For most of its existence as a state, Oklahoma has been dependent on the fossil fuel industry as the driving force of its economy. There have been ups and downs, booms and busts, but Oklahoma’s history is a history that was fueled by oil and then by both oil and natural gas. It is not surprising that in a state so dependent on oil and gas for its economic fortunes that the fossil fuel industry in Oklahoma has possessed and continues to possess tremendous political clout.
Speaking critically of the oil and gas industry or resisting its will is the closest thing to the kiss of death in Oklahoma politics. The fossil fuel industry knows this and so do the politicians. Oil and gas executives don’t try to hide this fact. They don’t have to. Historically what is good for oil and gas has been seen as what is good for Oklahoma. A politician following the will of the oil and gas industry was viewed simply as being a good Oklahoman.
Until very recently this political and economic hegemony of oil and gas went unquestioned and was both respected and feared by Republicans and Democrats alike. It is extremely difficult to succeed in Oklahoma, politically or economically, without good relations with and support from the industry that fuels the economic engines of our state. And this goes for persons in and out of political office. Speaking ill of oil and gas has been the third rail of Oklahoma politics and social survival – you just don’t go there.
Virtually no sector of Oklahoma society is untouched by the power of the fossil fuel industry, and all sectors are in some way dependent on it. Higher education, the arts, non-profit social service agencies, college and professional sports, entertainment venues, and even churches all find fiscal support from oil and gas companies, either directly or indirectly. They fund our plays, concerts, and musicals. They own and sponsor our beloved Oklahoma City Thunder basketball team. They are leading givers to charity (albeit their tax-deductible gifts are far less than the tax breaks they are given). The fossil fuel industry has established itself as the indispensable Oklahoma industry.
Oklahoma has come a long way with oil and gas, but there are significant signs that the relationship has evolved in ways that are no longer contributing to the overall flourishing of our state. The natural cycles of boom and bust are to be expected. That cannot be laid at the feet of the oil and gas companies, nor is it the underlying systemic problem of the relationship. Yet for systemic reasons, what was once an Oklahoma given, that the oil and gas industry is good for the state, has now become an extremely debatable assertion.
Perhaps the most significant problem with the industry that has made our state what it is today is that the production and use of its primary product pollutes our air and water and is quickly creating an unlivable climate. These are all assertions that the most prominent Oklahoma politicians refute because if they didn’t, they would no longer be among the most prominent Oklahoma politicians; but science is, well, science, and the evidence points strongly in the opposite direction of their denials. The recent experience of thousands of oil and gas wastewater injection induced earthquakes has made it more difficult to deny the negative environmental impacts of the industry as the Oklahoma earth literally shakes our consciousness and in some cases our conscience into new awareness.
Even if you take away most or all of the worst and very real environmental problems of oil and gas, there remain systemic factors in the state’s relationship to fossil fuel that are contributing to a less healthy relationship than what was experienced in the past. One of these factors is the importance of economic diversification. We have become so dependent on oil and gas that we fail time and time again to adequately diversify our economy to weather the times of bust in the boom/bust cycle. During every bust we promise ourselves that we will diversity, but when boom times come, we seem to contract a statewide collective amnesia.
Other forms of energy are becoming highly competitive with fossil fuel, and instead of embracing a multi-faceted energy economy with a broad mix of renewable energy sources, the fossil fuel industry uses its political clout to protect its interests over its competitors. This has played out in this year’s Oklahoma legislative session as incentives for renewable energy have been cut and electric cars taxed while Oklahoma Legislature Republicans seem resolute to keep hundreds of millions of dollars of annual tax breaks in place for oil and gas.
Fossil fuel executives lament that the industry is providing approximately 25% of the state government’s revenue, but what can we expect when we continue to fail to diversify? It should also be noted that we have made significant cuts to the budget over the past few years, so 25% today is less actual money than it was before the latest bust, and the state was already making budget cuts even during the boom cycle owing to a series of tax cuts, especially for the most wealthy and the fossil fuel industry. Compared to our peer oil and gas states, the fossil fuel industry in Oklahoma enjoys the lowest tax burden, with an effective gross production tax (GPT) rate of 3.2%. Our neighbor Texas, by contrast, has an effective rate of 8.3%
Faced with public pressure to restore the gross production tax rate to 7%, oil and gas executives and lobbyists argue that this will have a significant negative effect on oil and gas production in Oklahoma even though the rate will still be lower than most other states. However, a small number of vocal leaders in the industry, like George Kaiser and Dewey Bartlett Jr., are in favor of an increase in the rate and argue that a return to a 7% GPT will have a negligible impact on production, but it will have a significant positive impact on the state’s budget.
But most fossil fuel industry leaders want even more profit, and they are using their considerable political clout to pressure the politicians they have supported financially through the years for such a time as this. Schools are closing and moving more and more to 4-day school weeks across the state, teachers are paid abysmally and are leaving to other states where they can get paid $20,000 or more per year than in Oklahoma, hospitals are closing, mental health care is grossly underfunded, persons with special needs go underserved, and our incarceration rates are at record highs. Our state is failing, and as a third generation Oklahoman, I can already see my teenage daughters eying more flourishing communities beyond our state lines. Many people, especially young people, want out, and who can blame them? In the mean time, Oklahoma oil man Harold Hamm, the 32nd richest person in the United States and 87th richest person in the world, with a wealth estimated at $12.3 billion, is arguing that it would be “unconscionable” to raise GPT rates. The evidence of revenue failure in our state, I think, shows that it would be unconscionable not to raise them.
Oklahoma is experiencing a life threatening level of codependency on the oil and gas industry as the industry acts out its addiction to political and economic power at the expense of the overall health of the Oklahoma family and the well-being of our human and ecological communities. We have become a state of codependency, and any time we strive for more autonomy and independence from the fossil fuel industry or just simply ask oil and gas to pay its fair share, we are warned that disaster awaits us if we don’t stay the course, if we don’t stay in line.
What would we do without oil and gas, without the charitable giving, without the plays, without the concerts, without our beloved OKC Thunder? Just look at the majestic Devon Tower! See how far we have come! We are warned that we have to keep things just as they are, or we just won’t be able to make it. Yet behind the shiny tower, the professional sports, and the arts and entertainment (all of which are good within a flourishing community), we see a state that is languishing, a state that is failing, and a state that is codependent on the industry that may have made the state what it is, but is now keeping the state from becoming what it can be, both now and in the future.
The first step to recovery is to admit to one another that we have a problem. Without this first step, be prepared to remain high on the lists we don’t want to be high on and low on the lists we don’t want to be low on. Those lists are abstractions, but they represent real suffering of our neighbors and friends, suffering that will continue unless we break our current state of codependency.
Let’s come together as Oklahomans and take this step of recovery towards a more flourishing state, and our first step includes demanding that members of the Oklahoma Legislature restore the 7% gross production tax on oil and gas to save our state. Oil and gas companies won’t like that, but they do not own us. Healthy states and healthy people are not owned by anyone.
Excellent article, Mark. I’m glad to be following your blog.