Despite the Need for Increased Production, Government Policies Discourage Fossil Fuel Investment|
The Ukraine War has focused widespread attention on the need to help replace Russian natural gas and oil supplies to Europe by increasing American production and exports. But in spite of high crisis-driven market prices, U.S. production is projected to grow only modestly over the near term, far short of volumes needed to make a dent in Europe's shortfall, let alone provide relief from high domestic energy costs. Why?
In a recent Dallas Fed survey, responses and comments from both producers and service firms point to contributing factors. Frequently mentioned are shortages of skilled workers, and of supplies including tubular steel, frac sand and casing cement. But most often heard, particularly from independent firms, is unavailability of capital from financial institutions.
This is the unmistakable result of current Administration leaders, agencies and regulators repeatedly signaling to banks and other lenders to avoid financing fossil-fuel projects, including pipelines, based on unsupported claims of higher lending risk due to climate change. For example, last week the Securities and Exchange Commission published proposed new rules to "mandate climate risk disclosures by public companies" in their financial reporting.
All of this is sending strong and clear signals to federally-regulated lenders that can only be interpreted as official government opposition to financing fossil fuel-related investments.
Senator Kevin Cramer (R-ND) is leading an effort to end this overt discrimination against our industry by introducing a bill entitled the "Fair Access to Banking Act". Co-sponsored by one-third of the members of the Senate, it would prohibit financial institutions from discriminating against fossil-fuel related projects based on any criteria other than credit-worthiness.
EEIA is meeting with Senator Cramer and his energy policy staff this week to discuss how we can help move this critical initiative forward. We will keep you posted as plans develop. In the meantime, we recommend you read Senator Cramer's article on the subject that recently appeared in The Hill - a DC-based political news publication. It can be accessed here.