Harold Hamm is parochial, self-interested, and too focused on one sector of American energy industry
The rancorous campaign rhetoric is behind us and President-elect Donald Trump is already moderating some of his election promises – but, unfortunately, not the prospect of appointing Bakken billionaire Harold Hamm as energy secretary.
Representative Kevin Cramer of North Dakota, a Trump energy advisor, says the Continental Resources CEO heads up the transition team’s short list.
“In my view, Harold Hamm has the right of first refusal,” Cramer told Reuters. “In my view, he’s likely to be asked. And, because he’s a patriot and an American, he’s likely to say yes.”
Let’s hope Hamm responds with “no,” says energy economist Ed Hirs, who notes that while independent oil producers like Hamm favorably, other American oil patch players – e.g. majors, pipeline companies, and refiners – aren’t as enthusiastic.
Hamm is a basically a one-trick pony: shale oil and gas production.
“Mr. Hamm is not experienced in pipelines, nuclear proliferation, nuclear and renewables research, economic regulation of energy markets, clean coal technology research, or power grid stability – which are sure to be on the front burners for the Trump Administration,” said Hirs in an emailed comment.
President-elect Trump isn’t knowledgeable about those subject areas, either.
An energy veteran with a well-rounded resume advising the neophyte decision-maker might be ok, but does America really want two inexperienced men making national energy decisions?
Hirs also points to several examples of Hamm perhaps betraying his free market principles.
“Hamm’s company Continental Resources lined up with [emphasis added] the Obama Administration in opposing market-based rates for the remaining 10 per cent of capacity available on the Seaway pipeline,” said Hirs.
“They defeated Enbridge and Enterprise Products [Ed. an earlier version stated “in court.” The decision was actually made by the Federal Energy Regulatory Commission], but the net impact for producers did not change because 2,500 entities submitted their names for the opportunity to market the 10% of capacity – at market prices (which were no more than the cost of shipping crude by rail from Cushing to the Gulf Coast).”
Hamm was a vocal proponent of removing the ban on exporting crude oil last year, the only impact of which was to lower refiners’ margins even while the US increased dependence on foreign crude, says Hirs.
“Mr. Hamm’s statements during the campaign that the US oil industry can dominate the world market is contradicted by the fact that the US oil industry is the high cost producer and cannot compete on price as we have experienced the past two years,” said Hirs.
Global oil markets appear to have bottomed and have begun the laborious journey back to a point where many American producers can make a profit. The Permian Basin, in particular, is in the midst of a major land rush and could see its production soar to four or five million b/d within 10 years, according to industry players like Pioneer Natural Resources.
Trump’s energy secretary will need the experience and/or aptitude to manage the American policy framework to optimize that expansion.
But it’s also true that the global economy is at the very beginning of a transition to new energy technologies, as I’ve argued in many of my columns.
Check out Hamm’s speech at the Republican National Convention. The entire six minutes is spent railing against regulations and policies that affect the shale oil and gas sector, his industry.
The new energy czar must not be parochial, self-interested, and too focused on one sector of the American energy industry. There are bigger forces at play than just shale oil and gas, as important as those may be.
Harold Hamm is not the man for the job. Choose wisely, President-elect Trump.