Finding common ground
FIRST OFF, let’s acknowledge there is a problem. The oil and gas industry and the American public don’t always see eye to eye on issues
facing the country – for example, on hydraulic
fracturing, which is necessary for developing
shale resources, and on climate change, and
whether or not hydrocarbons are a significant
factor in exacerbating global warming.
There are arguments to be made on both
sides of these issues, and even scientists disagree on major points, but clearly the petroleum business is
not winning the PR battle with the public in the United States
and globally. Many consumers, probably most, see oil and gas
companies and their executives in a bad light.
Most people are sophisticated enough to view these issues
in shades of gray rather than absolute terms. But for the petroleum industry the question remains: how do we change public
perception, and is that even possible?
The industry can’t afford to ignore this growing divide because
public perception shapes political reality. The wider the gap
becomes, the more draconian the regulatory environment for
all industry sectors – upstream, midstream, and downstream
– from the wellhead to the pump, or burner tip.
Consulting firm EY conducted a nationwide survey of US
consumers earlier this year and a separate survey of energy
executives and found that their views about the oil and gas
industry vary widely, which is not exactly shocking news. I wrote
about the results of those surveys in the June issue of OGFJ in
which we compared and contrasted the views of consumers
with that of industry executives. The survey results compel you
to consider why there is such a marked difference between the
“The energy industry is providing products the public de-
mands,” says Deborah Byers, EY’s US Energy Leader. “But clearly,
there is a rift between what consumers want, how they want
it, and the public’s understanding of the industry. This gap poses
a challenge for the future of oil and gas companies, and may
influence their interactions with prospective employees, com-
munities near current or future operations, shareholders, and
even with consumers of energy products.”
Partly as a result of the survey, EY has just released a report
titled “How do we create a more refined view of oil and gas?”
Surprisingly, to me at least, EY concludes that oil and gas com-
panies have an opportunity to engage consumers and find
common ground on a number of topics, including regulation.
Interestingly, the surveys show that 85% of consumers and
79% of oil and gas executives agree that regulations are necessary to prevent or minimize the impact of oil and gas accidents
and spills. And 85% of consumers and 84% of executives agree
regulations are necessary to ensure environmentally safe drilling
The survey also showed that a large majority of consumers
also say they are willing to pay more for a gallon of gasoline to
ensure regulatory priorities are met, which undermines the
argument that consumers would not pay more in a more regulated environment.
Here are a few more data points from the surveys:
• 40% of consumers and 90% of executives think tax reform
will be good for the overall economy.
• 42% of consumers and 74% of executives think tax reform
will be good for energy prices.
• 91% of consumers and 93% of executives believe climate
change is real.
• 62% of consumers say creating alternative fuels is a major
step toward addressing climate change.
• More than 75% of respondents say they are willing to pay
more for gasoline if air and water quality regulations increase
• While 41% of consumers believe the industry is underregu-lated, 53% of executives believe the industry is
EY points out that, thanks to the shale boom, oil and gas
companies are exploring, developing, and transporting products
in and across markets less familiar with the industry. Increased
public interface means a “social license to operate” is more
important than ever before. The industry may also face challenges related to market share as technology makes new energy
options accessible and affordable.
In a market with energy choices, EY says consumer preferences and attitudes are critical. Having a good reputation and
being seen as an industry that shares consumers’ long-term
concerns and values will be necessary for oil and gas companies
in an age of energy abundance.
“Consumer opinions are more important than ever,” says Byers.
“Public perceptions can impact the industry’s ability to recruit
and retain talent, access capital necessary for growth, and pursue
new projects. They can also influence the regulatory and tax
environment and, perhaps, even demand for oil and gas products.
Americans’ views on oil and gas serve as a reminder that com-
panies need to proactively demonstrate value and earn trust.”
The report highlights a disconnect between American con-
sumers and the oil and gas industry. However, it also identifies
areas in which there are overlapping interests – common ground
that the industry can use to connect with consumers and im-
prove understanding, communication, and its reputation.
The public views environmental protection and safety as
critical issues. The survey shows that the petroleum industry
places similar value on good environmental stewardship and
safety performance. Tax fairness is another area where there is
significant common ground between the two groups. Those
are great starting points for opening up a dialogue on the role
of oil and gas today and in the future.