Yesterday, I gave a presentation about commodity prices in 2022. During the event, a few people “in the chat” got into a political argument over U.S. energy production. Specifically the State of the Union address from Tuesday night. One person argued that the U.S. hit peak production under our previous president – and that our current president wasn’t doing enough. Also – this person said that the U.S. was “energy independent” a few years ago and that we weren’t anymore.
Then, this person stressed the importance of being energy independent from “foreign actors” that are hostile to the United States (in this case, Russia). They went onto a massive tirade about how the U.S. energy sector won’t survive…
I had to stop my talk for a moment to address these comments. Why? Not because I “disagreed with them” or even wanted to debate energy politics. But because I actually wrote some of this person’s argument… 12 years ago. Seriously.
Back in 2010, I was a grad student at Johns Hopkins University’s School of Advanced Governmental Studies in Washington D.C. It wasn’t cheap, and living in the Dupont area requires a source of income. When I wasn’t in school, I needed a job.
I became a senior writer for an advocacy center that still writes political campaigns and forges talking points for various U.S. companies and trade associations around major events. What was my job? We changed the public narrative.
Want to change the perception of your commercial bank’s unethical lending policies before the financial crisis of 2008? We could change the bank’s public image from hostile loan shark to “supporter of local business” in about two months.
Want to escape public scrutiny for manipulating commodity markets? We could easily change public perception and ensure that everyone knew your bank’s trading desk “improved liquidity” for the markets – and how this was GREAT for teachers and firefighter pension programs. (Come on, they weren’t manipulating silver markets… they were just helping first responders achieve financial security in their retirement years…) Not even a great fiction writer can make up the lucrative reality of public affairs consulting.
The Frontline of a Crisis
That year, one of our clients was the largest trade association for U.S. oil and gas producers. If you recall, April 2010 was a very important month in energy politics for the U.S. That’s the month that the BP Oil Spill happened. The U.S. – at the time – lacked enough inspectors to check every single offshore well. The fact that we didn’t have enough inspectors and checks for these platforms like Deepwater Horizon was a big deal, and this even became a central plot point in the first episode of the HBO show The Newsroom. It doesn’t matter your politics.
We had just experienced the worst environmental crisis for the U.S., well – ever. And the Obama administration and Members of Congress (Democrats controlled both chambers) were prepared to put new regulations in place on energy… just months before midterm elections. Enter my team of political advocates and writers.
We would sit on the docks of National Harbor, Maryland – looking toward the Capitol – smoke cigarettes, drink coffee (the Irish kind), and think of emotional arguments to help corporate clients win the hearts of consumers. I’m not proud of being sucked into that machine. It was a horrible job that helped pay for graduate school and rent in Washington. I learned a lot about politics that still leaves me jaded…
Was America Ever Energy Independent?
But we were good at this job. In about a month, we changed the national conversation about BP Oil from “regulate offshore drilling now” to “make sure that America is energy independent.” We wrote speeches, we drafted ghostwritten columns for major newspapers, and said that more regulations would be horrible for energy production and thus the public. I even made the point to highlight that the energy industry is a major job creator for the United States.
Though the message of energy independence had shined a lot during the previous decade (remember Drill Baby Drill?) , it became a massive source of political barking over the next few years. In fact, our entire 2010 campaign morphed and forged into the backbone of the debate over the Keystone Oil Pipeline from Canada — which became the biggest political football in Washington — for a decade (and still today).
We were there. I still have articles and whitepapers that I wrote, I still have the pay stubs, I still remember the showers I had to take and the hyperbole. I remember telling my boss how apathetic I was becoming because I had now seen behind the curtain of public media and how easy it was to change the public narrative around anything. If you’ve seen the movies Wag the Dog or Thank You for Smoking, both are better reflections of reality than fiction.
I Didn’t Last Long
I also still have the letter explaining why I was fired… after just eight months at this company. Two months after the spill, I wasn’t very content about another project that we’d done to shift the narrative around mortgage backed securities for one of the nation’s largest banks. Especially how we made them look like the most important lender to small businesses all across America. I really hit an ethical wall…
I also learned where every talking point on FOX, CNN, MSNBC, and other media outlets originates, the names of the think tanks and the advocacy centers that craft our opinion sections, and I see people debating things today that are based entirely around emotion and not actual data.
Here’s a simple one that’s easy to rebuff: “The U.S. was energy independent” in recent years. No. The United States has never been energy independent… though North America could be many years from now. The U.S. would need to produce 20 million barrels of oil per day – and we don’t have the infrastructure – and likely not enough workers.
“Ensure America’s Energy Independence” was a talking point. This was reinforced by our support for the sector in the wake of a massive ecological disaster where the industry was against a wall. And, it was a damn clever message that resonated with voters (read: showed high responses among tested audiences) around job creation, concerns about hostile actors like Iran and Venezuela, and the pocketbooks of Americans.
People are saying that the Biden Administration is going to stop U.S. oil producers from drilling… but it’s not as extreme as some of the talking points coming out of those same advocacy centers where the talking points originate… The reality is the United States will produce more oil in 2023 than ever before. The U.S. will be the largest producer in the world. We’re projected to top 12.6 million barrels in 2023, which would beat the 2019 figure. And that’s not me saying this or a trade group. This is from the Energy Information Administration.
The reality is that the White House isn’t the biggest challenge to producers right now. Shareholders are. After years of weak returns (dating back to 2014), shareholders demanded that companies boost their dividends and buybacks to reward patience. As a result, a large number of companies don’t have the cash flow to increase production.
Companies like Devon Energy, Continental Resources, and others in the patch have said they won’t increase production targets – despite the fact that it’s economically reasonable to do so. So, they’ll become takeover targets in the years ahead… as a result, the bigger oil majors will get bigger. Meanwhile shareholders in smaller producers will get paid for the acquisitions.
Could the U.S. Become Energy Independent?
Anyone asking why we’ve fallen behind 2019 levels in 2020 and 2021 will typically blame the current administration. Of course, they can do this, but it’s just not entirely accurate. I’m not apologizing – AT ALL – for government bureaucracy and bad messaging.
But 2020 was a pandemic year, and 2021 had severe labor shortages. Companies had not planned to increase production significantly in 2022 until this massive price spike. It will take time for them to ramp up output, hire new workers, and build the necessary infrastructure. The U.S. will need every barrel it can pump to reduce inflationary pressure.
I know that this all might sound naïve to some. I get it, I really, really do. But I was there, in the trenches of a massive communications war in the wake of the BP spill. I still see the talking points from time to time – and oddly enough, I’m glad that they exist. Because there’s a battle of hyperbolic statements coming from other advocacy centers that are trying to shut down U.S. energy production. It’s hyperbolic arguing that goes ignored by the smart, brave energy workers who are setting up rigs right now and will continue to produce affordable American energy now and in the future.
We’re about to have a massive commodity bull market. I’ll show you how to profit while removing emotion – especially politically – from the entire equation.