The GPT: Oklahoma’s Oil and Gas Cognitive Dissonance

Lanie James
8 min readMay 20, 2017

cognitive dissonance: the state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change.

A Rich, Complicated History

Oklahoma and oil & gas, sometimes like peas and carrots or sometimes like oil and water — at least when it comes to our complicated economic history. We have a lot to thank the industry for and a lot to be ashamed of. The production of oil and gas in Oklahoma should have been the key to economic prosperity in our state — had we appreciated it, had we nurtured discipline, stewardship, conservation and accountability.

But we didn’t. Instead of shared prosperity, we robbed and murdered each other and damned our souls while praising Jesus with hymns of “Drill, baby drill!” We point and lay blame everywhere but ourselves, refusing to accept the fact that maybe we were shortsighted and even a little (or a lot) greedy. We used the blood, sweat and toil of the roughneck to fuel our righteous indignation whenever “shareholder value” was threatened.

I worked in oil and gas communications for over five years, committed to telling the industry’s story as authentically, credibly and transparently as I could. There were so many inspiring stories and truths to share — but in order for that truth to rise above the noise, the industry has to change, to acknowledge its ugly past and behavior and to take responsibility for mistakes. That was the dream of myself and my colleagues. We were passionate, we believed — but we knew that meant that sometimes we had to challenge from within.

Beware the words “shareholder value.”

Every publicly traded company has an obligation to be financially responsible and it’s been well documented that not every company is — even if they demonstrate some questionable “Robin Hood” ethics. The names Kirkpatrick, Kerr, Rockefeller, Carnegie have a legacy synonymous with civic duty and community investment as well as oil and gas. The history of the oil and gas industry is a complicated one, a sea of cognitive dissonance swirling with greed and generosity, corruption and inspiration, devastation and reclamation, wildcatters and scientific innovation.

When commodity prices started to tank — those “new” to the industry were unprepared while oil and gas veterans sighed and began to tighten their belts and update their resumes. Shellshocked non-profits and businesses, who relied on industry support and investment, began the grim task of layoffs, scaling back services or shutting their doors altogether as corporate giving was dramatically reduced or cut completely. The entire impact reverberated across the state, but oil and gas got a big win.

The Gross Production Tax: Why pay 7 percent when you could pay 2 percent?

Just prior to the commodity price tumble, the industry received a gift from Oklahoma legislators and Governor Mary Fallin — a reduction in the gross production tax from 7% to 2% (1% for horizontal wells.) I was working in the industry at the time and distinctly remembered a sense of surprise — as if it wasn’t expected to happen since the state’s budget relied heavily on oil and gas revenue. Anyone who knows me will laugh (or let out an exasperated sigh) and acknowledge that I’m not afraid to ask uncomfortable questions. While I didn’t have a crystal ball, it wasn’t hard to ponder “what if” scenarios. I didn’t have to live through history to learn from it — I asked peers, colleagues and friends, “If the industry experiences a downturn, won’t this impact the state budget and funding?” The general sentiment in response was, “Not our problem.”

Oklahoma Prosperity vs. Profit

But you see, it is. Oil and gas howls like it’s got a thorn in its paw anytime fees, fines, taxes or regulations are enacted (and enforced.) Lobbyists and spokespeople will wail various refrains, “We do this. We do that. You people are so ungrateful. The state should cut the fat. Leave us alone. You’re stealing from land owners. Mineral rights! Mineral rights! Pay royalties? Sure, we do. You’ll get your mailbox money… if there’s any left after we deduct costs and other fees. Oh, but the lease says we can. Here, use my obscure clause magnifier that says we can charge you for costs to get the minerals to market. It’s the cost of doing business! Ta ta!”

Some oil & gas lobbyists will say, if you raise the GPT it’ll kill job growth.

  • A 2 percent GPT didn’t save my job or the jobs of thousands of others in the industry.

But it’ll hurt royalty owners!

  • The GPT isn’t a chargeback to land owners nor does it impact the MCF (natural gas) or BOE (barrel of oil equivalent) price they receive based on current market commodity prices.

A 2 percent GPT sure as hell didn’t stop oil and gas executives from giving themselves bonuses or raises the past two years. As much as I appreciate and respect the oil and gas industry, it’s taught me that trickle-down-economics simply doesn’t work because you are relying on businesses reinvest in their businesses and communities voluntarily. It’s the equivalent of a multi-level marketing scheme where only those at the top of the pyramid get the payoff. The headlines about ballooning CEO compensation demonstrates this.

When I was laid off, I won’t lie, it hurt — but I understood (mostly) why. Companies faced real challenges with tumbling commodity prices. I didn’t begrudge industry “survivors” when hearing about bonuses because I felt they deserved it for “keeping the ship afloat.” I knew how hard my friends and colleagues worked. I vascillated through the stages of grief regularly but I didn’t become truly angry until I heard about executive bonuses across the industry. Deserving? Sure. Disproportionate? Absolutely.

But, Lanie, a board of directors has a right to determine compensation for their leadership team! Yes, they do. That doesn’t always mean that the legal thing is always the right thing to do.

The Blame Game

“It’s Obama’s fault!” I don’t know how many times I’ve heard or read this. Frankly, it’s a reflexive , inaccurate, unfair and convenient argument offered to those working in the industry by some of those running the industry. It’s misinformation designed to deflect blame, because it’s easier than explaining global economies or exposing the fact that global oil and gas production itself is to blame.

Don’t blame Obama. Blame OPEC. It’s a simple, but painful lesson in supply and demand, a fundamental economic principal.

If someone tries to lay blame for industry’s struggles at the feet of President Obama, regulations or taxes — tell them to conduct a Google search on “shale revolution” and “OPEC” and then walk away. We simply have a supply and demand problem. We have more oil and gas than we have demand. This drives down commodity prices, which drives down revenues, which drives down profits, etc.

Why do we have an oil and gas glut? Two basic reasons: 1) U.S. oil and gas producers got damn good, damn fast developing shale resources through horizontal drilling and hydraulic fracturing. 2) This freaked OPEC out. They sought to squeeze out U.S. oil and gas producers threatening their market share by NOT curtailing their own production. OPEC could absorb the hits longer than the U.S. could.

But what if we stopped importing foreign oil?

Not. Going. To. Happen. Give up that pipe dream now. You think our local oil and gas producers have influence? It’s nothing compared to Exxon, Chevron, BP, Shell or ConocoPhillips on a global scale. There’s a reason Rex Tillerson was celebrated as the Secretary of State pick, heaven help him. We now live in a global commodity environment and in order for the U.S. to stop foreign oil imports would likely mean stopping exports as well. If Japan wants to switch over from nuclear energy to natural gas, they are going to get their shipments from LNG somewhere. Cheniere Energy couldn’t build their LNG facility fast enough in order for U.S. oil and gas producers to export natural gas. And exporting to LNG to China? You might see an oil and gas lobbyist get teary-eyed with joy. According to this story from Time which relies on a report from the Energy Information Association (EIA), indicates the United States could be energy independent and a next exporter by 2026. What does that mean? It means oil and gas isn’t going anywhere.

How do we fix it?

We’re playing a long game but we won’t survive if we don’t stop the hemorrhaging. The state granted a GPT reduction when we were already wounded. Oil and gas leaders, it’s time to step up (again) and decide — are you a part of this community or are you here for the “shareholder value?” You need to answer this carefully because if you want to treat Oklahoma and its citizens with a “it’s just business” attitude — we can do that and you’ll be facing citizens demanding more than just 7 percent GPT.

Further, your own employees and contractors deserve better. Companies are powered by people, not financial statements. The men and women who work in the field, who live and raise their families in Oklahoma — they deserve to have good roads, their children deserve 5-day school weeks with qualified, well-paid, enthusiastic teachers, sports, art, music and other after school programs. Rural communities don’t have the luxury of sending their kids to private or even charter schools. Another budget failure and it’ll be the rig hand, the company man, the lease operator and their families that suffer. Oil and gas executives, however, will live in their McMansions in their gated neighborhoods while sending their children to private school.

But state education funding isn’t the only place where we’re wounded. The state has cut to the point where core services can barely function. You want out of the tax increases? Fine. Then help Oklahoma diversify it’s economy. Be Oklahoma’s #1 cheerleader to attract tech, bioscience, aerospace and others by investing to improve education, infrastructure and quality of life. A strong diversified economy will take the tax burden off the oil and gas industry while insulating state revenues if one sector stumbles.

Frankly, Oklahoma can’t do it without you. Yes, you’ve given the state a lot but you’ve also received a lot — the resources, the workforce and the second-nature support from most citizens for decades. It’s time for the Oklahoma oil and gas industry to decide what’s more important — being members of this community, being part of this family or sacrificing it for “shareholder value.”

To our state legislators who are getting the pressure from the oil and gas industry — supporting a GPT increase doesn’t mean you don’t care about the industry, it simply means you care about Oklahoma’s future more.

And if the leadership of the legislature is standing in the way — do whatever it takes to go around them. Oklahomans will remember who fought for Oklahoma’s future. You can guarantee there are vocal champions who won’t let anyone forget come the next election cycle.

You can’t run for Governor and not support a GPT increase of 5–7%.

You can’t run for re-election in the state senate or house and not support a GPT increase of 5–7%.

You can’t run for any county, city, state or municipal office and not support a GPT increase of 5–7%.

Welcome to Oklahoma’s new litmus test.



Lanie James

Digital Marketing, #OkState alum, college football fan, @okcthunder fan, #StarWars, golf, geekdom and mom. Views expressed here are my own.