NOTE: This article was originally published by the Houston Chronicle on March 7, 2024.
Many Texans feel a certain pride in claiming that we’re the energy capital of the world, and they’re right to think and feel that way. Texas leads the country in oil and gas production with nearly 290,000 wells active today. What many don’t know, however, is that according to the U.S. Energy Information Administration, in 2022 over 75% of the Texas wells were what are known as “stripper wells” and only produced less than 15 barrels of oil per day.
Responsible for about 6% of all oil and gas output as of 2019, they dribble a little product while gushing out a lot of pollution. According to a 2022 study published in Nature Communications, stripper wells are responsible for roughly half of the leaked methane pollution by the industry. Methane, a powerful greenhouse gas over 80 times as powerful as carbon dioxide in the short term, is responsible for at least a quarter of today’s global warming.
These industry players are a powerful force in Texas politics. Under the pretense of saving the oil industry, some Texas lawmakers have zeroed in on financial firms that they don’t consider friendly enough to the industry. These firms are charged with taking into account environmental, social and governance (ESG) considerations in their investment decisions, which might mean they don’t prioritize certain poorer performing wells.
If a firm seems too friendly to the environment, the Texas comptroller can put them on a blacklist, banning them from doing any business with state and local governments. If they acknowledge the potential financial impact of climate change, state pension funds and even county governments issuing bonds can be barred from working with them.
For a state that touts being good for business, Texas is sacrificing its reputation by using the heavy hand of government to force investment into oil wells owned by a group with lots of political influence — the owners of the least producing, highest polluting oil wells.
What’s worse is that these politically driven blacklists are so sloppily executed that the self-declared saviors of Texas oil and gas are blacklisting investment in oil and gas itself. According to a recent Bloomberg investigation, the Texas comptroller forbade Texas’ public pensions from investing with a number of funds that have invested a combined $5 billion in the Texas oil and gas industry.
What’s the downside for Texans? By blacklisting many of the best-performing financial firms, state lawmakers reduced competition and reduced Texas counties’ options when it came time to issue bonds. A Wharton study estimated that Texas taxpayers were already on the hook for an additional $303 million to $52 million in interest in just the first eight months after the law’s enactment.
The major energy companies understand that reducing methane emissions is critical to keeping the industry competitive as the global market for gas raises standards on pollution. Texas lawmakers are actually undermining the industry’s efforts to remain competitive by forcing Texas pension holders to underwrite the worst-polluting wells. At a time when the United States, led by Texas, is producing record levels of oil, politicians shouldn’t be forcing Texas taxpayers and pension holders to pay a penalty for the benefit of marginal oil producers.
Drive across any stretch of Texas roads. By day, you’ll see countless oil pumps. When it gets dark, the flare stacks at night are big and bright. But Texas also leads the country in wind and solar production, and has since 2006. Texans benefit from both, but not from bygone practices that are unnecessarily harming our environment. Texas politicians should wise up to new and better methods of energy production so that Texas can remain the energy capital of the world.