To Appease Environmentalists, The FTC Will Cripple U.S. Energy
BY TYLER DURDEN
THURSDAY, APR 25, 2024 - 05:30 AM
Authored by Justin Bis via RealClear Markets,
Link:
https://www.zerohedge.com/markets/appease-environmentalists-ftc-will-cripple-us-energy
In the movie The Perfect Storm, George Clooney and Mark Wahlberg are among the crew of a boat off the Northeast coast that is caught in the convergence of multiple powerful storms. The combination of tempests ultimately takes down the craft and its crew. We should all hope one of our nation’s most vital industries doesn’t succumb in similar fashion as it is caught in a perfect storm of ideological rigidity, bureaucratic arrogance, and regulatory overreach.
From fueling cars to heating homes to providing raw materials for much of the stuff that makes modern life possible,
the oil and gas industry is indispensable to economic activity and comfortable living. Significant disruptions to the smooth functioning of the industry could have ripple effects throughout the entire economy, impacting businesses and consumers alike. At a time when inflation remains stubbornly high, the industry is a bright spot in the U.S. economy. Spurred on by technological development, abundant natural resources, and a dynamic market built upon the rule of law,
America’s energy industry is undergoing a major renaissance. Despite political assaults grounded in the Biden administration’s hostility to fossil fuels, it remains the world’s largest supplier fuel supplier.
But hasty and politically motivated FTC investigations, cheered on by allies in Congress, could erode progress and prosperity.
The FTC is currently blocking at least four mergers and acquisitions in the industry – between Chesapeake Energy and Southwest Energy, Chevron and Hess, Exxon and Pioneer Natural Resources, and Occidental and Crown Rock. The allegation is that mergers of these American companies would limit competition and hurt consumers. Count me unconvinced. The only unusual aspect of these deals is the lengths the FTC is willing to go to stop them. For an example of the unprecedented nature of this obstruction, Occidental (or “Oxy”) completed an acquisition valued at $57 billion less than four years ago gaining FTC approval about one month after it was announced. The FTC has now delayed Oxy’s deal with Crown Rock, which is less than one-fourth the size of the earlier acquisition, for more than six months. And there appears to be no light at the end of the tunnel.
These deals present the perfect opportunity for opposition based on the convergence of the storms of the Biden administration’s desire to accelerate a transition away from oil and gas, whether consumers want it or not, with the FTC’s efforts to entertain novel theories and to push the bounds of the law in order to amass even more power. As the Wall Street Journal recently revealed, “Some staff think failure in court may even be Ms. Khan’s goal. As one wrote: ‘I’m not sure being successful (or doing things well) is a shared goal, as the Chair wants to show that we can’t meet our mission mandate without legislative change.’” As the Journal’s editorial board opined, “This isn’t the role of the FTC, which is supposed to follow the law that Congress has already written.”
Blocking deals will send shockwaves throughout energy and capital markets and signal once and for all that America’s flirtation with energy independence is coming to an ignominious end.
Most importantly, the decline of the oil and gas industry would be disastrous for the American people. The industry supports more than 10 million jobs in the United States. The product: cheap, reliable, and local energy is critical to American manufacturing and to the high standard of living we all enjoy. Beyond America’s shores, the export of liquified natural gas is decoupling European and Asian countries from the grips of authoritarian Russia and China. A robust oil and gas industry makes America wealthier, safer, and promotes peace abroad.
Rather than fostering competition and protecting consumers, the FTC’s wonton use of authority stifles innovation, threatens American security, and undermines the vitality of a critical sector of our economy. Instead of focusing on unnecessary market interventions, policymakers should prioritize policies that promote innovation, encourage investment, and ensure a level playing field for all participants in the oil and gas industry. My organization, the Financial Fairness Alliance, is dedicated to informing the public on what their government is really doing. Our goal is to uncover attempts from unelected bureaucrats to rig markets in favor of the politically connected. In this vein, the FTC’s intervention in oil and gas mergers should be viewed with great scrutiny by the American public.
FTC Chair Lina Khan promised to Republican senators to be a fair and an independent minded regulator. We will soon find out if this was an empty promise.
Justin Bis is the Director of the Financial Fairness Alliance. He has held senior government roles, including at the White House and the U.S. Department of Energy, where he assisted with recruiting top-level governmental leaders responsible for regulating the U.S. financial and energy markets.
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