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Gov. Perry Speaks at Annual Meeting of IOGCC

Location: Biloxi, MS

Assumes Chairmanship of the Interstate Oil and Gas Compact Commission

*Note - Gov. Perry frequently departs from prepared remarks.

Thank you, Bill [Sydow, IOGCC 2009 Vice Chair] and thank you for your investment in this organization.

I'd also like to thank and congratulate Gov. Brad Henry for his service as chairman. Brad, our states might clash on the football field, and compete for economic development, but Texas couldn't ask for a better neighbor.

Is there anyone in here from Louisiana, Arkansas or New Mexico? Well, Texas likes you too. Regardless, Brad left some big shoes to fill.

Mike Smith has also done a great job this year, stepping into the role of Executive Director and carrying on the legacy that Christine Hansen sustained.

The IOGCC team is strong, experienced and leaning into the future.

It is great to be here in Biloxi, in the company of people who have a clear understanding of energy, based on science and experience, not assumptions and paranoia.

Now, I'm not saying that everyone whose opinion on energy differs from ours is completely off-base, but it's important to know our position and the counter-arguments our opponents will offer in the debate over America's energy future.

I believe that anyone discussing energy in our nation and world must begin by acknowledging the essential role that oil and gas have played throughout our history and the reality that they must continue as fundamental elements of our energy portfolio.

The IOGCC is obligated to be a leading voice in that conversation because no one else can match our expertise, and our nation cannot afford to make a decision based entirely on the viewpoints of the radical green energy crowd.

By and large, our arguments are based on science and experience, while I suspect theirs spring largely from talking points crafted by folks who stand to gain from restrictions on traditional energy production and an avalanche of federal funds.

Now, don't get me wrong: I'm a fan of renewable energy sources. They're an essential part of our nation's energy strategy, because we must take an "all of the above" approach to our portfolio as we pursue energy independence.

In Texas, we've worked hard to expand our portfolio, but we've done it with incentives instead of sweeping mandates. As a result, we have more installed wind generation capacity than any other state…and all but four other countries.

However, we understand that oil and gas is that tried and true resource that is already in place, providing vital energy and employing thousands of Americans.

Unfortunately, too many folks with a voice in the conversation base their perception of this business on newsreels of gushing wells and movie characters in cowboy hats lighting cigars with hundred dollar bills. Our job is to keep changing that perception by sharing the facts.

We need to be sharing the facts about constantly improving technologies that have made this industry cleaner, more efficient and more cost effective.

We need to be sharing the facts about the real costs of energy sources and who is actually paying them.

The facts are still our main defense against an administration in Washington that has essentially declared traditional energy sources -- oil, gas and coal - public enemy number one.

Left unchecked, this administration is on a course to destroy this industry, by hook or by crook.

On the financial side, the president's 2010 budget slashes longstanding incentives for the oil & gas business, a move that the American Petroleum Institute estimates will cost $80 billion over the next ten years, while cutting into production, jobs and revenues.

On the legislative side, the US House of Representatives passed the Waxman-Markey cap & trade bill by the narrow vote of 219 to 212. From what we're hearing, the Senate version is even worse.

As it stands, this bill would usher in the single largest tax in the history of our nation, along with an unprecedented degree of federal intrusion into every American farm, home and workplace.

These energy taxes will cause every product that uses energy in its creation, cultivation or transportation to become more expensive, forcing hard-working Americans to bear massive new costs and kicking the legs out from under a national economy that is already wobbling.

These taxes will also hammer the states that produce and refine the vital energy sources that our families and employers need.

Shackling our economy with a crushing burden of new regulation will also place our entire country at an unfair advantage to other countries like China and India, who know better than to forgo economic growth & prosperity in return for no measurable benefit.

Do you think our country's latest unemployment figures will drop if energy prices are driven upward by this misguided legislation? I know I don't.

The other day, our energy experts in Texas presented their analysis of Waxman-Markey and offered some numbers that should disturb anyone, in or outside of the IOGCC.

According to our comptroller, this legislation would immediately increase the average annual cost of household goods for Texas families by about $1,200.

Annual electricity costs would also go up or, as our president says "necessarily skyrocket," by about $650 per household by 2013.

Pick your multiple of those numbers when it's time to talk about the cost impact on manufacturers. Think that'll create jobs?

If Waxman-Markey goes through, we estimate that somewhere between 200,000 and 300,000 Texans whose livelihoods rely on energy production would find themselves out of work. I suspect your states could reference similar percentages of lost jobs.

Advocates of this so-called green economy say "don't worry, our green economy will create millions of jobs." When they tell this fairy tale, they always get to "happily ever after" without mentioning what Spain learned from their push for green jobs.

According to a recent study by King Juan Carlos University Spain lost 2.2 real jobs for every "green" job they created and found each job cost roughly $774,000 to create. Tracy [Evans, President and COO, Denbury Resources], how many jobs could you create with $774,000? More than one?

I suspect supporters of Waxman-Markey are aware of those numbers. How else do you explain funds in the bill to pay displaced workers, underwrite their healthcare, and provide for job retraining for up to three years?

Knowing somebody is going to buy you a cup of coffee after they burn your house down doesn't soften the blow much.

Henry Waxman and Edward Markey aren't the only federal lawmakers drawing a bead on the oil and gas industry. Have you seen the bills targeting hydraulic fracturing? They are yet another example of how misinformation about this industry and its proven technologies is used to sway opinion.

I've heard the prospects for passing House Bill 2766 and Senate Bill 1215 aren't strong this year, but I don't suspect they'll be Washington's last attempt to pass new restrictive regulations as a way to poke domestic energy producers in the eye.

This is the sort of thing that has been happening for years, and I'm grateful that the IOGCC has been a voice of reason in the debate.

I'm somewhat encouraged that the EPA will be studying the issue, since I have yet to see proof of the "thousands of incidents" of contamination that they claim have been caused by fracturing.

In a decision-making process that carries such a significant impact some research is better than no research, but the EPA is'nt exactly on our side either.

They have already threatened Texas because they don't like the way we've cleaned up our air.

They have also made it clear that, if Congress fails to pass a cap & trade bill, that group of unelected federal bureaucrats will take matters into its own hands and declare carbon dioxide a harmful substance.

If they could prove that piling these massive costs and additional regulatory burdens on American consumers and employers would produce some measurable benefit, I'd be open to a conversation.

However, the EPA administrator has openly admitted to Congress that this move would have virtually no impact on global CO2 levels or temperature, but, still, they press on.

More mandates, restrictions and penalties are not the kind of things that will encourage innovation and investment. Instead, I believe that incentives are the key to the next big idea.

Whether that big idea is the next generation of energy technology or new ways to improve air cleanliness and public health, the marketplace will respond much more quickly.

That's how it's worked back home in Texas, where we've leveraged incentives to expand the use of renewable energy, especially wind.

We didn't shower renewable energy companies with subsidies or diminish competition with arbitrary percentage mandates. Instead, we set a renewable floor which has allowed competition & advancements in technology to dictate the demand for renewables. We also set up renewable energy zones with consolidated transmission resources to reduce infrastructure costs.

Interestingly, private sector companies involved in building that transmission infrastructure just turned down federal stimulus funds because all the strings attached to them would have actually slowed construction.

Incentives were also the driving force behind the dramatic air quality improvements Texas experienced in our major municipalities, with statewide ozone levels decreasing 22% from 2000 to 2008.

Incentives have also helped Texas reduce nitrous oxide emissions from large industrial sources by 46% between 2000 and 2006 while still attracting new residents and jobs, and not harming an economy that is still the nation's strongest.

If you ask me, the challenge all boils down to one word, "jobs."

Legislators and bureaucrats who lob around impact numbers lose sight of the fact that a single lost job is a family in trouble.

I celebrate the fact that American oil and gas directly create jobs in extraction, refining and distribution, and indirectly create countless more by powering our economy.

At a time when our nation is shedding jobs, we should be looking for ways to reduce the burden on employers. Instead Congress wants to increase the burden of businesses and workers alike.

At a time when families are fearful of their financial futures, we should be working to reduce the cost of living and increase opportunities for them to feed their families. Instead, Congress wants families to pay more for transportation, electricity and consumer products.

Our federal government needs a continuing regimen of reality and common-sense that this organization is uniquely qualified to provide.

In the months to come, I hope IOGCC will continue to be the informed voice of reason in our nation's energy conversation, sharing the facts, and telling the story of an industry with a proud history and an even brighter future.

As various trial balloons float out of Washington policy shops, we need to remain on guard for schemes that will hinder state's rights, stifle innovation, and explode our national debt.

Our states -- and our nation - have the expertise, the brainpower and the responsibility to protect the livelihoods of our citizens. So let's apply it in pursuing an all-of-the-above approach to energy that will make best use of our nation's resources, and increase our energy independence.

The IOGCC embodies the good that can happen when solutions are pursued at the state level.

Let's not forget: the IOGCC is a compact among states, the same states that created the federal government, a government whose power is limited by the seemingly forgotten 10th Amendment to the U.S. Constitution.

This organization has remained true to its founding charter, and been a consistent force for improvements, in safety, efficiency and environmental protections…
…in a tough, tough business.

I am honored to step into a line of principled leaders that began in 1935 with Oklahoma's E.W. Marland and continued through Brad Henry.

I look forward to the coming months as we continue to innovate, educate and advocate on behalf of an industry that lights our homes, fuels our transportation and drives our economy.

Thank you, God bless you, now let's get to work.

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