Oklahoma’s Future Rests in the Hands of Two Very Different Oil Billionaires
(Bloomberg) -- George Kaiser, a 76-year-old Oklahoma banker and oilman giving away almost his entire $10.5 billion fortune, wants higher taxes on his own industry. He’s bankrolling trendy neighborhoods in Tulsa, an early-childhood education program and a movement toward criminal-justice reform. Kaiser says his priority is to wean the state’s economy from “cyclical, commodity-based industry.”
Harold Hamm, founder of Oklahoma City oil-and-gas giant Continental Resources Inc., has fought to keep things as they are: lean budgets, lax environmental regulations and low fossil-fuel levies. With a net worth of $13.8 billion according to the Bloomberg Billionaires Index, he funds the state’s most conservative politicians while arguing for higher taxes on wind turbines sprouting on the rolling hills. Hamm, 72, has promised to donate most of his money to “causes that will enable people with ambition and tenacity to achieve their goals.” So far that’s included millions for research on what he calls the “American energy renaissance”—a doubling of oil production since 2011.
“You couldn't find anybody more different than those two guys,” said Mike Cantrell, a former Continental Resources executive who is president of the Oklahoma Energy Producers Alliance, a group of small oil companies that campaigned for higher taxes to fund education. “They both care a great deal about Oklahoma, and both are tough and brilliant businessmen.”
The Sooner State and its wind-swept, derrick-dotted plains are a microcosm of America. Millennials and minorities are flocking to its two big cities, propelling the economy even as oil dominates its politics. Now, its two richest billionaires have taken opposite sides in a fight that may decide whether the industry that built their fortunes will define the future. The conflict has been raging all year, including a teacher’s strike, the first tax increase since 1990 and election victories for a swarm of educators. Meanwhile, the state’s economic transformation is accelerating, following trends evident across the country: While rural areas bleed jobs, metro areas like Oklahoma City and Tulsa win new wealth and flashy amenities.
Hamm and Kaiser have backgrounds as distinct as their personalities. Kaiser, the Harvard-educated son of Jewish refugees from Nazi Germany, inherited the family oil company and transformed it into a global empire. He keeps a low profile in his hometown of Tulsa, shunning public events and interviews while working long hours managing his philanthropy and holdings. In private meetings, Cantrell said, Kaiser’s intelligence is “almost intimidating”—while Hamm’s intuition “just kind of sneaks up on you.”
The 13th child of sharecroppers, Hamm took big chances getting rich—at one point drilling 17 consecutive dry holes. He pioneered techniques including fracking, which yields billions of barrels from fields previously assumed to be tapped out. He’s still taking risks, concentrating the vast majority of his fortune in volatile Continental stock. Frequently interviewed on television, Hamm is used to attention: A messy 2014 divorce ended with Hamm handing his ex-wife a check for $975 million. He appears at rallies with President Donald Trump, for whom he is the model of an oilman.
Hamm’s biggest concern is environmental policy. “Climate change isn’t our biggest problem—it’s Islamic terrorism!” he told the Republican National Convention in 2016. “Every onerous regulation puts American lives at risk.” He forged a relationship with Trump, who installed a close ally, former state Attorney General Scott Pruitt, for a brief, headline-grabbing stint as U.S. Environmental Protection Agency director. Hamm, Continental and its political action committee plowed more than $3.1 million into the past two elections, almost entirely for Republicans and Trump-focused PACs. His philanthropy is just getting started and it’s not all political—Hamm has given more than $60 million to the University of Oklahoma’s Harold Hamm Diabetes Center. He suffers from the disease.
Kaiser’s political influence is more subtle, with almost $630,000 in donations since 2015, along with gifts to a left-leaning think tank. But Kaiser’s targeted philanthropy has introduced innovative policy experiments even as Hamm’s agenda struggles.
For the past century, the fortunes of Oklahoma and its 3.9 million residents have risen and fallen with natural gas and crude oil—indeed, a working well sits on the capitol grounds in Oklahoma City. And both Kaiser’s and Hamm’s net worths are closely linked to the price of oil, which has dropped steadily since early October. But residents increasingly work outside the fields. Since 2012, the Tulsa and Oklahoma City metro areas have added more than 82,000 jobs, according to federal statistics, while the rest of the state lost 9,800. More are coming, including Amazon fulfillment centers employing 1,500 workers in each city and a $600 million expansion of a Google data facility near Tulsa that will be powered by a 300-megawatt wind farm.
The state caters to oil nonetheless. As fracking accelerated, Oklahoma slashed the tax rate on wells to 2 percent from 7 percent in their first three years of operation—when they bring in the most revenue.
During the Great Recession, oil plunged and lawmakers cut budgets. Inflation-adjusted spending per student dropped 28 percent from 2008 to 2018, more than any other state, according to the Center on Budget and Policy Priorities. Schools stopped replacing textbooks, cut arts and advanced-placement classes, and, in almost 100 districts, moved to four-day schedules. By 2017, teachers made less than in every state except Mississippi.
“We were basically giving tax welfare to oil and gas companies,” said Alicia Priest, president of the Oklahoma Education Association. “They have been able to write their own ticket with our legislature.”
This year, furious teachers walked out for nine days. And in March, Hamm looked down from the statehouse gallery as lawmakers—many who had taken his donations—raised his taxes, boosting the production levy on new wells to 5 percent and rejecting his proposals to tax wind power. Teachers got an average raise of $6,100, and almost all legislators who resisted were defeated in Republican primaries.
Through a Continental spokeswoman, Hamm declined to comment. “The oil and gas industry can’t be the only industry asked to come to the table in a time of need,” said Cody Bannister, spokesman for the Oklahoma Independent Petroleum Association, which represents the company.
While Hamm suffered defeats, Kaiser—notoriously self-effacing—was handling displays of gratitude.
At a retail complex made of shipping containers near downtown Tulsa, you can buy a green T-shirt emblazoned with the phrase, “Thanks, George!” The tribute was prompted by what may be one of the most generous civic gifts ever. Opened in September, Gathering Place is a $465-million, almost 100-acre park along the Arkansas River. There are eight miles of trails, 16-foot rock canyons, waterways and elaborate play areas. Kaiser and other philanthropists seeded the park with a $100 million endowment.
Kaiser‘s foundation also redeveloped Tulsa’s arts district, a collection of millennial-friendly bars, music, restaurants and shops. Its heart is a two-story mural of Oklahoma native Woody Guthrie holding his guitar emblazoned with the slogan “THIS MACHINE KILLS FASCISTS.” Kaiser bought the singer and activist’s archives and built the Woody Guthrie Center. More recently, he purchased the archives of Bob Dylan, a Guthrie acolyte.
But Kaiser’s true obsession is poverty. Intrigued by research on brain development, he launched three so-called Educare centers—with one more on the way—that spend $24,000 per child annually and charge almost nothing. Thousands of Tulsa children 3 and under are eligible for the 550 slots, so admission is based on risk factors such as whether the parents are teens. In small classrooms, teachers constantly talk to children to narrow a “word gap” with middle-class peers. They eat family style, passing the peas and pouring their own drinks, to encourage fine-motor skills.
It’s just one of a long list of Kaiser-funded initiatives. He started a program that offers 18 months of drug treatment and therapy to women who otherwise might spend years behind bars. The focus on women, many mothers, touched a state that incarcerates residents at higher rates than any other. In 2016, voters made simple drug possession a misdemeanor.
While Kaiser donates to Democrats on the federal level, his Oklahoma contributions are bipartisan. He praised the Oklahoma GOP for “cleansing their ranks of the most extreme views of limited government,” adding that “ideology is giving way, to some degree, to pragmatism.”
Kaiser said his philosophy is “to identify the highest priority, most morally compelling, solvable human problem,” and his core principles are “inclusiveness and tolerance.”
The Nov. 6 elections gave both Kaiser and Hamm reasons to celebrate. Businessman Kevin Stitt, a Hamm-backed Republican, won the governor’s mansion by 12 points over a former Democratic attorney general backed by Kaiser. Republicans kept wide legislative margins, gaining seats in rural areas but losing a few in the big cities. The night’s biggest surprise, though, was a U.S. House seat in Oklahoma City: Longshot Democrat Kendra Horn upset the incumbent Republican.
Her victory gave a glimpse into what Oklahoma’s future might look like: blotches of blue, economically vibrant, but surrounded on all sides by deep red.
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