Analysis by Energy Workforce President Tim Tarpley
Since October 1st, the Government has technically been shut down. This “shutdown” occurred because the Senate was unable to pass a straight CR funding package that was sent over by the House. The “CR” was essentially a straight continuation of current funding levels that the majority of both parties in Congress agreed upon months ago. The difference this time around is that the Democrats in the Senate choose to vote no (and at least seven are necessary to go beyond the 60-vote threshold). The purported reason for the about-face was a desire to address the expiration of several Obamacare subsidies that are set to expire at the end of November; however, politics likely also played a role, as many Senate Democrats have been facing pressure on their left flank to push back harder against the Trump administration. So, without a deal between the two sides, the government will likely remain shut for the near term. I use the term “likely” because it is always possible that Senate Republicans choose to use the “nuclear” option and change the Senate rules to allow a simple majority to pass the budget. While this option was recently used to expedite the passage of some long-delayed nominees through the Senate, it seems like a long shot, at least for now.
So… what does this all mean for oil and gas? Well, from a practical standpoint, on the day-to-day, not much, at least not yet. Over the past decade or two, federal government “shutdowns” have been made less impactful due to a variety of policy changes that allow most agencies to continue to operate and designate many of their employees “essential”. These employees work throughout the shutdown and are then reimbursed after it ends. We should expect this to occur again, unless there is a significant change in policy from the White House. So, the agencies our companies and customers deal with, such as BSEE, DOI, DOE, OSHA, PHMSA, etc., will continue to operate during the shutdown. Permits should continue to be granted within relatively normal timelines. OSHA should be expected to operate essentially the same as usual. This could begin to change if the shutdown lasts beyond 30 days or so, as some workers may start calling in sick as their funds run short and they face issues with childcare and other concerns.
Additionally, as the shutdown continues to drag on, perhaps the most significant impact on us is what is not getting done on the policy side in Congress. There is a short window to get a bipartisan permitting package passed before the end of the year. As long as Congress is dug in and fighting it out on the shutdown, they are not working on other things. Given the short timeline we have to get permitting reform done, if this continues on for weeks and weeks, permitting reform could become a casualty. To highlight this point, the House of Representatives is not even in session this week. That means no hearings, markups and likely no discussions on permitting reform. Ideally, a deal is struck sooner rather than later and normal operations can resume.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
