The libertarian-leaning economist Russ Roberts has published at length about the merits of deregulation and the harms of unnecessary government intervention. At the same time, he tells of the limitations of laissez-faire economic attitudes and acknowledges legitimate arguments in favor of government regulations. In what I will refer to the Parable of the Hockey League he provides an example of the general line of thinking that leads one down the path to favoring reasonable levels of government regulations. It goes something like this.
Suppose you were to start a hockey league in your hometown. Some rules would need to be established. Aside from the basics you would have to nail down what kind of safety precautions should be put in place. One could take the libertarian approach and suggest that any player is welcome to wear helmets and face shields, but not required (I promise I’m not making references to COVID-19 and masks – let’s not go there). It would soon be pointed out that those who choose to wear helmets and face shields are at a slight competitive disadvantage – extra weight and reduced visibility. Whoever wants to be as competitive as possible will forego this hardware.
After a few games as injuries begin to pile up, someone somewhere would simply suggest that ALL players have to wear the same gear whether they want to or not. Everyone will be at the exact same competitive disadvantage and the incidence of head injuries will decrease. This is the logic behind some (not all) government regulations, especially in high-risk heavy industries.
The federal government is (to no one’s surprise) imposing new regulations on our industry. In regard to greenhouse gases, revisions to the OOOO-series regulations will stiffen requirements relating to methane emissions for both new and existing facilities. It is estimated that in Permian, methane emissions are 60% higher than what is being reported. If you are of the camp that CO2 emissions are not relevant because CO2 is required for life, the warming impact of methane can still not be ignored. And if you aren’t worried about methane emissions, it has to be acknowledged that where there is methane there are normally VOCs (Volatile Organic Compounds) that constitute a serious public health concern. Whether we like it or not, we have not cleaned this up on our own and regulations are coming.
So we are getting told to wear helmets if we want to play in our hockey league. I’m not entirely opposed to this – again, if we as an industry were that good at addressing this issue there would be no need for regulations to begin with. This being said, it should be pointed out that we aren’t talking about forgettable hockey games between Chippewa Falls and Whoville. In this industry we don’t just compete with ourselves in the US, we compete with the likes of Russia, Venezuela, and Saudi Arabia.
I accept the rule that we have to wear helmets. But here are a few rules I would love to see put in place for our REAL competition (I’m looking at you OPEC+):
· Similar regulations regarding methane / VOC’s emissions
· Access for NGO’s such as the Environmental Defense Fund to independently report compliance with said emissions regulations
· Labor laws that prohibit discrimination based on race, sex, national origin, creed, etc.
· Worker safety laws similar to those that have been successfully implemented into our industry in the US
· Transparency regarding how revenues are apportioned among political leaders and their acolytes
Can someone please go to the aforementioned countries and make this happen? I sit in Denver, CO – most of you are closer than I am to these other countries, so I’ll leave it up to you. Thanks, by the way.
In the meantime, for all of you that work hard to make this US oil and gas industry work: Suit up and let’s play some dang hockey.