The Texan Podcast - Interview: Luke Warford Talks About the Race for Railroad Commissioner

Episode Date: September 6, 2022

Want to support reporting on Texas politics that doesn’t include the spin? Subscribe at https://thetexan.news/subscribe/ This week, Brad Johnson interviewed Luke Warford, the Democratic nominee for Railroad Commissioner. They discussed the antics of the race, the responsibilities of the office he seeks, and his views on the future of the energy industry.Enjoy this content? Be sure to subscribe for similar interviews and The Texan’s Weekly Roundup — a podcast released every Friday that brings you the latest news in Texas politics.

Hello everyone, I'm Brad Johnson, senior reporter here at The Texan. I interviewed today Luke Warford, Democratic candidate for the Texas Railroad Commission. We discussed his campaign, the responsibilities the office he seeks, and his views on the future of the energy industry. If you enjoyed the interview, be sure to subscribe to The Texan's podcast for more interviews like this and a weekly roundup of the news in Texas every Friday. And to stay informed and support us in bringing the news with just the facts, please be sure to subscribe at thetexan.news.

Hello, everybody. I'm sitting here with Luke Warford, Democratic candidate for Railroad Commission. Luke, welcome. Good to be here. How are you doing? Thanks, Brad. I'm great. You just got done with a whistle-stop tour kind of across the state. How'd that go? It was a lot of fun. Believe it or not, you can take a train all the way from Boma in East Texas to El Paso. We took a bunch of different stops along the way in Houston and San Antonio, out in the Permian, Alpine, and then El Paso, drawing attention to the fact that the Railroad Commission actually has nothing to do with trains. But it was a good excuse to get out on the road to meet with folks working in the energy industry to talk about the future of Texas energy.

And frankly, just to try to tell the story and educate folks across the state about what the Railroad Commission really does, because it's got a huge impact on people's lives, whether it's the grid failure or how much we're paying for electricity or our clean air and clean water. And people don't realize that, you know, they think Railroad Commission and they are like, well, why do I care about trains? But it's actually this incredibly important office. And so we took this tour to help tell that story. Yeah. Energy is something that a lot of people take for granted. And even more so when the name of the position that's regulating the oil and gas industry

has nothing to do with energy. So with that, can you tell us a little bit about your background and why you decided to run for this position? Yeah, absolutely. So I'm just have have been obsessed with energy and sort of like the intersection of politics and policy and energy for a long time. So I have a political science background. I studied business and economics in grad school. I've worked at the World Bank abroad at the African Union in consulting, advising global oil and gas companies, but also renewable companies, all around the question of what does our energy mix look like? How do we

make sure that people have access to reliable energy? It's just like energy is everywhere, right? Energy is everything. And that's true. You know, we see that in really like high pressure moments like last February's winter storm. But it's also true when you think about developing countries around the world who, you know, often don't have access to a lot of people don't know about in the Texas Railroad Commission that regulates the Texas oil and gas industry. Obviously, oil and gas is just like massively important in our state for our economy, for our ability to keep the lights on, for the environment. And so this has been an office that like I've cared about for a long time. I think it has a huge impact on Texans and decided to run. It's not much more complex than I'm looking at the people who are in the office now, most

of whom are career politicians who, you know, my opponent, Wayne Christian, has been in elected office since I was eight years old, who are just not doing what's best for the people of this state. Right. Who are just not doing what's best for the people of this state, right? Time and time again, they're making decisions that I think hurt Texans and prioritize their campaign donors and a few oil and gas executives. And I got mad about that and decided to run. You mentioned reliability. That is a key word that everybody in Texas is focusing on, especially since the blackouts in February last year. What does that word mean to you and how does that bear out in policy? the energy capital of the world. We have more energy production capacity, both oil and gas, but also renewable than any other state in the country. And so it seems fairly basic to me that

with all of those resources, we should have reliable and affordable energy. But we currently have neither of those, largely because a lot of our elected officials, I think, have misplayed a really good hand that they've been dealt. And on the reliability side in particular, going back to February's winter storm, one of the biggest causes of the grid failure, as you know, was a drop in natural gas supply because there was not a weatherization standard at the Texas Railroad Commission. And so natural gas producers didn't prepare to operate in cold weather, just like they do in almost every other state, right? In

Wisconsin or Alaska, natural gas doesn't fail when the temperatures drop. But here, we didn't have a weatherization rule, despite, you know, going back to a storm in 2011, when the grid had almost failed all of these expert recommendations to the Railroad Commission to create such a standard. And they just didn't take action. Right. And what happened last February happened. And, you know, as as you know, earlier this week, they it's now been 18 months. The Railroad Commission is talking about a new weatherization standard, has proposed one. But what they have put forward is deeply inadequate it's got huge transparency issues it's got huge enforcement issues like what um like it's not clear who

needs to comply with the rule right and so when you look at um the railroad commission's enforcement track record i mean on on any of the rules that they're supposed to enforce, right? Whether it's capping orphan wells or the rules on flaring and venting, like time and time again, we see them just not enforcing the rules. So even if they made a strong, transparent rule, I don't have faith in them to enforce it. But the rule is not even strong and transparent, right? The fee structure, you know, there's been a lot of debate about whether or not how big the fees would get, but a $5,000 fine for a company that made billions in profits in a week is not a real incentive, right? That's not a real motivation to actually change behavior. And just to come back to your question, Texans need reliability, right? They

need to know like that when temperatures drop or frankly, when temperatures get too high, that their power is not going to go out. And that's not where we are, right? I running for office, you travel all over the state. And so I've talked to people, you know, everywhere, whether they're Republicans or Democrats or independents, and nobody thinks it's okay that we are living in fear or of the next time that the power goes out, right? That's just like not how we should be living. And it's the result of decisions that our elected officials have made. Right now, there's a broad scale political fight over the direction of energy in general. There's obviously a lot of

different opinions, even within the two political parties on that. Where do you fall on the future of energy in general? So I'm very much an energy expansion, all of the above type of person, right? I think it is. I am deeply familiar with the history of Texas oil and gas with the absolutely critical role that Texas oil and gas has played both in this state, but, you know, around the world for the last hundred years. And I'm proud of that legacy. I think we should be honoring that legacy. I think just to be really honest, people in my party sometimes don't respect that legacy, especially Democrats in Washington, D.C. And I think what we've seen, especially with high prices this year, with

Winter Storm Uri, with everything happening in Ukraine, that we are going to need Texas oil and gas for a long time, and we need it now more than ever. And so we should be like, I think what we need for Texas producers is we need to like a regulator that consistently enforces the rules that identifies and holds bad actors accountable, because that's what's good for industry, sort of like independent of what you think about the environmental implications, like the private sector should want and does want clear and consistent rules. I think we should- Consistency being the key there and clarity. Yeah. And the thing that I hear when I talk to folks in the oil and gas industry who wouldn't typically be voting for a Democrat is

they say there's not consistent enforcement of the rules and that creates messed up market incentives. And like just to look at the the flaring situation in particular right now, right? Flaring is a stain on the reputation of the Texas oil and gas industry. And it is not a stain that everyone, all producers are equally responsible for, right? You've got bad actors who are not following the rules and not being penalized by the Texas Railroad Commission. And that is having a huge impact on the sort of long-term prospects of the industry here. I think, especially with what's happening overseas, European buyers are going to be, and this is an argument I made to Tipro, but European buyers are going to be looking to buy

hydrocarbons and natural gas in particular outside of Russia, given what we've seen in the last year. And Texas producers are going to want to compete for that. But right now for that business, right now we've got a bad reputation because we don't have a regulator that's enforcing the rules. And what we need in order to compete and to be able to sell our hydrocarbons to Europeans who will pay a premium for lower emissions products, like we need a regulator that holds bad actors accountable and that can credibly say they're enforcing the rules. And right now we have neither. And that's, you know, to the argument I make is that like lowering our emissions and getting our flaring situation in order is just good business, sort of independent of what you think about the environmental

implications. It is just good business. And we need a regulator that's going to enforce the rules in order to help Texans and Texas producers. In the Permian Basin, we've seen flaring intensity, this might extend to all of Texas, but we've seen flaring intensity improve quite a bit. That's the amount of gas flared per barrel of oil produced, how much more room is there for that kind of trend to continue growing outside of regulation? So I think we've seen improvements in some areas, but I'm a little skeptical of the Texas Railroad Commission data that says, hey, this situation is massively improving, right? They're ignoring methane leaks.

They're ignoring, you know, there was an example a few months ago where a pipeline leak emitted the same amount of greenhouse gases in an hour that 16,000 cars emit in a year, right? And so if you're saying, hey, we've reduced the flaring here where that's, you know, contributing some percentage of the overall problem, but we're not addressing the like big elephant of a problem. I don't really think we can call that progress in a meaningful way. It's kind of the same way, you know, it's the same way I feel about the orphan well situation, right? Where, you know, there are 6,000 orphan wells and or more, you know, there are more that are coming online

or offline. There's all this federal money to cap them and folks want to celebrate the 800 wells that they're going to plug. And obviously that's a benefit. But if you talk to folks who have some of these wells on their land, they're like, oh, well, the Railroad Commission just cares about metrics, right? They're focused on capping the wells that cost $5,000 and ignoring the wells that will cost $100,000 or a million dollars to cap, like Beamer Lake, like the well that Skylar White was testifying about on Tuesday. And so they're going to then say, hey, we made all of this progress. But if you're not solving the biggest, most complex issues, if you are time and time again saying this isn't our problem, like whose problem is it? Right. If we should have elected officials that want to actually do the job and actually

solve the problems that we are facing, which are hard and complex and require a nuanced understanding. And it's not all black and white but we don't have that right now instead we have people who are who are playing politics with um these issues that are incredibly important for texan on this emission stuff there's currently a fight brooding between the state and the federal government specifically the epa yeah on ozone levels in the permian now there's no like permanent measure measurements in the perm in the Permian. Now, there's no permanent measurements in the Permian Basin on Texas' side, but we've seen some disputed data in New Mexico and El Paso. What is your thought on that fight? And we saw Governor Abbott accuse the EPA of using faulty data, specifically picking

and choosing the counties that it pulls data from and ignoring another one that's geographically closer to much of the Permian. What do you think about that situation? Look, I think that if we had a regulator that enforced the rules and did what was best for Texans, like we wouldn't be worrying about the EPA. I don't want the EPA here more than anyone else does. I want us to have... We are Texans. We should be having our own house in order. We don't currently have that. Again, going back to the orphan well situation, this is a brewing thing that's growing over time.

And if we don't get it under control, it's going to become more expensive and riskier. And I feel the same way about flaring and some of the air quality and emissions things that we currently have an opportunity to get this stuff under control. But time is running out and we need someone in office who actually wants to solve the problem and get the situations under control. But time is running out and we need someone in office who actually wants to solve the problem and get the situations under control. Because otherwise what is going to happen is the EPA is going to come in and nobody wants that. And we shouldn't need that as Texas. More specific than just like paying more attention to the issue or the specific examples, what could you do as railroad commissioner? What kind of policies or procedures

would you implement in order to alleviate the orphan well problem and the flaring stuff? Yeah. So on flaring in particular, and this is all, I'll take a minute to just talk about the commission and how it works in case folks aren't as familiar. But basically the railroad commission is an 800 person regulatory agency that is overseen by three elected commissioners. No Democrat has been elected to the commission in 30 years, in more than 30 years. It's a six year term that are staggered. And part of your point is that in my first two years, I would be the minority on the commission. So what can I achieve? I think there is a huge amount that an individual commissioner can achieve, even as the minority on the commission. Right. And to take the flaring

situation in particular, what you see right now is so many of the flaring exemptions, for example, which are a huge source of greenhouse gas emissions. Some are necessary and some are not, right? We have a rule on the books. The Texas legislature has a law that says you're not supposed to flare after 10 days. But what we see is every year, the Texas Railroad Commission grants thousands of flaring exemptions, approves almost 100% of the ones that companies apply for. And that creates millions of tons of unnecessary greenhouse gases that are emitted into the atmosphere every year. And many of those things are passed on something called the consent agenda. And we saw this on Tuesday this week, where they'll introduce 300 items at a time. I think this week it was 445.

And the commissioners, because they all are on the same page, they all are voting the same way, will just introduce items one through 468, right? And they'll approve them all. No debate, no witnesses, no public testimony, no discussion. And so as an individual commissioner, and this goes back to the problem that we were talking about before, I could significantly, I would dissent on some of the applications that I disagreed with. I would call witnesses. I would call for hearings and more discussion of some of these issues, because it is a one of the biggest problems with the Railroad Commission, regardless of what party you're in, is that there's just a lack of transparency, right? In general, people are not paying attention to what is going on.

And so I think there should be more discussion and more transparency about what is happening there. And so that's one thing I would really focus on as a commissioner. I think another really important power that an individual commissioner has is to do investigations into high priority or high profile issues. And one that I always bring up is the natural gas pricing during last February's winter storm, right? Natural gas prices went up a huge amount overnight. Several companies made billions of dollars. It is the Railroad Commission's job to investigate unorthodox pricing behavior, to work with the attorney general to make sure that there was no price gouging or no foul play and to prevent monopoly behavior. And what they're doing is the exact opposite, right?

They haven't even investigated. They're not even trying to answer the question of, oh, did consumers get the short end of the stick or taken advantage of here? Meanwhile, their donors made billions of dollars during the storm. Texans are paying off those costs in the form of higher utility bills for decades because of a decision the Railroad Commission made. And so as a commissioner, I could direct commission staff to do an investigation into the price gouging situation, for example. And there's obviously a huge list of things we could do as an individual commissioner. With the natural gas situation, how much obviously you haven't you haven't

done the investigation because you're not a commissioner you know you haven't exercised that regulatory authority but how much of that do you think was just the scarcity pricing of natural gas jumping the price uh with the alleged issues. Some people call it price gouging, like you mentioned. Others talked about canceling of contracts. Where's the balance on that in your mind? I mean, I think without doing the investigation, it's hard to know, right? But I'll point to a few data points that we do have, right?

Data point number one is that because, again, this goes back to the federal government, and the point about the EPA, but because the Railroad Commission and the Attorney General have not taken action to investigate, the federal government is now threatening to or wants to. They have seen things that are concerning. That concerns me. I don't really want them investigating. I want us, again, to look out for our own situation.

The second thing that I think is concerning is that we, you know, they pegged electricity rates the highest possible, right? And they did it retroactively, not just going forward. And just to be really clear about this, you can't incentivize behavior in the past. That's not how pricing works. And so, number one, I don't think that that was necessary. Number two, because there's not a production incentive argument there. And number two, we just don't have clarity. There was no communication about a lot of those discussions and decisions. And there continues to not be a

lot of transparency about what was happening and who was talking to whom. And these are huge costs passed on to consumers, right? Like while literally millions of Texans were in their homes without power, like it was 38 degrees inside my apartment in Austin, Texas, in 2021, in the energy capital of the world, you saw Greg Abbott and Wayne Christian and a lot of these natural gas producers, like natural gas pipelines, like probably talking to each other and some of them made billions of dollars and so i at least want an invest would want an investigation into what happened because it feels uh off to me and i think it feels off to a lot of people the um we see at the puc right now the public utility commission they are trying to figure out ways to tweak the electricity market. We'll see how that turns out. But the natural gas market, that's

international. How much authority to make tweaks does the Railroad Commission actually have on that? So I think one really concrete place where we should be, the Railroad Commission could increase transparency in the market, is in the intrastate gas market, right? And basically what we need is we need transparency on pricing on either end of the pipeline, because we have that transparency within the electricity market in this state. You know, the PUC and ERCOT have worked on that. And it does not seem, it would not be that difficult. And it would protect consumers to have more transparency on the intrastate gas market where the Railroad Commission has jurisdiction.

I think the problem that you see is that the pipelines don't want that, right? They have monopoly power, despite the fact that the Railroad Commission was created to prevent monopoly power and hold monopolies accountable. You've got these pipeline monopolies who can pay whatever they want to the natural gas producers and charge whatever they want to the power plants with basically no recourse and no accountability for anyone. And you see the Railroad Commission, even in cases where, oh, prices went up 300 times, saying this isn't our problem.

This is a private contract, right? You look at almost every other state in the country, pipelines do not have the ability to own the natural gas that flows through them in those other states. It just creates too much market power for monopoly, for these monopoly providers or pipelines. And it, just to be really clear, has a real impact on producers, right? It's hurting small producers who don't have as much power.

It's hurting the power plants. And it's hurting Texas consumers, right? It's hurting small producers who don't have as much power. It's hurting the power plants and it's hurting Texas consumers, right? Because ultimately we are paying higher prices because of the lack of transparency in this market. Is it just some of the pipeline companies that actually own the natural gas? Because there are contracts between the producer and the generator that's buying the gas, and they pay the pipeline to transport it. So you're saying there are pipeline companies that do actually own what's moving through? Yeah, that do actually.

So it's a hybrid system. Okay, gotcha. I think there is an oversimplification, or people think that the entire oil and gas industry is a monolith, and that's not what's happening, right? There's a lot of folks in entire oil and gas industry is a monolith. And that's not what's happening, right? There's a lot of folks in the oil and gas industry who are not happy with the Railroad Commission and who are not happy with Wayne Christian because he is essentially in the and you look at Commissioner Craddock as well.

They're essentially in the pockets of energy transfer partners, Kinder Morgan, like a lot of these like uber wealthy folks who are screwing over the small business owners that, Kinder Morgan, like a lot of these like uber wealthy folks who are screwing over the small business owners that, you know, growing up, my dad owned a small business, right? I the reason I studied economics, the reason I care about a lot of these issues is because I was raised in a household like knowing what it's like for for someone to be trying to make ends meet through a small business. And ultimately, it was a CD store. He closed that store because of technology change and people not buying CDs. And so a lot of these smaller guys in the industry are getting screwed over by the pipelines and the fact that no one has their back, right? No one's looking out for them. And I think people are mad

about that. It's a competitive industry and you have the big ones, you have the small ones. So you mentioned multiple times about not wanting the feds or the national party to get involved in this or at least play a big role. We've seen your party at the national level, especially move pretty forcefully against fossil fuels, at least in the long term, if not the short term, too, depending on the proposal you're talking about. Where do you fall on that?

How do you bridge that gap here in Texas? Yeah, I mean, I don't think I'd have to bridge that gap. I think national Democrats are going to do whatever, you know, national Democrats are going to do. I'm running, I'm a Texan. I'm running for this office to do what is best for Texas and to do what is best for Texas oil and gas producers and also the people of this state. And that means, you know, making sure the lights can stay on when temperatures drop. That means holding pipeline monopolies accountable to lower utility prices. That means keeping our air and our water safe.

Frankly, like I'm not obviously I pay attention to what's happening at the federal level, but I don't think federal Democrats have a big impact on or they have they have no impact on how I would do this job. Well, the measuring stick for a lot of people has been take the Green New Deal, which has gotten a lot of headlines. That would have tremendous effect here in Texas. Some people argue it would be good. Some people argue it would be very bad. What do you think about that blueprint in particular? Look, I think we need a Texas-based plan.

We need a plan for Texas. Again, the Green New Deal was is best for the future of this state. We have been an energy leader for the last hundred years. I want us to continue that energy leadership by making oil and gas cleaner and safer, by expanding opportunities in geothermal and carbon capture and hydrogen and some of these emerging industries. And what we need is we need somebody at the Texas Railroad Commission, which has historically played an advocacy role of leading Texas energy is literally their motto, who has some understanding that, like, we all know the world is changing, right? Everyone looks around people who work in the industry, people who don't, we look around, we all know the world is changing, right? Everyone looks around, people who work in the industry, people who don't. We look around, we all see that the world is changing. And the question is, how does Texas position ourselves with regards to that change? Like, are we going to continue to lead or are we going to put our heads in the sand and pretend that it's 1980 and nothing's happening?

And, you know, I've got an opponent who's doing the latter, right? Who is sort of, you know, I heard somebody the other day describe it as sleepwalking, but has it been essentially sleepwalking for years? And that's having a real impact. And I think Texans are frustrated by that. And we see that in conversations across the state, not just with Democrats, but with independents and Republicans as well. And I think that means they're going to vote for a new leadership in November. When I saw you speak at TIPRO, I think it was April. Yeah. You led with the line, it feels a bit like Daniel entering the lion's den. Has your whole campaign felt like that?

You know, I love it, right? Because I think people look at me like I'm the youngest Democrat to run statewide in 30 years, right? And people look at me and they ask about the Green New Deal and AOC and sort of like expect certain things to come out of my mouth. And then I start talking about my business background, my experience advising oil and gas companies, my economics degree and understanding of global natural gas markets and how we can position ourselves to continue to lead in the energy economy of the future. And sort of like there's a surprise on people's face, I think a little bit, which is pretty, it's pretty fun. You know, I'm a pragmatic, practical person who cares a lot about these issues, who wants to

improve them for the benefit of Texas and Texans. And after that Tipro speech, that's a room that's not particularly friendly on its face to a Democrat. And a lot of people came up to me and said, you know, I'm never voting for you, but I respect you for coming here. But a few folks came up and said, you won my vote. Or, wow, like, I've never heard a Democrat talk like that before. And I just think there's a lot more, there's a lot more people sort of in this pragmatic, like, hey, how can we make incremental improvements to a lot of these really important issues rather than this like sort of non-constructive political conversation where like you've got my opponent talking about the border, like the border and

like abortion and all of these issues that are just not really directly in his job description. And it's like, because he doesn't want to, he's not doing the job. He doesn't want to do, it's just politics for him. And I actually want to do the job and have an interest in serving and serving Texas. Well, Luke Lorford will be on the ballot November 8th. Thanks for joining us, Luke. Thanks for having me.