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Mitt Romney In Ohio, Seeks Electoral Advantage Amid State's Shale Oil And Gas Boom

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Mitt Romney told a crowd of Ohioans at a manufacturing company Thursday that President Barack Obama is keeping the state's oil and gas industries down.

"Go talk to the people in the natural gas world and ask them what it's like under the Obama administration," he said. "They'll tell you that the administration has tried to push itself in to regulate the production of natural gas."

"This is a president that's made it harder to create jobs there and to get low-cost energy to manufacturers like this one," he said.

For Romney and energy industry groups, that's a central argument in their pitch to Ohio voters whose 18 electoral votes and divided electorate make it a crucial swing state. But they will be forced to argue while faced with something that undercuts their position: Spurred by the use of new technologies like hydraulic fracturing, the oil and gas industry in eastern Ohio's Utica Shale formation is booming.

Economists place the number of jobs that could be created there between 20,000 and 65,680 over the next few years. Steelmakers in Ohio are building 2 million square feet of production space, at a cost of $1.5 billion, to keep up with the demand for pipes and drilling equipment.

Obama said he would like to continue that expansion, but make sure it doesn't lead to pollution, a position he repeated in Ohio Thursday.

"You hear this ridiculous dual story from anti-regulation, pro-industry folks, who on one hand say this is the biggest economic boom and it's going to create millions of jobs for Ohio," said Julian Boggs, a policy advocate at Environment Ohio, a group that promotes tougher regulation on hydraulic fracturing. "And then on the other hand, pretend that the whole thing is so economically fragile that we can't afford basic protections for our environment."

The federal government, moreover, is limited in what it can say about those "basic protections." Hydraulic fracturing was specifically excluded from the Clean Water Act by the 2005 energy bill, and Congress shows no signs of changing its mind. The cost of the new federal rules about emissions from natural gas wells, drillers told Bloomberg News, would be "manageable."

Meanwhile the state's biggest player, Chesapeake Energy, is staring at problems of its own: overproduction and alleged financial mismanagement.

Whether or not Mitt Romney was right when he said the president made it harder to create jobs in the natural gas industry depends on who you talk to -- environmentalists or industry analysts.

"Federal regulation has nothing to stop what is a huge boom" said Deborah Goldberg, a managing attorney at environmental group Earthjustice. "This industry has been very successful in getting exclusions from every major federal environmental legislation on the books."

But Ben Salisbury, an analyst at FBR Capital Markets, said that during the time the natural gas industry was lobbying the administration to keep the cost of rules on hydraulic fracturing and natural gas down, drillers were forced to undergo a "risk premium" that created a drag on development.

"The Obama administration has been reasonably accommodative to those concerns when brought forward by the industry," said Salisbury. "I think that's a very positive signal, but that was by no means always clear."

Ultimately, however, even Salisbury thinks the growing pains will be good for the natural gas industry, whose image has been battered by anti-fracking publicity, including the movie "Gasland."

"Once the process has matured I think it will ultimately help insure the growth of the industry," he said. "By addressing these problems before they become problems, it will allow the industry to grow unencumbered."

The oil and gas industry interests pouring millions into the Romney campaign and an assortment of third-party groups take the position that they're being treated unfairly by the Obama administration. Already, Americans for Prosperity, and the American Energy Alliance, two groups connected with the Koch brothers, who made their fortunes in the oil and natural gas industries, have spent $2.4 million on ads in Ohio media markets.

But it's not clear the state's voters will be swayed.

So far, said John Russo, the co-director of the Center for Working Class Studies at Youngstown University, the Utica shale has mostly produced for Ohioans the "promise" of jobs. "As of now we've seen a lot of cars from Texas and Oklahoma," he said.

While natural gas may lead to more jobs making pipes in the steel industry near Youngstown, Russo said, voters who care about manufacturing will also consider Romney's position -- or positions -- on the auto industry. One in 8 jobs in the state depends on the car companies, he said.

Ohioans, moreover, have the same environmental concerns about hydraulic fracturing that other Americans do. Sixty-four percent of them believe the economic impacts of natural gas drilling outweigh the environmental drawbacks, according to a Quinnipiac poll in January. But an even greater number, 72 percent of voters, believe fracking should be suspended until it's further studied.

Concerns like those have been magnified by a series of earthquakes near Youngstown that the state has tied to fracking. Russo remembers sitting at his kitchen table on New Year's Eve when a 4.0 magnitude earthquake hit the area, which never had experienced them before.

"It sounded like a sonic boom, but I said, 'my god, that's an earthquake,'" he recalled.

And if Romney believes his promise of more jobs will win over unionized "Reagan Democrats," the state branch of the United Steelworkers says good luck. It is benefiting from the upsurge in demand for seamless steel pipes needed for natural gas expansion; the situation would be different if Obama had not slapped tariffs on Chinese pipe manufacturers.

"Without the tariffs, China would still be dumping seamless steel pipe," said Donnie Blatt, the rapid response coordinator for United Steelworkers' District 1, which covers Ohio. "Governor Romney isn't a person that's going to enforce the trade laws."

Blatt, for one, is not convinced by Romney's argument that the president wants to drive up the cost of energy. "I think that's completely ridiculous," he said. "There's absolutely no president, whether it's a Democrat or a Republican, who would want to see the price of natural gas go up."

 
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