I love oil and gas executives. But one of the cardinal mistakes so many make is letting political partisanship cripple their companies’ policy strategies — which they set to appease either those in power or those they wish were in power. All policy strategies based on partisanship inevitably become dated and irrelevant, like poor Fonzie when he jumped the shark (Millennials: #boomerexplanation). Game-changing leaders make their political strategies shark-proof (resilient) by being proactive, bipartisan, measured, and deliberately long-game.
In January, we discussed what to watch for in federal policy. In just four intervening months, we’ve witnessed the upending of nothing less than global energy security. As listeners to the Energy Thinks podcast heard firsthand in my interview with Senators Hickenlooper (D-CO) and Cassidy (R-LA), bipartisan engagement is at the heart of building solutions — and staying nimble enough to respond to accelerating change.
In this Both True, I cover the tempting pitfalls of reactive political engagement and urge you to chart a steady, resilient course free of sharks.
Both of these things are true:
- Policymakers are asking our industry to aggressively increase oil and natural gas production to address global energy security.
- Often, the same policymakers are demanding that oil and gas companies rapidly move to a low-carbon model.
As Donald Rumsfeld famously articulated, we’ve got the known knowns, the known unknowns, and the unknown unknowns. Let’s start with the known knowns: the current state of federal policy.
- The reconciliation bill. Although there were hopes that a massive spending bill would be revived after its 2021 flop, Congress has had no luck getting the bill across the finish line. Despite Democratic leadership still advocating for the spending bill, earlier this week, Congress blew past an informal deadline to decide whether to strike a deal or abandon any hope of passing the legislation before the August recess.
- Bipartisan energy talks. Independent of the reconciliation bill, a bipartisan group of senators led by Senators Joe Manchin (D-WV) and Lisa Murkowski (R-AK) recently launched a series of talks behind closed doors about reaching a climate and energy deal. Key topics of these meetings have included carbon border adjustment, a series of low-carbon energy and carbon-capture tax credits, and the simplification of NEPA regulations. Though the outcome remains unclear, we know lawmakers are actively seeking out bipartisan solutions for leveraging the United States’ low-carbon advantage abroad and boosting low-carbon energy production at home.
- Energy security. For months, the hot topic on Capitol Hill and across the globe has been energy security. This topic has been brought on by the Russian invasion of Ukraine and the glaring reality of dependence on fossil fuels from an autocratic country. In March, President Joe Biden announced that the United States would provide our European Union allies with LNG to help reduce their reliance on Russian gas. At the same time, Biden was advocating for climate and clean-energy investments to counter Russian President Vladimir Putin’s energy chokehold.
And while we’d like to imagine that we know the outcome of November’s midterm elections, we also have a number of known unknowns:
- What will be the makeup of the U.S. House and Senate in January 2023?
- In what way will presidential election politics (beginning as soon as January 2023) influence energy policy?
- Will global energy security remain a top-of-mind political priority?
- Will a global recession occur — and will it change energy price dynamics?
And then we can only look to our recent history of unknown unknowns to temper any arrogance we might have about our understanding of the political future:
- a global pandemic that continues to deliver twists and turns, such as recent lockdowns in China;
- swings in oil prices from negative to $100 plus in two years;
- a violent insurrection at the U.S. Capitol influencing political and voter narratives more than a year later;
- the Biden administration asking the U.S. oil and gas industry to produce more ASAP; and,
- an upending of energy and global security caused by one country’s ambition to seize territory.
In the face of such turbulence, what should your steady political strategy entail?
Seize the day
The last several months have accelerated U.S. and global political swings, reinforcing the importance of having a resilient policy strategy that’s proactive, bipartisan, measured, and deliberately long-game. As an industry leader in a time of massive and accelerating change, you are also (like it or not) a collaborator, helping policymakers and others solve global problems. When you engage with policymakers and your strategy is resilient, it solidifies you as that collaborator, that civic partner who can be trusted.
- Proactive: Identify what matters to you. Select the lanes where policy will complement your company’s leadership ambitions and planned role in the energy transition. If you don’t know where to start, identify anticipated policy barriers and work backward from there.
- Bipartisan: Build your consistent message. Before you talk to policymakers and their staff, know how to tell your story and make sure it is consistent across audiences. Articulate your company’s aspirations, how those aspirations aim to solve key energy and climate challenges, and how your policy priorities align with those aspirations. When you talk to policymakers, be clear about what you need and tie those needs back to your company’s goals. Work consistently with both parties, those in leadership and those not, to withstand the inevitable wild political winds.
- Measured: Respond thoughtfully. A game-changing leader resists the urge to react to policy developments. Instead, use each of these developments as new opportunities to be a part of the solution. Rather than opposing policymakers or their policies, focus on the solutions you can bring to the table.
- Deliberately long-game: Keep the door open. Policy will have a major impact on what the energy future will look like. And how you show up in policy discussions today will shape your opportunities tomorrow. For example, growing opposition in the policy space to the low-carbon deployment of fossil fuel infrastructure is a problem for today and tomorrow. An impactful policy engagement strategy will keep policy doors open despite leadership changes and new unknown unknowns. You can start by asking policymakers what they need to see from you to have a good relationship and work together on solving the energy challenges of today.
We all learn, again and again, that trust is the bedrock of productive, long-lasting relationships. Building an enduring engagement with a wide range of lawmakers — even those who are skeptical of or even hostile to you — is one of the cornerstones of a resilient policy strategy. Hit reply if you’d like to map out the strategic elements of a resilient policy strategy, free of sharks. If this email was forwarded to you, please subscribe here.