LOMAX | Anti-oil & gas Initiative 97 asks us to vote against our own best interests
Investors: Don’t buy what political activists are trying to sell you in Colorado.
I’m surprised this reminder is even necessary, given how anti-oil and gas ballot measures collapsed in 2014 and 2016. But according to the Denver Business Journal, this month’s signature submittal for anti-oil and gas Initiative 97 “rattled some investors,” with a $3 billion drop in the combined market value of some of Colorado’s largest energy companies observed in the days afterward.
To be clear, $3 billion is roughly 5 percent of the combined market capitalization of these firms, so it’s nothing they can’t bounce back from. But the nature of this knee-jerk reaction is surprising nonetheless. It ignores a whole host of fundamentals – specifically, the longstanding hurdles facing any ballot measure targeting the oil and gas industry in Colorado.
History of failure at the ballot box
Assume for a moment that Initiative 97 qualifies for the ballot, which is a very open question at this point. Even in highly favorable political conditions, measures targeting the oil and gas industry in Colorado have been defeated decisively.
For example, a 2008 ballot measure targeting Colorado’s oil and gas sector – Initiative 58 – was beaten by a wide margin of 58-42 percent. It was the same year Barack Obama accepted the Democratic presidential nomination at Mile High Stadium. President Obama, who ran as a critic of the oil and gas industry during the 2008 election, decisively won Colorado. It was a wave election nationally, with the president’s party winning huge majorities in Congress and maintaining its control of the state legislature.
Initiative 58 had the strong support of then-Gov. Bill Ritter (D), and it was much less extreme than this year’s Initiative 97. Instead of an effective statewide drilling ban, Initiative 58 would have hiked taxes on oil and gas development — and still it lost by 16 percentage points.
Comparisons are sometimes drawn between Colorado and California, which leans further to the left politically. But even California provides no comfort to anti-oil and gas groups. In 2006, during another wave election, a ballot measure to raise taxes on oil and gas development was defeated 55-45 percent. And in the years since then, anti-fracking groups have been continually thwarted by Gov. Jerry Brown (D), a staunch environmentalist who refuses to support oil and gas bans.
All of this strongly suggests that Initiative 97, should it qualify for the Colorado ballot this year, will be defeated by a wide margin.
Broad, bipartisan opposition
You can already see a wall of opposition to Initiative 97, in fact. During this year’s primaries, every Democrat and every Republican running for governor shunned the proposed ballot measure, which would ban oil and gas development within 2,500 feet of a long list of areas deemed off-limits by environmental activists.
Not even Congressman Jared Polis (D) – who financially supported anti-oil and gas ballot measures in 2014 until a major political backlash forced their withdrawal – was willing to support Initiative 97. Fellow Democrat Ken Salazar, a former Colorado attorney general and U.S. Senator, has called Initiative 97 “fundamentally unconstitutional” because of the mineral rights that would be effectively seized from private property owners.
Likewise, outgoing governor John Hickenlooper (D) has compared 2,500-foot setbacks and other proposed oil and gas bans to the laws of authoritarian countries like Russia and China. “We can’t just snatch someone’s private property because we don’t approve of that activity,” he told Colorado Public Radio recently.
Colorado’s business community is also ready to defeat Initiative 97, citing the damage it could cause to the Colorado economy as a whole and the flow of tax dollars to state and local governments. “Colorado’s business community will not rest until this economically destructive ballot measure is defeated,” the leaders of the Aurora and South Metro Denver chambers of commerce recently wrote.
In other words, the same bipartisan and pro-business coalition that formed to defeat anti-oil and gas measures in 2014 and again in 2016 is ready to win again this year. For the record, Vital for Colorado, an organization that is financially supported by individuals and organizations from across the state economy including the energy sector – and where I work as a research fellow – is part of the coalition to defeat Initiative 97, assuming it even makes the ballot.
Disorganization, strife and procedural challenges
Inside Colorado, the response to the Initiative 97 petition submittal has been muted so far, despite the activists claiming 171,000 signatures were turned in. That’s because major questions hang over the ability of anti-oil and gas groups to organize a statewide campaign.
In 2016, the same groups behind Initiative 97 falsely claimed to have collected more than 98,492 valid signatures – the minimum number required to make the ballot. It was a debacle that few political observers in Colorado have forgotten. This year, the campaign’s internal strife and financial disputes spilled into public view, leaving unpaid signature gatherers and unanswered questions about the chain of custody for thousands of submitted signatures.
As a result, the committee established to oppose Initiative 97 – Protect Colorado – has vowed to challenge the validity of any suspect signatures submitted by the proponents of the ballot measure.
And the nature of the ballot measure itself cannot be ignored. It is statutory, not constitutional, because two years ago Colorado voters approved tougher standards for gathering signatures and winning voter approval for amendments to the state constitution. These new standards, staunchly opposed by anti-oil and gas groups, ensure greater legislative and legal oversight for ballot measures like Initiative 97 that can no longer pass muster as constitutional amendments.
Same story, different year
Anti-oil and gas groups have a dismal track record in Colorado state politics. Those fundamentals won’t change in their favor over the next few months, assuming the campaign even lasts that long. To be sure, Initiative 97 is an extreme measure with severe economic impacts. But that is why it’s so beatable, like all the others before it.
Simply stated, energy producing states like Colorado — or California for that matter — don’t vote against their own economies. Place your bets accordingly.