American consumers don’t just have OPEC to blame for rising fuel prices.
As it turns out, our own government is working overtime to implement new rules that result in greater barriers to energy development and reduced competitiveness for domestic energy firms.
And that’s exactly what’s under consideration right now at the U.S. Securities and Exchange Commission (SEC) through a new rule within an almost hidden provision of the Dodd-Frank financial reform law.
When Dodd-Frank was enacted in July 2010, it directed the SEC to implement so-called specialized disclosure rules. In effect, these rules require companies listed with the SEC and engaged in the development of fossil fuels overseas to disclose each and every payment to a foreign government.
The unintended consequence, however, is that, if these rules are codified as written, they could do much more harm than good.
By imposing these disclosure mandates, the competitiveness of U.S energy firms in the global energy marketplace would be drastically undercut, putting future energy supplies in the hands of the most unscrupulous foreign players.
Energy firms not listed with the SEC, namely the state-run energy behemoths in the Middle East and Asia, would be exempt from such disclosure.
The further result would mean that the National Iranian Oil Company, Venezuela’s PDVSA, and China’s Sinopec would have access to the sensitive and proprietary financial data about their U.S. competitors, allowing them to outbid, outsmart, or simply muscle out Anadarko, Chevron, and ExxonMobil. Our competitors must laugh at the U.S. sometimes.
These rules are another layer of hostility from the Obama administration and some in Congress toward American energy developers.
We have already witnessed the rejection of the Keystone XL pipeline, a severe reduction in access to offshore and onshore federal lands and the reintroduction of billions of dollars in new punitive tax increases.
Unfortunately, this anti-energy agenda most hurts those who can afford it least: motorists on a fixed budget, small manufacturers with inflexible balance sheets, and retirees rationing their savings, among others.
With energy demand forecast to rise considerably in emerging markets and competition for the world’s key exploration projects intensifying, these disclosure rules would also threaten the ability of the U.S. to maintain a secure and affordable energy supply.
Given our economy’s tepid recovery, the last thing our securities regulators should be doing is making our energy companies less competitive in the global marketplace.
For our economy to fully bounce back we need competitive oil and natural gas firms; after all, they alone contribute 7.5 percent of our gross domestic product. The SEC’s misguided efforts will only have the entirely opposite effect.
It’s hardly surprising that these rules are buried in the second-to-last title of Dodd-Frank, listed as “Miscellaneous Provisions”, or that the SEC is now more than 11 months late in finalizing them.
But there is nothing miscellaneous about, or timelier for, America’s need of strong oil and natural gas firms. Simply, these SEC rules would go a long way in ensuring that energy companies are ill-equipped to pursue, produce, and deliver the energy that we will need in the future.
What’s more, these rules are actually unnecessary. The Congress deliberated this very issue back in the 1970s when the Foreign Corrupt Practices Act came to fruition.
And the American energy companies that would be dealt a significant blow if these SEC rules are finalized already have in place extensive compliance policies dealing with transparency and the legality of payments.
As anti-corruption expert Professor Mike Koehler said, “bribery and corruption are bad, but that does not mean that every attempt to curtail bribery and corruption is good.”
There are no two ways around it: We need strong American energy developers to sustain our way of life, and these companies are at the forefront of our economic recovery.
The SEC, therefore, must reconsider the implementation of Dodd-Frank’s “disclosure of payments by resource extraction issuers” section, namely implementing an aggregate country disclosure, rather than a well-by-well or mine-by-mine mandate.
The Congress can also reexamine this regulation and realize that further disclosure is not necessary, less it further impair the oil and natural gas companies essential to protecting America’s future economic and energy security.
Thomas J. Pyle is president of the American Energy Alliance.
