Major companies and associations in the oil and natural gas sector greatly cut back their spending on federal lobbying efforts in the second quarter this year.
Across the oil industry, from producers to refiners, lobbying activity has fallen greatly, according to disclosure reports lobbyists had to file with Congress this week.
The reductions coincided with major headwinds such as the economic depression caused by the COVID-19 pandemic, a drop-off in oil demand, and lockdowns that have made in-person meetings and other common lobbying activities far more difficult.
"There have been limited lobbying opportunities during the pandemic — House and Senate offices have been closed or severely restricting access," said Jennifer Pett, spokeswoman for the Independent Petroleum Association of America, which represents mainly small oil and natural gas producers.
"Second, the reductions are a reflection of the industry and economy in general. The tough fiscal challenges our industry is facing has caused IPAA to reduce lobbying expenses," she added.
IPAA spent just $163,586 lobbying federal officials in the quarter from April 1 to June 30, the group disclosed, less than half of what it spent in the same period last year.
Lobbyists employed and contracted by the organization advocated on issues such as trying to prevent an extension of the moratorium on drilling in the eastern Gulf of Mexico, trying to stop rollbacks of tax incentives that benefit the industry and fighting potential restrictions on hydraulic fracturing.
The American Petroleum Institute, the main federal lobbying group for most sectors of the oil and gas industry, spent $1.31 million lobbying on issues including COVID-19 economic stimulus and supporting regulatory rollbacks, a reduction by more than one-third from the same period in 2019.
API spokesman Ben Marter this week attributed the decline to the coronavirus pandemic.
Major oil and gas companies, including producers, pipeline developers and refiners, saw similar drop-offs in lobbying activity.
Occidental Petroleum Corp.’s spending fell by more than half from the year-ago period, to $640,000. Exxon Mobil Corp.’s $1.76 million in lobbying costs was 28.2% less than the second quarter of 2019, while Marathon Petroleum Corp. cut its spending by 47.7% to $450,000.
Karr Ingham, a petroleum economist and executive vice president of the Texas Alliance of Energy Producers, attributed the drop-offs squarely to economic factors — both those being seen across the economy and those specific to oil and gas.
Companies’ revenues have dropped due to significantly lower demand and low prices, and the associations that rely on them for membership dues have had to adjust in turn.
"Everybody has a revenue problem now. Associations do, advocacy groups do, the companies do," he said. "I think it’s safe to say they have less money to spend in 2020 than they did in 2019."
Furthermore, social distancing guidelines and rules have all but stopped in-person meetings.
"It just makes perfect, intuitive sense to me that when you throw all of these things together, spending on that activity and many other activities would be dramatically lower in [the second quarter of] 2020 than it was in quarter 2 in 2019," Ingham said.
The pattern wasn’t the same across the energy industry. The Nuclear Energy Institute, for example, saw just a 1.7% decline in its lobbying costs to $590,000, while the National Biodiesel Board’s spending grew 24.1% to $510,108.
The lobbying industry, meanwhile, saw a boom in the second quarter, with major K Street firms like Brownstein Hyatt Farber Schreck LLP, Akin Gump Strauss Hauer & Feld LLP and K&L Gates LLP all seeing increases in business, largely attributable to advocacy on COVID-19 relief for clients.
But most major lobbying forces in oil and gas pulled back. American Fuel & Petrochemical Manufacturers, which advocates for fuel refiners, spent $567,144, a 30.8% drop from a year prior.
BP PLC, Royal Dutch Shell PLC, Chevron Corp. and ConocoPhillips all saw big reductions. Some of the companies slashing their lobbying budgets are in more dire financial straits than others, like Noble Energy Inc., which spent $310,000, down 68.4%, and is being acquired by Chevron.
Chesapeake Energy Corp., which announced its bankruptcy filing last month, saw a drop in its lobbying budget by more than half to $60,000.
"You’ve got economic conditions that are atrocious to this industry. When it comes down to that you are cutting people, it’s hard to hold this kind of budget harmless," one energy policy analyst said.
"There’s belt-tightening going on all across the industry," the analyst said, pointing out that a divided Congress in an election year is already unlikely to do much in the way of major legislative action anyway.
The future has room for hope, but with significant limitations. The worst of COVID-19 might have passed, but the economic recovery is on shaky ground.
"That was the worst quarter — hopefully," Ingham said.