The oil and gas industry fended off two ballot challenges Nov. 6 in Colorado and Washington State, but the margins of victory were less than resounding and could signal troubles in future election cycles.
“When it comes to Proposition 112 [in Colorado], what isn’t surprising is that it lost, what’s surprising is how tight the margin was given the disparity in resources between supporters and the opposition,” Ashley Petersen, senior oil market analyst for Stratas Advisors, told Hart Energy.
Colorado’s Proposition 112, defeated 57% to 43%, would have prohibited oil and gas drilling within 2,500 feet of homes, schools or other occupied structures or “vulnerable areas.” The ban would have made only 15% of the state’s non-federal land available for drilling.
The industry-backed movement to defeat the measure spent about $36 million in its campaign while supporters spent less than $1 million.
“The fact that even in a traditionally oil-and-gas-friendly state this measure needed to be so vigorously fought against shows that sentiment in Colorado continues to shift away from extractive industries,” Petersen said.
A study by the Colorado School of Mines estimated that horizontal drilling would give producers access to 42% of the non-federal land. However, the restricted area included sweet spots in the Denver-Julesberg Basin.
Washington State voters’ rejection of Initiative 1631, which would have allowed the state to charge companies for their emissions of carbon dioxide and other greenhouse gases, was the second failure of a carbon fee in the state. It followed rejection of a similar measure in 2016. This year’s measure was opposed by 56.3% of voters, despite the full-throated support of Gov. Jay Inslee.
Under the initiative, fossil fuel companies would have been required to pay $15 for every ton of carbon dioxide released into the atmosphere. The anticipated $1 billion-plus in revenue over five years would have been shifted to projects that would move the state away from fossil fuels, such as public transit, energy efficiency, wind and solar power.
“While in Colorado there are more obvious economic ties with the oil and gas industry, the tide here was turned by concerns that this would impact consumer wallets directly,” Petersen said. “In large part, it was driven by aggressive messaging from opposition parties.”
Again, the oil and gas industry spent heavily—$31 million compared to proponents’ $15.2 million. In Washington, though, the threat of higher fuel and utility bills convinced most voters.
“Clearly in Washington, economic concerns still handily outweigh environmental ones, regardless of how the fee is structure,” she said, but noted that supporters of the initiative have promised to try again.
“Chances might be better third time around,” said Petersen. “In 2016, the measure was opposed by several social justice groups and gained only 42% of the vote. This time around, I-1631 had broader support among social justice groups and garnered 43.7% of the vote.”
Thomas J. Pyle, president of the American Energy Alliance, issued a statement in which he seemed almost resigned to fighting the battle again.
“There is little doubt that those who authored the defeated initiatives will try again, but we hope they have finally learned their lesson,” he wrote. “The voters have spoken. It’s time to listen to them.”
Joseph Markman can be reached at jmarkman@hartenergy.com or @JHMarkman.
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