Tex Wagner Ready to "Rig" Virginia's Economy

Earlier this month, the City of Virginia Beach hosted a community open house and forum on a strategy for future energy alternatives. Delegate Bouchard, D-Virginia Beach, and Senator Wagner provided remarks. Bouchard discussed the outcome of the Governor's Commission on Climate Change, greenhouse gas emission goals, the anticipated effects of climate change on the Virginia Beach topography, and efforts at adaptation to the change. He advocated the search for alternatives to energy dependence on foreign nations. While Delegate Bouchard discussed practical proposals to adapt to climate change to preserve the future of Virginia Beach, Senator Wagner came in loaded for bear, advocating doing everything and anything, including drilling here and now. The fast talking advocate of continued fossil fuel reliance delivered an animated message without any unifying theme that pointed toward a favored solution: drill. Oddly, this was justified in part by arguing there is "no one single bullet that is going to resolve the issues."  
One of the biggest problems with drilling off Virginia, Bouchard pointed out is interference with the naval training range. 100% of the potential sources of gas are within that range. The Navy has steadfastly demanded that no drilling occur within that area. NASA is also on record as being opposed to drilling since the Virginia Capes operating area is the closure area for rocket launches. Florida is campaigning for naval resources and the more we advocate for offshore drilling, the easier it is for Florida to win the case. Florida, he told the audience, actually spends money to advocate against encroachment in its waters. Every time a Virginia politician makes a statement in favor of offshore drilling, it is added to Florida's argument. Another problem is that in reality, the area under Virginia jurisdiction is postage stamp sized compared to adjacent states' areas.

"What the energy plan did was to take a comprehensive approach to look at all areas. Offshore was included in there, as was renewables, as was nuclear, as was funding research and development centers, as was conservation, as was moving forward and trying to incentivize people to conserve energy and move forward with it."
- Senator Frank Wagner

The government's own data fails to support the arguments for offshore drilling. In the last decade, offshore drilling almost doubled, but total US petroleum production declined. Virginia drilling potential is so insignificant that it will have little or no impact on America's energy independence. What Bouchard did not explain is that even if US production were to dramatically increase, it is possible it would not change the supply curve in a way that it will make a difference in price. There is no appreciable world-wide competition. OPEC sees to that. It can easily draw down output to match any increase in US production. So the consumer is not going to directly benefit from drilling anyhow; only those who drill will benefit. Bouchard's bottom line was that renewable energy is the path toward helping the consumer.  

Shifting gears, Wagner's smorgasbord of drilling justifications also included job creation. "We've lost over 65,000 manufacturing jobs in Virginia," he told the audience. He said he went through the balance sheet of "the company" (sic) and looked at areas where business could be incentivized around Virginia. Turns out, he is volunteering the efforts of one of his committees for credit for the Forbes ranking of Virginia as the number one state in which to do business.

Wagner brought into question his own understanding of simple economics when he brushed off Delegate Bouchard's discussion of the marginal incremental increase in supply available as a result of drilling. Like most who have bought into the supply-side explanation of economic outcomes, Wagner does not seem to appreciate that the demand side of the formula plays any role at all. This demonstrated lack of fundamental economics theory was only extended by his assertion that drilling off Virginia would create some 6000 jobs in the Hampton Roads area. This was not his own math, he told the gathered crowd, but the math of an Old Dominion University professor. As Wagner said, "I will tell you what we've had in the studies we've funded..." Maybe he's never heard, "You get what you pay for."

Growing up in a county with three oil refineries, countless oil and gas wells, the home of one fortune 500 company and headquarters of another even larger fortune 500 company's wholly owned oil subsidiary, the exaggeration is evident to me. Virginia's oil and gas reserves will never generate that kind of economic activity and there were nowhere near 6000 sustainable jobs in the oil industry even with all that infrastructure. The only way to count 6000 jobs related to the petroleum industry in Virginia would be to include every clerk at every gas station and convenience store that sells fuel in the state; and those are already in place. In fact, Wagner seemed to argue against his own assertion of massive job growth by describing the technological advances that allow a single drilling platform to service 25 or more offshore wellheads. Then in an odd aside, he commented that there have never been any real proven reserves identified off the east coast from New Jersey to North Carolina.

Exploration so far has not demonstrated any important oil reserves. Test wells have been unimpressive. Further, Florida doesn't want one aircraft carrier, it wants two. They are very close to winning one. And offshore drilling provides a better argument for a second. That would total a direct loss of 10,000 jobs and indirectly many thousands more. Bouchard is familiar with the facilities at Mayport, Florida and knows they have the potential to support two carriers. We could also lose NASA Wallops. So, net, net, there is no expectation of anything but lose, lose, even when the best oil and gas expectations are realized. Instant wealth from offshore drilling is a pipe dream and Senator Wagner's enthusiasm for drilling cannot be explained based upon the available facts; though the trips to Norway are a wonderful benefit of his interest, it could be he is suffering the Oslo version of the Stockholm syndrome. Maybe he should focus more clearly on the immediate and real threats to existing jobs in Hampton Roads.

Senator Wagner admitted that the Navy had made the decision to move one carrier without the issues of training in play. He did argue that when the decisions for leasing will be made, the Navy's concerns will be considered.

"I have some actual offshore footage of an oil platform that I think you'll find interesting. You can see the website there.... This isn't an oil company; this isn't a gas company; this is an environmental group that has studied these offshore platforms for 20 years."
- Senator Frank Wagner

Wagner brought along a video about the positive environmental impact of drilling platforms on indigenous sea life through a rigs to reef program. But he did not stop the video before it went to the introduction of the president of Virginia Natural Gas. "If you want to know why Jodi Gidley was on there," he seemed compelled to quickly explain to the laughing audience as the video halted, "She was a member of the climate control commission; she explains why natural gas would be good for Virginia's economy..."

The reasoned approach by Delegate Bouchard was in contrast to the almost manic sales approach Senator Wagner presented. While Bouchard discussed the future and how to progress toward and profit from its realities, Wagner reflected a reactive posture and emphasized a solution he admitted was only short-term. Clearly, Bouchard is an advocate for change. It seems also clear that Wagner is an advocate, but not for energy alternatives nor adaptation to a changing economic reality.

Cross posted at Blue Commonwealth

Cross posted at VBDems.org - Blogging our way to Democratic wins in Virginia Beach!

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