Is industry pulling the strings on US offshore policy?

18 September 2016 (Last Updated September 18th, 2016 18:30)

A new report by the Public Accountability Initiative has found that most of the studies used to justify the US Government’s proposals for new drilling in the Gulf of Mexico and offshore Alaska have been funded either by the oil and gas industry itself or by groups with links to the industry. Chris Lo asks, are the government’s energy regulators and policymakers truly under the thumb of industry and its network of front groups?

Is industry pulling the strings on US offshore policy?

The debate has been as fierce as expected, as the US considers how best to develop its offshore hydrocarbon resources over the next five years. Important decisions on which regions of the US Outer Continental Shelf (OCS) to open up to exploration and which to leave undisturbed are set to be made before the end of the year, and as always, the gulf of opinion between the fossil fuel industry and its advocates and environmental campaigners is a wide one.

In March, the Bureau of Ocean Energy Management (BOEM) released its draft proposal for America’s offshore leasing plan from 2017 to 2022, which recommended ten new lease sales in the mature Gulf of Mexico, and one sale each in the higher-risk, less well-developed waters of the Chukchi Sea, Beaufort Sea and Cook Inlet offshore Alaska.

Public input or industry influence?

The immediate story coming out of BOEM’s plan was the exclusion of the proposed mid- and south Atlantic leased areas, essentially ruling out the development of the US’s south-eastern coast by the oil and gas industry until 2023 at the earliest, mostly due to heavy opposition from coastal communities in the region. The decision was celebrated by local campaigners and incensed the industry, while US Secretary of the Interior Sally Jewell painted the decision as a victory for the democratic decision-making process.

“Public input is an important part of the planning process,” Jewell said in March. “This is not a big reversal. Basically, this is exactly how the process is intended to work.”

But while BOEM’s decision to put Atlantic drilling on the back burner could be seen as a grassroots campaign winning out over corporate interests, two separate investigations by the International Business Times (IBT) and the Public Accountability Initiative (PAI) have raised concerns about the extent to which the economic analyses used to justify BOEM’s draft proposal have been paid for or are linked to the oil and gas industry. Is the entire offshore leasing process far less impartial than might naturally be assumed by the American public?

Offshore economic impact studies: in the pocket of industry?

A major component of the consultation and analysis that informed BOEM’s draft proposal was an array of economic impact studies measuring the potential economic gain from new offshore development against the potential costs of environmental and social disruption. This bank of data led BOEM to conclude that the leasing programme “would sustain and add high-paying jobs for the more populated areas of Alaska and possibly protect vital oil and gas tax revenues for the state”, as well as supporting “existing patterns of employment and government revenue collections” in the lucrative Gulf of Mexico.

"Of the nine economic analyses cited by BOEM in its proposal, eight came from sources with ties to the oil and gas industry."

A study undertaken by the non-profit PAI found that, of the nine economic analyses cited by BOEM in its proposal, eight came from sources with ties to the oil and gas industry. Of those eight, four studies were directly funded by the industry or lobbying groups.

“For some of these studies there’s just no way that BOEM wouldn’t have known that they’re industry-sponsored,” says PAI research analyst Robert Galbraith, one of the authors of the report. “One of the studies was published by the American Petroleum Institute [API], and BOEM’s own site points to API as the source for that study. For the other ones, even the most cursory look into the organisation and people behind the study would have revealed to them that it came from an incredibly biased source.”

Galbraith singles out a study commissioned by the Interstate Policy Alliance (IPA) as a good example of the shadowy front groups that make it possible for the industry to influence academic studies without any official links.

“[The IPA study] was sponsored by one of the most notorious ‘dirty-tricks’ campaigners in America, Richard Berman,” says Galbraith. “The IPA is one of a network of dozens of front groups he’s created to oppose all sorts of things from drunk-driving laws to trans-fat bans. You can Google the name of this organisation that they cited and you’ll find out all sorts of derogatory information about it. It would be very hard to believe that BOEM could have been totally clueless about the industry ties of the reports that they relied on.”

In comments to the IBT, representatives of industry-linked studies responded by arguing that their research was objective and unaffected by any funding arrangements or industry ties. BOEM, meanwhile, claims that the industry-backed studies were just a part of the bank of research that the bureau consulted alongside its own analysis.

“There was never any real explanation for why, then, these specific studies were pointed to in their report,” says Galbraith. “They just said these weren’t the only ones, they were just an example of the studies they used. That’s the only response that we’ve gotten.”  

The problem with ‘frackademia’

This practice of directly or indirectly sponsoring academic research is a strategy commonly employed by many industries looking to influence public opinion and government policy, and the oil and gas sector is so well-known for it that research sponsored by the industry has been given its own nickname – ‘frackademia’. Even current US Energy Secretary Ernest Moniz, during his time at the Massachusetts Institute of Technology, was criticised for allegedly accepting money from industry sources and publishing a study encouraging fossil fuel development.

“There’s a grass-roots advocacy angle to it where they create organisations and front groups that attempt to limit the discourse around issues to a set of industry talking points, and then there’s the sponsoring of science that supports industry positions and creates doubt about positions or assertions that the industries does not support,” says Galbraith.

"Economic modelling tools can easily be tweaked or manipulated to paint a sunnier picture."

Those who criticise the cosy relationship between fossil fuel companies and certain academic institutions argue that work produced in this way is far from unbiased. Investigations by university and conservation group researchers claim that industry-funded studies often exaggerate the economic benefits of drilling activity while downplaying the risks. Economic modelling tools can easily be tweaked or manipulated to paint a sunnier picture.  

“The Interstate Policy Alliance study was conducted by an author named Timothy Considine [of the University of Wyoming], who has a long history of writing extremely rosy reports for fossil fuel industry sources, both the oil and the coal industry,” Galbraith says. “I know in the past he has used a widely-criticised model called IMPLAN. The way this model works is you take spending, you plug it into the model and it spits back out economic impacts. He’s been criticised personally for his methods in the past, for increasing the multiplier numbers for the impacts he’s predicted. That happened with a series of studies he did in Pennsylvania.”

Given BOEM’s seemingly uncritical acceptance of offshore drilling research supported by companies with a clear vested interest in the outcome, not to mention the obvious potential to mislead the public and policymakers, it’s surprising that there hasn’t been a more insistent and sustained outcry over such practices. Galbraith argues that there is a culture of complacency in government about industry influence, while organisations such as the API have become adept at deflecting criticism when it comes their way.

“Anytime they’re caught engaging in this kind of strategy the oil industry likes to paint itself as a victim, where it’s being witch hunted by radicals and this is very standard, and that there’s nothing wrong,” he says. “On the other hand they like to create an equivalency anytime they see a study that has any links to any environmental organisation. I would say it’s a false equivalency because of the difference in financial incentives. That’s their main justification. A lot of times they don’t need to justify themselves and it rolls off their back.”

Calling for transparency

Of course, given the industry’s technical expertise and decades-long experience working offshore, there is the potential for oil and gas companies to have meaningful and appropriate input on issues like the country’s offshore leasing programme. After all, as the industry’s defenders noted to the IBT: “Businesses affected by proposals have an obligation to tell regulators about their views on proposed policies”.

It’s not necessarily the industry’s involvement in itself that is the problem for its critics – even Galbraith agrees that offshore companies “can contribute to this conversation” – so much as the opaque, seemingly deceptive nature of its communications. Transparency is the key, and given the industry’s interest in promoting one side of the argument, surely it should shoulder the burden of making its links to academic studies clear and argue the merits of its research, rather than pulling strings behind front groups and think tanks.

Peer review – a common method of academic self-regulation in which studies are presented for scrutiny by other academics – is a proven and valuable method of assessing the credibility of research as well as funding links.

“[Peer review] at least allows their findings to be interrogated by, presumably, objective third-parties,” says Galbraith. “Another key component of submitting studies for peer review is that publications require funding sources to be disclosed and I think transparency is paramount. So, I do think it’s possible for industry linked studies to be valuable but I think transparency about these links is incredibly important and I think any time that those links are obscured is cause for alarm.”

None of the studies cited by BOEM have been made available for peer review.

Of course, there are other ways of improving transparency and empowering the public to question the sources of important information. Public comment periods are in place and BOEM’s Atlantic drilling decision makes clear the efficacy of strong public campaigns as a countermeasure to excessive corporate influence. Another suggestion made by Markkula Center for Applied Ethics executive director Kirk Hanson to IBT is to increase state funding for policy-relevant academic studies, which would have the twin benefit of increasing the bank of impartial studies and reducing the reliance of academics on industry sponsors to make up funding shortfalls.

Whatever the solution, the industry has likely had too much success with its labyrinthine system of veiled communications to change it without being prompted.

“I don’t think the industry is in any way inclined to open up about this,” Galbraith concludes. “I think it’s found an extremely effective way to influence policy that worked for the tobacco industry for decades and decades and has worked for the oil industry for even longer. It doesn’t seem the industry has any incentive to open up about its influence strategies.”