Oklahoma Governor Kevin Stitt recently signed into law a ban on the state contracting with banks seen as hostile to the oil & gas industry. Stitt’s stance has raised eyebrows, as traditionally, it is believed that government should not dictate how businesses operate. Republicans generally oppose central planning and government interference in business decisions, so the move by Stitt seems contradictory to typical Republican principles.
Stitt’s argument that financial institutions should not push a political agenda with pension funds and should refrain from attacking the oil & gas industry is met with skepticism. Critics question whether not doing business with certain sectors or industries should be seen as a boycott or a political agenda. Just like how not all restaurants serve all types of cuisine, not all financial institutions may have the expertise or resources to support the energy industry. This specialization is common in the business world and should not be viewed as discrimination.
The competitive nature of the oil & gas industry means that financial institutions are constantly vying to attract business from energy companies. Despite the occasional refusal of a bank to finance fossil fuel projects due to a lack of expertise or ideological reasons, the industry as a whole remains highly profitable. Oklahoma boasts numerous billionaires who made their fortunes in the oil & gas sector, demonstrating the lucrative nature of the business. Therefore, concerns about discrimination or lack of financing for the industry are unfounded.
Banks operate based on the funds entrusted to them by their customers and cannot afford to take significant risks with these funds. Oil & gas lending poses a considerable risk for banks due to the volatile nature of the industry, making it a less appealing investment option for many financial institutions. This risk-averse approach is not driven by ideology but rather by the necessity to protect the interests of their customers and maintain financial stability.
While there are valid reasons for financial institutions to pass on oil & gas finance that are unrelated to ideology, Republicans typically advocate for businesses to have the freedom to choose who they do business with without government interference. By attacking financial institutions for their decisions, Governor Stitt’s actions may be perceived as going against traditional Republican principles. The success stories of Oklahoma-based oilmen like Harold Hamm and T. Boone Pickens underscore the immense potential for wealth creation in the oil & gas industry, further illustrating the industry’s resilience despite occasional challenges in securing financing.
In conclusion, Governor Stitt’s decision to ban state contracts with banks seen as hostile to the oil & gas industry has sparked debate about the role of government in business transactions. While concerns about discrimination and political agendas may be overblown, the competitive and risk-prone nature of the energy sector means that financial institutions have valid reasons for being cautious about financing oil & gas projects. Ultimately, the long-term profitability of the industry suggests that fears of insufficient energy capital are largely unfounded, and Governor Stitt’s intervention may be seen as contrary to traditional Republican values of limited government interference in business affairs.
