weeds out the good operators and those who plan for the future. It shows the companies that are here to stay and looking to benefit the economy.”
While the recent oil bust and the pandemic have created a downturn in price and reduction in demand, it has served as an area of opportunity to reawaken the focus of reasonably reducing regulations
that are unnecessary across the board.
“The FDA is moving quicker than they ever have before with testing, treatments and vaccines; more flexibility with telhealth and tele-medicine,” he said. “Community banks made it possible to get the hundreds of billions of dollars - 14 years worth of SBA loans in 14 days - from the PPP assistance to businesses as quickly as we did and it wouldn’t have happened if it was the government doing it. The private sector is one of the heroes in the story that we are going through.”
While the oil and gas downturn is not over, there is a tide shift now that the economy is opening back up. As small businesses and communities begin to open up to 75% capacity in establishments across the nation, barriers are starting to come down.
“There is not a more resilient group of people than West Texans,” Congressman Arrington said. “Our resiliency will serve us well. We need to continue to lean into reopening, get back. We can do it safely and responsibly, but let’s get back to living again. America has had challenges, crises and disasters, but we’ve always been able to rise to the occasion and by the grace of God we’ve been able to overcome and I don’t think this will be any different. We will learn lessons that will make us stronger, healthier as a country as a result of this.”