Critics of the Trump administration are arguing that the oil sector is receiving preferential treatment during the government shutdown.
The United States has experienced two-government shutdowns over the past six years. While most people would expect federal departments to experience the same consequences during each shutdown, it’s clear the oil industry during the Trump shutdown is fairing better than it did during the previous shutdown.
Governments are required to serve everybody equally. However, that happens not to be the case with the ongoing partial government shutdown in the U.S. The oil sector has provided clear evidence of a disparity between President Barack Obama and Donald Trump’s government shutdown.
Some experts have even accused the Trump administration of illegally favoring the oil industry during current the government shutdown.
“One of the principles of government is that you serve everybody equally,” but that’s not what’s happening here, said Matt Lee-Ashley, a former deputy chief of staff at the Interior Department, to Bloomberg News. “The oil industry is still getting business as usual and everybody else is getting shut out, so it’s fundamentally not fair and it may be illegal too.”
Booming Oil Sector
Although the federal government is shut down, the government has continued to issue permits in the oil sector, raising serious questions about favoring the oil industry.
While some people would argue favoritism is illegal under federal law, it also shows how Donald Trump is focused on ensuring minimal disruption in sectors deemed critical.
Reports indicate that the Interior Department has continued to issue permits for oil drilling on federal land. The issuance is part of the government’s bid to ensure operations in the oil sector continue undisrupted, especially in the Gulf of Mexico.
The government is also moving forth with oil development works in the Arctic National Wildlife Refuge and some parts of Alaska. The Interior Department has already carried out public participation meetings as it seeks to gather public opinion into the proposed projects. Whereas, other departments and projects have suspended public meetings and the processing of any applications that need federal approval, like new drugs.
The Interior Department is not the only federal institution that has continued to operate even with the government shutdown in place. The Bureau of Safety and Environmental Enforcement has retained some staff to process new permits to drill in the coastal waters. The department is reportedly relying on user revenues to finance its operations in addition to other non-appropriated funds.
However, there are instances where the government shutdown has come to full effect. For instance, it comes as a surprise that the Bureau of Ocean Energy Management has suspended a good chunk of its operations. The result has seen a suspension of planned public meetings seeking views on the development of the Vineyard Winds Project. The proposed project is for the setting up of a large-scale wind energy farm off the coast of Massachusetts
The partial shutdown has also put on hold planned environmental reviews of a proposed $7 billion Dominion Energy Atlantic Coast pipeline. The Interior Department has also halted the issuance of permits needed for seismic surveys of oil exploration in the Atlantic Ocean.
Obama Government Shutdown
In contrast, it was far different in the oil sector when President Obama’s administration went through a government shutdown. During the 2013 shutdown, the Bureau of Land Management did not process permits for oil drilling in any federal land. The agency also canceled oil and gas leases of at least one auction in New Mexico.
A report by the White House Office of Management and Budget indicates that the 2013 government shutdown resulted in the suspension of the processing of about 200 applications for oil drilling permits. The shutdown also resulted in the postponement of more than one oil and gas lease sale.
The shutdown did catch the attention of President Obama who warned it was doing much damage given the lack of activity in the oil sector. However, the government did little to ensure that some departments continued to operate, as is the case with the Trump administration.
Under U.S. laws, Federal departments can only continue to operate, in case of a shutdown, if their operations are deemed necessary. Departments that don’t incur financial obligations can also continue normal operations. What this means is that the departments or operations that don’t depend on budget allocations from Congress can continue to operate. Some of these operations include those financed by user’s fees or other multiyear funds.
Any official or agency that violates the more than 100-year-old Antideficiency Act, which prevents the government from making financial obligations in excess of what is available, is always at risk of incurring a fine of $5000 or two-year imprisonment. No one has ever been prosecuted under the law even with the numerous amount of government shutdowns over the years.
Even with a total government shutdown, there are departments as well as government operations that must always remain open. That said a new debate has emerged about the type of work that can continue in times of a government shutdown given the developments in the oil sector with the current partial shutdown.
Lobbying For Government Opening
While the oil sector has experienced minimal disruption because of the partial shutdown, industry observers have started to raise the red flag. Should the standoff with Congress persist then industry executives warn it could start feeling the pinch.
Oil and gas officials are increasingly urging President Trump and Congress to resolve the shutdown. According to Mike Sommers, the President of the American Petroleum Institute, a more extended shutdown is not good for the industry. He also warned of the negative consequences of a continued trade dispute with China.
“China’s retaliatory tariffs carry the risk of losing a vital energy market, which can mean losing American influence where we need it,” Sommers said during his address to reporters last Tuesday. “We need to make sure retaliatory tariffs on LNG don’t continue and certainly don’t expand,” he told reporters.
A more extended shutdown would affect the ability of the Environmental Protection Agency and the Interior Department to regulate the sector. While the departments have operated partially amidst the ongoing shutdown, it’s not enough according to observers.
The effects of a prolonged government shutdown could also come to affect consumers. For instance, it may result in a decline in oil, gas and renewable energy production something that could hurt supplies leading to a spike in prices.
The current administration remains eager to ensure maximum exploration and drilling of oil and gas in federal waters as part of its energy agenda. It does not come as a surprise that the Trump Administration is doing all it can to ensure normal operations in the oil sector, given Trump’s ardent support of the industry.