The American Energy Institute recently released a paper rebutting an analysis done by the Oklahoma Rural Association (ORA) that claimed Oklahoma’s anti-ESG law, the Oklahoma Energy Discrimination ACT (OEDA), has cost taxpayers money. The main focus of the ORA analysis is the claim that the OEDA has disrupted the bond market in Oklahoma in a way that raises costs on municipal projects resulting in fewer projects and increased taxes for these projects.  

The American Energy Institute report, authored by economists Vance Ginn and Byron Schlomach, refutes these claims on several fronts. Aside from the flaws in the statistical analysis, the main point brought up by Ginn and Schlomach is that the ORA report fails to take into consideration the negative economic effects ESG policies have on Oklahoma as a whole. ESG investment policies directly reduce investment in two of Oklahoma’s core industries, oil and natural gas. Even if the OEDA resulted in increased borrowing costs, the economic slowdown in these two sectors and the resulting economic fallout far, far outweigh a slowing municipal bond market.

States across the country, along with the federal government, have been leaning into the ESG model. The harm these policies will have on the state’s oil-and-gas sector means that the cost of doing nothing to combat ESG policies dwarfs the potential costs (if any actually exist) the OEDA might have.

The state recently experienced what can happen when the oil-and-gas industry falters. The downturn in 2016 and 2017 resulted in the largest tax increase in state history—with more than $1.1 billion in revenue-raising measures passed over a three-year span.