WASHINGTON—The post-election mood tends to be up among people in the oil and gas industry, acknowledges Texas Alliance of Energy Producers President Karr Ingham. “It borders on exuberant,” he describes. “Optimism is high and there is a great sense of relief. It’s not like every bad Biden administration policy will be undone immediately, but we are encouraged because the new presidential administration will not be starting with an easily demonstrable contempt for this industry.”

Even if they fall short of predicting the next couple of years will be a carefree stroll across sunny uplands, many representatives of the country’s oil and natural gas producers suggest the federal policy landscape at least appears to be past the minefield of recent years. According to North Dakota Petroleum Council President Ron Ness, President Biden’s approach to American oil and gas production veered far beyond other Democratic president’s customary skepticism into outright hostility. That appears to be ending with President-elect Donald Trump’s victory.

“I have never seen anything like the past four years,” Ness describes. “We have been through Democratic administrations before. Traditionally, there are more regulations, but they are manageable. In this administration, people at these agencies looked for ways to put us out of business.”

Texas Independent Producers & Royalty Owners Association President Ed Longanecker expands on that theme by mentioning that the Biden administration’s roster of documentable anti-fossil-fuel moves includes more than 200 official actions. He says TIPRO members are eager for the contrast of a Trump administration.

“We are excited to return to some level of normalcy from a federal regulatory standpoint,” Longanecker characterizes. “That is especially relevant for the thousands of smaller producers looking at the disproportionate impacts of the federal methane tax in the Inflation Reduction Act and the Clean Air Act’s new source performance standards OOOOb and OOOOc. Reverting to regulatory normalcy will be very significant.”

Kentucky Oil & Gas Association Executive Director Ryan Watts and Gas & Oil Association of West Virginia President Charlie Burd maintain that election results indicate most voters’ practicality. “Consumers are energy agnostic, but they want the lights to come on and the car to move without great expense,” Watts relates. “People have heard our message about reliable and affordable energy and have taken that to heart in the voting booth.”

“Energy security, energy pricing and energy reliability are on a lot of American minds,” Burd assesses. “Certainly, these election results are a win for that.”

It is also a victory for broader federal regulatory restraint and cooperation, affirms Dan Naatz, chief operating officer and executive vice president of the Independent Petroleum Association of America.

“The country understands the importance of oil and gas and that Washington’s regulatory regime—across the board—is too big, too broad, too much,” he evaluates. “Washington’s goal should not be about dictating policy to the states, but to work with the states and their people toward a safe environment without a regulatory regime that completely squashes entrepreneurship and innovation.”

Before Inauguration

Although Biden is in his final weeks in the White House, Watts warns that the outgoing administration is likely to unleash a torrent of additional actions before the incoming presidential team takes office. “Do not forget the gap between the end of the Biden administration and beginning of the next Trump administration,” he advises. “It will be very difficult to overcome all the problematic regulations and laws we already know about, but there are sure to be more to come.”

Even if they are lamentable, Naatz indicates, such 11th-hour maneuvers appear to be inevitable. “Some congressional Republicans are warning the Biden administration against a last-minute regulatory dump,” he observes. “But that will happen.”

According to Naatz, IPAA’s pre-election contingency planning included scenarios in which the association would urge lawmakers to pass federal permitting reform legislation during the so-called lame duck session. However, he assesses, the election results dim the prospects for a permitting bill by senators Joe Manchin, I-W.V., and John Barrasso, R-Wy.

“The session is likely to be fairly short,” Naatz predicts. “People often say a lame-duck session is going to be really vigorous, but it does not usually play out that way. Why would the party that is about to enjoy a better advantage in the next Congress cut a deal in this one?”

Even if the GOP’s standing in the 219th U.S. Congress will be better than in the 218th, Naatz acknowledges that a stand-alone bill to renovate the federal permitting system may require 60 votes to advance on the Senate floor. However, he notes, attaching such measures to a budget reconciliation package or other must-pass legislation can allow them to skirt a filibuster.

“Bills like that only need 50 Senate votes to pass,” he observes. “Meanwhile, something like the Barrasso-Manchin bill would face real time constraints during the lame duck. There would be no time for a real conference committee to create a stronger bill that could pass both chambers.”

The Defense Authorization Act is another possibility for such legislation, as well as other provisions pertinent to the industry, Naatz adds. He says he has encountered rumors that the lame duck session may provide occasion to repeal the methane tax found in the Inflation Reduction Act, but that may be a long shot, he suggests.

“Defense authorizers have pushed back hard on including too many riders, because it is an important bill and not a Christmas tree,” he emphasizes. “Getting rid of the methane tax during the current Congress will be hard because many Democrats are going to resist, but you never can tell.”

The Biden administration completed its plans for that methane tax when the U.S. Environmental Protection Agency finalized its waste emissions charge on Nov. 12 (see accompanying story).

Mending Methane

Independent oil and gas producers have plenty of priorities they hope to see addressed once the presidency changes hands on Jan. 20, Longanecker indicates, but adjusting EPA’s OOOOb and OOOOc emissions standards for oil and gas wells is at or near the top. Some of those requirements are not scheduled to take effect until spring 2029, but if they are not rewritten, he warns they are likely to exact a particularly steep toll on small producers.

“We estimate that cost at $550 million a year, which equates to $0.22 a barrel of oil equivalent, but marginal operators may be looking at added costs as high as $10 per boe,” he details. “We can conservatively say that OOOOc will result in about 55,000-60,000 marginal wells becoming plugging and abandonment candidates because the economics no longer make sense. Operators will have to shut in those wells, which will create an accelerated plugging and abandonment timeline, which will lead to bankruptcies, insolvencies and other problems.”

According to Naatz, a leading complaint among independents is the extent to which those methane rules use a one-size-fits-all approach. Unfortunately, he acknowledges, campaign promises do not always survive inauguration day. “It is easy to say you are going to do all sorts of things on day one,” Naatz considers. “As important as it is to reduce regulations and streamline processes, the new administration is going to have to grapple with some complicated issues as it moves forward. Part of the goal is developing a durable regime.”

Longanecker concurs that not even a president can unilaterally cancel a regulation that has followed proper rulemaking protocols. “It is not like President Trump can wave a magic wand and immediately do away with all that,” Longanecker says. “Providing the industry with a reprieve may be a long process, but he can pull some levers.”

Regarding subparts OOOOb/c, Longanecker suggests legislation is an implausible vehicle for addressing many industry concerns, and says the two regulatory pathways are to promulgate new regulations or reconsider the existing ones. As TIPRO learned after 2016, he recalls, promulgating new regulations can entail nearly four years, which then may open those new rules to reversals by a succeeding administration.

“Reconsideration has never been used for something this significant, but it is an option that can lead to a significantly reduced regulatory burden if it works and can be done more quickly,” Longanecker says.

Meanwhile, Ness insists, the methane tax also deserves the axe, but since the measure’s origins lie in statute, fully rooting it out will require congressional action. “That will be a killer to small businesses,” he predicts. “A different administration can come back with that in four years or more, so that issue has to go.”

According to Longanecker, since Republicans control Congress, they are likely to try to pass a budget reconciliation bill that will prevent a filibuster in the Senate. It opens the possibility of repealing the methane tax in the IRA through the same process that passed it.

Meanwhile, he continues, some have expressed a desire to utilize the Congressional Review Act to rescind the methane tax. Although the CRA makes it possible to overturn a regulation, Longanecker notes the WEC, which is used to calculate the applicable tax, is a legal mandate. Although a successful CRA resolution would block the existing WEC, EPA nevertheless could undertake the lengthy process of developing a new and sufficiently different regulation.

“We think the methane tax is a bad idea, but Congress will have to get rid of it,” Naatz confirms. “Congress is going to take a very serious look at doing away with it. IPAA has opposed it from the first day it appeared in the IRA.”

Even so, Ness urges Congress to be judicious as it returns to that statute. He points out that not all the incentive funds for carbon capture projects are going to fossil fuel opponents. “Some people lump those IRA incentives in with the Biden administration’s ‘Green New Deal’ concepts, but carbon sequestration programs for enhanced oil recovery started in the early 2000s under President George W. Bush’s administration,” he observes. “A lot of the Q45 credits were introduced during the previous Trump administration.”

Executive Impact

Although statutory improvements to the permitting process for projects on federal lands and waters cannot take effect without passing Congress, Ness points out that one way in which presidential administrations exercise considerable influence in that area deals with their approach to leasing. “It makes an incredible difference,” he says. “We have a lot of investment opportunity up here and dragging out the process really kills that. Delays and constant drags on the process can kill projects.”

“Some of that has to do with the organizational leadership at the top,” Ness adds. “After Trump’s first election, people were not even jogging or walking into their agencies. This time, I hope they come in at a full sprint. Congress should not be slow to get these people in place.”

Although President Trump has been out of the presidency for four years, Naatz suggests there will be little or no need for the sort of acclimation that tends to accompany new administrations. “He knows where the bathrooms are,” Naatz chuckles. “His staff will be in place swiftly and I believe the transition will move quickly. I guarantee the Senate will quickly bring up the president’s nominees and move fast on approving them.”

Naatz notes that Biden and many in his administration have touted strong hydrocarbon output on federal lands and waters, but such crowing fails to acknowledge the extent to which those leasing and investment decisions predate Biden’s presidency.

“This administration has issued very few new leases, but the lag means we will not see those effects until later,” Naatz relates. “Oil and gas is not a just-in-time business, and that is especially true off shore, where investments can run hundreds of millions of dollars. The Biden administration ignored the law and starved off leasing, and the situation cannot be corrected overnight.”

Regulatory determinations and other discretionary moves are another way in which presidential administrations exercise considerable influence, Longanecker notes. He cites the example of the Biden administration’s hints about plans to designate the Permian Basin as failing to attain Clean Air Act standards for ozone. Such a move would trigger stricter regulatory and leasing requirements in the basin.

“EPA’s current leadership has said pursuing nonattainment in the Permian Basin is not a matter of if, but when,” Longanecker cautions. “That would be massively impactful to our industry. Under new leadership, I do not think nonattainment will be on the table any longer.”

He also highlights that the incoming administration also has discretion on matters such as a petition for review filed by a coalition of 25 trade associations and many large and small operators, regarding OOOOb/c and Subpart W. The petitions’ national applicability under the CAA requires them to be filed with the U.S. Court of Appeals for the District of Columbia Circuit, Longanecker explains, which he says is a forum that tends to side with the EPA over industry.

Requests and petitions for reconsideration of both rules also have been filed with the EPA, Longanecker continues. Depending on the issue, if EPA denies the petition, that decision can be appealed to the DC Circuit. Opening briefs for the appellants were due on Nov. 25, he notes, and EPA’s response is due in January. The new administration is likely to seek more time and work to put the litigation in abeyance, pending action on the reconsideration requests, Longanecker predicts.

Trade Troubles

Even if oil and gas advocates generally are encouraged by Trump’s election, the executive branch’s influence over U.S. trade policy is one area that elicits expressions of wariness about the incoming administration’s plans.

“It is going to be an issue,” Naatz acknowledges. “The president-elect has been very clear about his desire for new tariffs, which concerns many of our members. We will have to talk with the administration about it, because we believe free trade is important.”

Watts predicts Americans will be skeptical of any tariff that elevates consumer costs, whether at the gasoline pump or the grocery store. “President Trump has to be very careful with how he sells that to the American public,” he advises. “I would like to see free trade without the tariffs, but I understand other countries need to know they cannot take advantage of America. Hopefully the tariffs will be a great bluff, but their use is a president’s prerogative.”

Burd suggests that strategic tariffs and other trade policies may help the United States compete better and depend less on foreign imports for materials such as rare earth minerals and computer components. “Trump wants to increase or create incentives to bring back companies that have relocated outside U.S. borders,” he relates. “Think back to the pandemic, when we were suddenly struggling to get personal protective equipment into the country because so much of it was controlled by countries that are not our closest allies.”

As an economist who wears free market views on his sleeve, Ingham acknowledges Trump’s trade stance often troubles him. “We lived with this in the first Trump administration,” Ingham notes. “Protectionism is his worldview and he truly seems to believe it makes America better and stronger.”

“There is a lot of evidence that it does not,” he continues. “Protectionism weakens a domestic economy. Without a doubt, it props up workers in certain industries, but most of the time no one mentions workers in other industries and broader economic harm.”

Ingham recounts making precisely that point about the steel and aluminum tariffs Trump’s administration announced in 2018. “Why is it good to save an American steel job at the cost of an American oil and gas job?” he poses. “Protectionism increases costs throughout the economy.”

And then there are the risks that imposing tariffs on imported goods will prompt countries to do the same on U.S. exports. “We want to export more U.S. crude oil and liquefied natural gas, but it is likely that our trade partners will retaliate against us, which is risky for U.S. exports of crude oil and LNG going forward,” Ingham says. “Anything that jeopardizes energy trade will be costly and damage the industry and economy.

“We have made this point before Congress, but as an institutionalized notion within Trump’s circle, this is a tough nut to crack,” Ingham adds. “I pick Trump over the other candidate, hands down, every day the week and twice on Sunday, but I take issue with his approach to trade.”

“That is going to be a hugely important subject for us to discuss with him,” Naatz maintains. “It is very important for the country to have a reliable trade policy that allows companies to count on secure contracts. We will have to have a long discussion about this, not only with the administration, but with the industry as a whole and other trade groups.”

Beyond D.C.

November’s elections not only saw the GOP recapture the White House, but the Senate as well. Republicans also maintained a slim majority in the U.S. House of Representatives. With Republicans controlling the presidency and both chambers of Congress, Naatz predicts the party will take an aggressive approach.

“Reconciliation may be a way to move forward on matters such as taxes,” he predicts. “Even before we knew the outcome of the election, we were talking about a massive tax bill. I think we also will see a big push to address a number of regulatory issues if they can be done congressionally, then also moving forward on a variety of other issues.”

State level election results also generally appear positive for the industry throughout the country. Ness, for example, says North Dakota’s state government will enter 2025 with a similar stance toward the industry as in 2024. “It is status quo,” he affirms. “We have a new governor, and he is extremely supportive of oil and gas.”

Longanecker says the same is true for Lone Star State. “That is because our policymakers understand and support the important role of the oil and gas industry from an economic and energy security perspective,” he suggests.

Although it may be no surprise if pro-oil-and-gas candidates win majorities in states such as Texas and North Dakota, a couple of measures on ballots in two West Coast states have raised some eyebrows. Or as author, podcaster and filmmaker Robert Bryce put it in a post-election article, “ballot initiatives on taxing or restricting natural gas use—one in Washington state and the other in Berkeley, Ca.—lost decisively.”

The Berkeley vote rejects industry opponents’ new strategy, which followed a federal appeals court ruling from early this year that struck down the city’s erstwhile ban on new natural gas connections. “In Berkeley, one of the most liberal cities in America, Initiative CG, which would have levied a massive tax on buildings that use natural gas, was rejected by a whopping margin of 69%-31%,” Bryce explains. “Berkeley, of course, is part of Alameda County, where Harris thrashed Trump by a margin of 72%-25%. Thus, it’s clear that even the most liberal voters in America want to be able to use the fuels that they like, and that includes seeing that familiar blue flame on their gas stovetops.”

“Berkeley’s outcome was a landslide,” Ingham characterizes. “I was encouraged, but also a little surprised because it continues to elect people who put those kinds of policies in place. Voters seem to recognize the harm that such policies can do by limiting energy and making it more costly, and Californians in particular are already struggling with that.”

Washington’s referendum, Initiative 2066, also prevailed in territories where Democrats typically win. “The measure repeals provisions of a state law that was designed to force Puget Sound Energy to speed up its transition away from natural gas,” Bryce details. “The initiative, which was backed by a host of business groups, prohibits cities and counties from barring or penalizing the use of gas in homes and business. It passed by a margin of 51-49, or about 60,000 votes. Again, context is essential. A majority of voters in Washington said they want to keep using natural gas. At the same time, they voted for Harris over Trump by a margin of 58-39.”

A Green Millstone

Bryce points to the significance of energy issues in helping to sway voter attitudes in swing states such as Pennsylvania and highlights the findings of a YouGov survey that political analysts Roger Pielke Jr. and Ruy Teixeira say shows voters are increasingly skeptical of climate alarmism.

According to Pielke and Teixeria, “When asked if they would support just a $1 monthly fee on their electricity bill to fight climate change, only 47% say they would, while almost as many (43%) are opposed. Even at this level, opposition is greater than support among working-class voters. When the proposed fee is increased to $20, overall voter support plummets to 26% with 60% opposed. At $40, it is 19% support to 69% opposition; at $75 it is 15% vs. 72%; and at $100 it is 7-to-1 against (77% to 11%) paying such a fee to combat climate change.”

Although Harris sought to distance herself from positions she held earlier in her political career, Burd muses, many voters seem to view that as a politically convenient bait-and-switch. “From the beginning, she made it very clear she was against fossil fuels and hydraulic fracturing,” Burd recalls. “She changed her position because she saw it was hurting her in the polls and creating pushback.”

“When the Biden administration cancelled the Keystone XL pipeline on day one, the plan was clear,” Ness muses. “It made a lot of moves to try to raise the price of oil and gas to make renewable energy sources more competitive, while also tilting the playing field for them with incentives and mandates. Ultimately, it inflates costs for everything.”

Burd predicts Harris and the rest of her party would have fared better with voters had Biden and other Democrats heeded the advice of longtime Democratic Senator Joe Manchin. “All along, Senator Manchin tried to warn his party that it had shifted in an irresponsible direction,” Burd recounts. “Had they listened to him and moved back to the political center, it might have changed the election.”

“It is important to listen to the country,” Naatz considers. “If you look at voter surveys, America likes to go to the middle. The Biden administration’s push for a heavy Washington-down approach was too much. The states know so much better about how to regulate oil and gas within their borders.”

Naatz concludes by expressing hope that 2024 signals not only a return to normalcy, but stability. “Even our smallest members tell us it is a constant problem when the political pendulum swings back and forth,” he reports. “These are multimillion dollar investments put in over a long period. They need regulatory certainty and need to know that another election cycle is not going to completely transform the regulatory regime.”

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