Study contends State’s Energy Discrimination Elimination Act hurts Oklahoma

A new study by the Oklahoma Rural Association claims the two-year old law created by the legislature to target financial firms that discriminate against the state’s oil and gas industry is far more harmful than beneficial to the state’s economy.

The Association is a group that promotes rural Oklahoma as well as business and industry in rural communities. The discrimination act was created to fight financial firms from using ESG policies against the oil and gas industry.

The study, entitled “Unintended Consequences of the Energy Discrimination Elimination Act in Oklahoma,” was conducted by Dr. Travis Roach, an associated professor and chairman of the Department of Economics at the University of Central Oklahoma. Dr. Roach is also founder of the Central Policy Institute.

“It is clear that the EDEA has caused an unnecessary increase in municipal borrowing rates, increasing costs, harming taxpayers, and resulting in municipalities paying more for less or canceling projects altogether. These unintended consequences are causing significant harm to Oklahoma communities and our economy,” said study author Dr. Travis Roach.

Notably, the new study finds that Oklahoma’s EDEA policy has resulted in:

• A 15.7% increase in borrowing costs for Oklahoma municipalities compared to non-EDEA adopting states.
• $184,777,344 in additional expenses for local municipalities since the policy’s enactment, or $10,869,256 per month of the policy’s tenure thus far.
• Increased borrowing costs, which negatively impact Oklahoma municipalities through:

• • Higher taxes.
  • Reducing expenditures in other areas.
  • Delays or complete abandonment of projects intended to improve infrastructure and quality of life.

This impact is only projected to increase if Oklahoma’s EDEA policy remains in place and continues to restrict the competitive municipal bond market, further harming taxpayers.

The study prompted a statement from Monica Collison, president of the Oklahoma Rural Association.

“The negative impact of the EDEA on Oklahoma taxpayers and communities, including those in rural and underserved areas, was completely avoidable and, as the research shows, a direct, negative result of these failed policies,” said Collison.

“Any tax dollar unnecessarily spent is wasteful – especially to the tune of more than $185 million. Oklahomans deserve better, and we encourage our lawmakers to right this wrong.”

The EDEA, passed in 2022, prohibits certain financial institutions from doing business with public entities in Oklahoma based on specific banking policies. In compliance with the EDEA policy, Oklahoma lawmakers must maintain a list of financial institutions they deem “boycotting” the oil and gas industry. By limiting competition and tightening the competitive bond market, local governments are seeing hikes in interest rates, taxes, and an inability to complete projects.

The last determination made by State Treasurer’s office listed several major financial institutions that are banned from handling investments for state agencies.

The list was created May 3, 2023 and there has not been a determination since then.

“–the Oklahoma State Treasurer’s Office has determined that the financial companies listed below are engaging in energy company boycotts. Accordingly, each is hereby placed on the Oklahoma State Treasurer’s Restricted Financial Companies List.”

They were:

BLACKROCK, INC.

WELLS FARGO & CO.
JPMORGAN CHASE & CO.
BANK OF AMERICA N.A.
STATE STREET CORP.
GCM GROSVENOR
LEXINGTON PARTNERS
FIRSTMARK FUND PARTNERS
STEPSTONE VC GLOBAL PARTNERS
WCM INVESTMENT MANAGEMENT
WILLIAM BLAIR
ACTIS
CLIMATE FIRST BANK

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