California dreamin’

For a few heady days, it looked as if California’s legislature might approve a bill which would have set the stage for the first new oil activity off the Santa Barbara coast in 40 years.

Gov. Arnold Schwarzenegger and the minority and majority leaders in the state’s senate and assembly had made a plan to let Plains Exploration Co. proceed with its proposed Tranquillon Ridge project part of a package of bills to address the state’s budget crisis. The senate accepted the idea on July 24. The assembly rejected it several hours later.

Schwarzenegger started talking about the project as a way to raise money in June, several months after the State Lands Commission refused to approve PXP’s application despite strong support from local environmental groups which saw it as a way to bring all oil production off Santa Barbara to an end several years ahead of schedule.

In the end, it was the governor’s politically ham-handed plan to create a special purpose commission to overrule the lands commission and approve the project that led a majority in the assembly to push for the proposal’s deletion (along with another bill which would have diverted gasoline tax revenues from cities and counties for several years with the idea that the state eventually would pay them back).

Opponents also chided Schwarzenegger for refusing to propose a severance tax on oil and gas production in California. What they failed to mention was that producers in the Golden State already pay a hefty ad valorem tax.

Similar debates could play out in other states as governments weigh whether to cut more services or find other ways to replace lost revenue from businesses which were recession casualties. The basic question remains whether their lawmakers decide to tax existing oil and gas production more heavily, or find ways to encourage new activity which would generate jobs as well as dollars.

When Cronkite covered the oil industry

Walter Cronkite, who died at age 92 on July 17, had a long and varied journalistic career before he became managing editor of the CBS Evening News. One of his least known stints was his brief tenure covering the oil industry.

I first learned of it in the early 1980s, not long after I became part of the oil and gas trade press. I was managing editor of The Oil Daily, which Whitney Communications Corp. owned at the time. One spring, Whitney brought selected editors and publishers from its magazine division (which also included Interior Design, Art in America, Boating Industry, and Hockey News) to the Bahamas for a conference.

Several Whitney board members were there, including Cronkite. My boss, DeVan L. Shumway, introduced me to him at the opening night reception. “Oil Daily?” Cronkite said. “I admire your being able to report on that industry.” When I asked him why, he said he would explain more fully when he addressed us the next morning.

During his remarks, he emphasized how important our work was in keeping the public informed, and expressed concern that so many people got all their news from the nightly television network newscasts. He said that he recognized that trade publications often break important stories because they are better acquainted with the industries they cover, and urged us to write the best stories possible.

Then he admitted that he hadn’t always followed that advice.

It was soon after he joined the Houston bureau of United Press in the late 1930s. The bureau chief called him in to his office one day to say Cronkite was being sent to Tulsa for a month while the reporter there took a month’s vacation.

Cronkite said that he protested he didn’t know anything about the oil industry. “Don’t worry about it. You’re pretty bright. All you have to do is file an oil column each Thursday,” the bureau chief replied, so off Cronkite went.

“Not too surprisingly,” he told us all those years later, “I didn’t start to worry about what I was going to put in the column until Thursday morning. Then I did what any resourceful young reporter who was in well over his head would do: I looked for something to steal.” He finally found what he thought would be perfect: a weekly oil column in the Chicago Journal of Commerce that was incisive and authoritative. Cronkite reworked it slightly, sent it in, and didn’t think about it until the next week “when I opened the Chicago Journal of Commerce and discovered, to my horror, that its weekly oil column was filed each Thursday by the United Press reporter in Tulsa.”

Once he recovered from the shock, he reworked the column again and submitted it. He did the same for the remaining two weeks he was there. “What horrifies me now is the fact that either no one noticed, or nobody cared,” he told the Whitney editors and publishers.

I met him one other time. Another Whitney publication, Waterways Guide, was opening its new office in Annapolis, Md., near Washington, and my wife Robbie and I were invited to a reception there. I thought that Cronkite might be there too since he was an avid sailor and on the Waterways Guide board, but I didn’t tell Robbie, who was a journalist too. I just waited until we were there, worked my way over to Cronkite and, at the right moment, said, “Walter, I’d like you to meet my wife.”

This obviously happened to him a lot. He was charming, asked about both of us, and said “we caught a break there” when I congratulated him on a story the CBS Evening News had aired the night before from inside Iraq during the Iran-Iraq War. He obviously was a journalistic pro who wasn’t afraid to admit that he sometimes made mistakes. That’s the way he was.

Peterson returns to the OCS battle

One year after President George W. Bush lifted the Outer Continental Shelf land withdrawal his father put in place, John E. Peterson was back on Capitol Hill asking why so little has happened on the OCS in the time since.

He was not alone. Former House Speaker Newt Gingrich, now general chairman of the advocacy group American Solutions; Doc Hastings (D-Wash.), the House Natural Resources Committee’s ranking minority member, and Institute for Energy Research President Thomas J. Pyle asked the same question at a July 14 event commemorating Bush’s action.

But Peterson, who did not run for re-election to the House last year after six terms, clearly relished being back. “This nation is broke. There’s nothing better Congress and the Obama administration could do economically than to start producing more domestic energy resources, onshore as well as offshore,” he told me after the rally.

I first wrote about Peterson in OGJ in 2006 when he was a lone voice in Congress calling for an end to OCS leasing moratoriums and withdrawals. He’d been at it for five years. This flew in the face of conventional wisdom, which stated that it just wasn’t going to happen.

But the Republican from Oil City, Pa., soon found an ally in Rep. Neil Abercrombie (D-Ha.), and the two of them began cosponsoring bills and amendments. They also formed a bipartisan coalition of House members that quietly developed legislation late last summer which, among other things, would have used future federal OCS revenues to help address coastal impacts and fund alternative energy research and development. The bill attracted more than 170 co-sponsors by mid-September.

Voter outcry in response to record high crude oil and gasoline prices forced the House’s Democratic leadership to let remaining OCS moratoriums expire on Sept. 30. When I saw Peterson again on July 14, he obviously was disappointed that more has not been done.

“The first thing the Obama administration did was put a five-year OCS leasing plan it inherited from the Bush administration on hold, along with other programs,” he said. “We’re fearful that they’re not going to move. The potential is tremendous, and offshore energy resources are close to population centers, particularly on the East Coast.”

Now that he’s out of Congress, Peterson could be candid about Republicans’ mistakes too. He suggested that there might have been too much deference to the Bushes, including Jeb Bush, who was Florida’s governor. He also thinks that more Republicans should have tried to reach a bipartisan OCS solution.

And he was glad to see Rep. Tim Murphy, another Pennsylvania Republican, step up and start cosponsoring OCS legislation with Abercrombie in 2009. “He’s not new to the game. He’s good. He was helpful when I was working on this issue. He believes in this,” Peterson said.

He conceded that he might not have as big an impact now that he’s a former House member. But he said he feels compelled to speak out because producing more domestic oil and gas, onshore as well as offshore, still matters, and he’d like to see more people paying closer attention to the issue. It was good to see him back in the fight.

Do not underestimate this woman

Soon after John McCain chose Sarah H. Palin as his vice presidential running mate late last summer, my wife and I went to dinner at a long-time friend’s house in Washington. Our host, as he met us at the door, said that he understood I might have a different opinion of Palin than others who were there, which I agreed might be possible. After dinner, he asked for my assessment with obvious anticipation.

Here’s what I remember saying: “Sarah Palin is in charge of a state with several large agencies and departments. She served on one of the most important, the oil and gas commission. She also defeated a much more experienced politician in the Republican gubernatorial primary and got the state legislature to rewrite his agreement backing a huge natural gas pipeline with much more favorable terms. I saw her last winter when she chaired the Natural Resources Committee meeting at the National Governors Association’s winter meeting here. She seemed smart, with a no-nonsense attitude. Do not underestimate this woman.”

It would be an understatement to say that a lively discussion followed. Some of these folks were the very “inside the beltway” types who Palin may have suspected were out to get her. They certainly sounded that way that summer evening last year. A few might be saying now that Palin’s July 3 speech announcing her resignation as governor confirms that she’s not only an intellectual and political lightweight but also a quitter.

I’m not so sure. Her speech, which is posted online at www.gov.state.ak.us/exec-column.php, was not thought out. She obviously did not confer with her staff or others in the state government before delivering it. They expected her to say she would not stand for re-election. They did not anticipate that she would resign by the end of the month.

“Political operatives descended on Alaska last August, digging for dirt. The ethics law I championed became their weapon of choice. Over the past nine months I've been accused of all sorts of frivolous ethics violations, such as holding a fish in a photograph, wearing a jacket with a logo on it, and answering reporters’ questions,” she said. “Every one, all 15 of the ethics complaints have been dismissed. We’ve won! But it hasn't been cheap: The state has wasted thousands of hours of your time and shelled out some two million of your dollars to respond to “opposition research.” That’s money not going to fund teachers or troopers, or safer roads . . . Todd and I are looking at more than half a million dollars in legal bills in order to set the record straight. And what about the people who offer up these silly accusations? It doesn’t cost them a dime so they’re not going to stop draining public resources, spending other peoples’ money in their game.

“It’s pretty insane: My staff and I spend most of our day dealing with this instead of progressing our state now. I know I promised no more ‘politics as usual,’ but this isn’t what anyone had in mind for Alaska,” Palin declared.

So she has decided to walk away now and regroup. “My choice is to take a stand and effect change, not hit our heads against the wall and watch valuable state time and money, millions of your dollars, go down the drain in this new environment. Rather, we know we can effect positive change outside government at this moment in time, on another scale, and actually make a difference for our priorities; and so we will, for Alaskans and for Americans,” she said.

It reminded me of Richard M. Nixon, two years after he lost the presidential election to John F. Kennedy when he ran for California governor in 1962 and lost to Edmund G. “Pat” Brown. Nixon even lashed out at the press in an often quoted statement which was supposed to be his political obituary. But he also started campaigning for other Republican candidates and rebuilt enough political capital that he won the GOP presidential nomination in 1968 and the election itself a few months later.

Palin may be thinking of doing something similar. She will need to develop much more political discipline and learn to stay “on point” when she responds to questions. She also will have to expand her expertise beyond energy and national security. But she already has a loyal group of followers which could grow if she successfully reinvents herself. It’s far from certain that this would be enough to secure her the 2012 Republican presidential nomination. But it could be big enough for her to be a major force in the next Republican administration. I wouldn’t be surprised if she became its Interior secretary.

She may be retreating and regrouping, but she doesn’t plan to go away. Do not underestimate this woman.