Time to end the oil and gas boondoggle
By MARTHA MARKS, Board Chair of REP’s “sister” organization, Conservatives for Responsible Stewardship.
Originally published in the August 31, 2020 issue of the Albuquerque Journal.
A central tenet of traditional conservatism always has been personal responsibility. Russell Kirk, whom President Reagan called “the prophet of American conservatism,” wrote of the correlation between rights and responsibilities: “Every right is married to a duty; every freedom owes a corresponding responsibility.”
Sadly, this simple principle is not being applied to oil and gas companies with permits to drill on our public lands.
When these companies file for bankruptcy, as they often do these days, the old wells and other infrastructure that they leave behind threaten the surrounding air, water and land long after they are gone. Not only is this a disaster for the environment, but also it is bad for our wallets.
By failing to clean up after themselves, these companies shift the responsibility to taxpayers. You and I end up footing the bill to the tune of $20,000 to $145,000 per well, according to the Government Accountability Office. Given today’s large number of “orphaned” wells, these numbers really add up.
Total reclamation costs for wells operating on public lands could exceed $6.1 billion, although we can’t be entirely sure because the federal government does a poor job of keeping track of them. What we do know is that, if those orphaned wells are not properly reclaimed, they can contaminate local drinking water and release as much air pollution as 1.5 million cars.
Perhaps you’re asking, how did we get into this fiscal and environmental mess?
The answer is that our federal oil and gas system is woefully outdated. Before oil and gas companies even start to drill, they must put money down in the form of bonds to cover cleanup costs in the event they file for bankruptcy. The problem is that these bonds are based on rates that have not been revised in over half a century and do not reflect today’s soaring reclamation costs.
This means that taxpayers bear most of the risk when oil and gas companies, which are increasingly on shaky financial footing, drill on our public lands.
At a time when state budgets in New Mexico and elsewhere are strapped by the economic fallout of COVID-19, they can’t afford to spend millions or billions of dollars cleaning up after bankrupt oil and gas companies. And it’s even more galling that those same companies often are paying extravagant bonuses to CEOs on their way out the door.
This long-standing problem is now a full-blown crisis because instability in the global oil market, brought on by the pandemic, has resulted in a wave of bankruptcies, with more likely to come.
Communities that have long depended on the oil and gas industry for jobs and tax revenue are now facing contamination of their drinking water, air and public lands from all the orphaned wells left behind.
There is a simple, fair, and – yes – conservative solution to this crisis. We must update the federal bonding rates to reflect the actual costs of oil well cleanup.
There are growing calls for the use of federal funds to hire tens of thousands of unemployed oil workers to reclaim the orphaned wells that already exist. Still, that would be like putting a Band-Aid on the larger issue.
Any such effort to clean up orphaned wells needs to be tied to bonding reform so that future generations are not saddled with the same problem.
Although some states, including New Mexico, have launched efforts to strengthen state bonding requirements, they can only do so much. The federal government must do its part to tackle the larger problem.
As members of Congress continue considering proposals to fund the cleanup of orphaned wells, they must not overlook the urgent need to strengthen federal bonding rates.
Just as we responsibly practice a leave-no-trace ethic when we camp or hike on our favorite public lands, oil companies should have to do the same. As Russell Kirk would have said: It is their duty.