Energy and Trade Priorities With Governor J. Kevin Stitt

Kevin Stitt, twenty-eighth governor of Oklahoma, discusses his international priorities, including Oklahoma’s growing role in the renewable energy landscape, ensuring access to a sustainable supply of critical minerals, and deepening trade relations.

This meeting is part of CFR’s State and Local Officials Initiative which offers resources on pressing international issues that affect the priorities and agendas of state and local government officials. 

For those attending virtually, log-in information and instructions on how to participate during the question and answer portion will be provided the evening before the event to those who register. Please note the audio, video, and transcript of this hybrid meeting will be posted on the CFR website.

TRANSCRIPT

FROMAN: Well, good morning, everybody, and welcome. Thank you for joining us today. I’m Mike Froman, president of the Council, and I’m really delighted to have this event here today.

You know, the Council is—prides itself on being a nonpartisan, fact-based institution. We don’t take institutional positions on any issues. We represent a wide range of perspectives in our members, our board, our fellows. And it’s great when we can have Republican governors, Democratic governors, and the like all feel comfortable coming here and showing their views with us.

And we’re delighted and honored to have Oklahoma Governor Kevin Stitt here with us—with us today. In my past life, when I used to work with governors and mayors on business issues, I always thought, like, that’s where the work gets done. They’ve got to actually deliver for folks. And whatever partisanship is going on elsewhere in politics in the U.S., governors and mayors really, really focus on getting things done.

We’re going to have a great conversation, led by Michelle Caruso-Cabrera, CEO of MCC Productions and a CNBC contributor. But let me just say a few words about the governor.

He’s the twenty-eighth governor of Oklahoma, a fourth-generation Oklahoman. And when he was elected, he promised to bring the world to Oklahoma and Oklahoma to the world, and he’s going to be talking a little bit today about his international strategy. I think we all think of Oklahoma as a major producer of energy, particularly oil and gas; but people may not realize it’s also a top producer of wind, solar, and hydroelectric power, and 47 percent of its total electricity is generated by renewable resources. And he’s going to talk a bit about that and some of the critical minerals and processing that Oklahoma is positioning itself to play a major role in.

So, Governor, we’re delighted to have you. Michelle, we’re delighted to have you. And I’ll turn it over to you for the conversation.

CARUSO-CABRERA: Thank you so much. Thanks, everyone, for coming this morning. It’s a pleasure to be here with you, Governor.

STITT: Thank you.

CARUSO-CABRERA: A reminder this is on the record. We’re going to chat for about a half an hour, and then we will take audience questions. I know a lot of people in this audience and I know they’re going to have great questions, and we’ll also take some online.

First, you know, we get a lot of foreign policy experts. We get a lot of presidents and prime ministers from around the world. Why does the governor of Oklahoma want to talk to the Council on Foreign Relations?

STITT: Well, thanks. Thanks, Michelle and Mike, for having us. It’s an honor to be here with all of you, and looking forward to the conversation.

You know, like he was saying, when I ran for governor I told Oklahomans that I wanted to tell our story a little bit better—I wanted to take Oklahoma to the world and bring the world back to Oklahoma. And so we have a(n) international strategy. I’ve met with, I don’t know, probably fifty different ambassadors telling our story. And Oklahoma is the best place to live, to work, to raise a family.

And a little bit about my background. So, in 2019, I had—I had—after college, I had started a company with a thousand dollars and a computer, so I’ve had to bootstrap my whole life. And I grew this business to over a thousand employees, and then we ended up buying a bank. And I’d never been involved in politics at all, but I saw my state struggling and just wanted to get involved. And today, Oklahoma’s just thriving as a—as a state, which we can go into all those details. But it’s just exciting to be able to tell Oklahoma’s story to ambassadors in different foreign places.

CARUSO-CABRERA: And what story are you telling them? I’m assuming it’s a lot about energy, mostly about energy, energy production?

STITT: Yeah. So Oklahoma’s energy story is—everybody probably thinks of Oklahoma as just an oil and gas state, right? And we’re so proud of our oil and gas industry. We’re actually number six in oil production in the country, number five in natural gas. But we’re also number two in wind energy production. We’ve got some of the cleanest water, cleanest air in the country. Because of that, we have an affordable, reliable energy grid. And that’s causing companies to look—manufacturing, AI, datacenters. Google has their largest datacenter located in Oklahoma because of our energy prices and they like buying our renewables. And we have 50 percent of our energy—we’re one of only four states that could say this—50 percent of our energy comes from renewables. So we’re a net exporter. And because of all that, it’s just causing people to look at our—look at our country.

Every ambassador I talk, at every company in Europe, if—they all want to talk about energy reliability, right? And especially when you see the Russia-Ukraine and you see some of these disruptions around the world, it becomes more and more important. Right now you’ve got Germany building coal power plants.

And so I just think it’s important that we have more of everything. And that’s kind of the approach Oklahoma takes, is we believe we need more wind, and we need more hydrogen, and we need more solar; but we cannot leave out of the conversation a baseload requirement of natural gas.

And one thing that—I think a story that kind of exemplifies this, so you all remember the polar vortex back in February of ’21? It was unseasonably cold all through the Midwest, and literally rolling blackouts. Texas’ grid was really being strained. Oklahoma held up pretty good. But what happens is 40 percent of our electricity is normally generated by wind, and during that unseasonably cold weather our wind turbines were actually frozen, so we were getting no electricity generated from wind. And even we were having some of our natural gas was frozen at the gas wellheads, so we couldn’t get a lot of that. Coal normally in Oklahoma is less than 10 percent of our electricity generation, around 8 percent, and it actually went to 50 percent. So some of our—some of our generation can be flipped, coal or natural gas, and so during that two-week period we went to over 50 percent of coal generation for our electricity. And I was on the phone with President Biden during that time, and he was having a call with myself and Governor Abbot, and when I told him that story I said, if we wouldn’t have had kind of everything, all these different resources, people would have died. We would have had literally some—and I tell young people when I talk to high-school kids, I said, if we wouldn’t have had coal in Oklahoma at that time, you wouldn’t have been able to watch social media for two solid weeks. They kind of—

CARUSO-CABRERA: No Instagram.

STITT: They kind of scratched their head.

But I do think it is important—it’s funny, but it’s also important to understand where that electricity comes from and what is the generation. When you plug your cellphone in or your electric vehicle, where does that generation come from? And it’s important that we talk about that.

CARUSO-CABRERA: And I assume you’re saying that because there’s a big push to make the transition away from fossil fuels to go even faster. There are—there are many who believe we’re going to eliminate fossil fuels completely. Where do you fit on that continuum of what is the role of fossil fuels in the future?

STITT: You know, I’m a—I’m a free-market person. And if you think, you know, the government has all the answers, I don’t believe that. I don’t think that you can just dictate, put your thumb on the scale.

If you go back to 1978, I can’t remember exactly what the bill was called, but it was like a—it basically said—and this was the U.S. Congress—that you couldn’t use natural gas for electricity generation; you only could use coal. So the coal lobby was huge in the ’70s, and so we were pushing electricity generation by coal, OK? So that was what the government was doing in the—in the ’70s.

CARUSO-CABRERA: But government intervention is justified by many now because it’s believed by some that there is an existential threat to humanity by the use of fossil fuels.

STITT: So I don’t—I don’t believe that there’s a(n) existential threat to humanity based on fossil fuels. I think we—I think in Oklahoma, for example, we have reduced our carbon footprint by 60 percent over the last two decades because of natural gas. I think we need to be concerned about the environment. We need to do—have cleaner forms of energy. But to kind of put our head in the sand to say that we can get rid of oil and natural gas in the next decade is not—is not common sense. It’s not going to happen. And we’re also a global economy. And you look at what’s happening in India and China and I just mentioned Germany, we all have to heat our homes and our businesses.

And another thing that we think—I spoke before Congress back in 2019. I think this was something that you might find interesting. I know Oklahomans find it very interesting that in a lot of the Northeastern rural parts of the country you have trucks driving around fueling up basements with heating oil, right? That seems kind of weird to us in Oklahoma because clean-burning natural gas and pipelines that can deliver a much, much cleaner fuel than—a truck driving around rural parts of the state pumping, you know, heating oil into basements is not the solution either. So I don’t think we’re having honest conversations about that.

And permitting’s part of that. There need to be some major, major permitting reforms. Even if you believe that we want to transition all to wind, you’re going to have to have more transmission lines. And I think there’s a bipartisan effort right now between the governors—National Governors Association—to talk about that. As governors, we know we need to get these projects done because—

CARUSO-CABRERA: The grid needs improvement, dramatic improvement, if we’re going to do these things.

STITT: Yes. Yes.

CARUSO-CABRERA: Yeah.

You talk a lot about energy—wind, solar, et cetera, natural gas, and oil—but you’re also very focused on attracting businesses around critical materials. Tell us about the efforts there and why that is.

STITT: Yeah. I think we’ve all seen, you know, during COVID especially the supply chain and, you know, kind of a reliance on people that might be an adversary to us, and if things turned off—if we couldn’t get these critical minerals for the defense industry, for our cellphones, for our technology. So I think there is a move—and I just wrote a—wrote a(n) op-ed in the Wall Street Journal—maybe it’s been about a year now, less than a year ago, but—talking about a strategic stockpile for critical minerals. We do that in the natural gas or in the oil and gas space; we need to do that and think about that in the—in the critical minerals space.

Oklahoma’s been leaning into that. As a business-friendly state, I tell all my regulatory bodies we never play gotcha with the companies, with industry. We want to have a level playing field, but let businesses go compete. That’s our philosophy. And so it’s being—we’re attracting companies, especially around this critical mineral industry. USA Rare Earth just set up their—the first-ever mineral-to-magnet manufacturer in Oklahoma, and that normally, you know, China owns 60 percent of the critical minerals and all the manufacturing is done there.

CARUSO-CABRERA: Are people mining in Oklahoma? Are there supplies there? Are you refining—(inaudible)—et cetera?

STITT: We don’t have a lot of—thank you—we don’t have a lot of mining in Oklahoma, but that’s something that we do need to have a conversation about authorizing mining in other parts of the country for sure. But this is more of the manufacturing side, taking that mineral and then turn it into magnets. And there’s people in here that know more about that than I do.

CARUSO-CABRERA: And are you doing like the Biden administration is doing, say, with semiconductors, which is offering subsidies, et cetera, to attract business? How do you get those businesses to go to Oklahoma as opposed to different states?

STITT: You know, some of the—some of the IRA, some of the federal credits are available wherever you’re at in the country. And then so, Oklahoma, we—our Commerce Department is going to do, you know, the normal incentive packages that are going to be competitive, but we’re not specifically, you know, targeting that. It’s just more of if you hire this many employees, here, we’ll do some rebates. There’s some—there’s some ad valorem rebates on taxes for manufacturing facilities. But it’s just the normal commerce-related stuff.

But these folks are looking for workforce. They’re looking for the right workforce. They’re looking for the right energy—affordable, reliable grid. And then they’re looking for a great environment from a regulatory standpoint, because these are new processes, and so they got to be able to work. And our Department of Environmental Quality is going to work really, really well with them and approve new processes.

CARUSO-CABRERA: Have you rolled back regulations, or was it—are you inherently lower regulatory framework state? Tell me more about that, because—

STITT: Yeah.

CARUSO-CABRERA: —when companies are choosing different states, that’s often what they talk about.

STITT: Yeah, great question. You know, I think, you know, we believe in a free market. And if we let innovation happen, and we encourage innovation, and we have new incubators coming, that’s where companies want to be—want to be located. You can see—you could see what’s happening in the court system and some of the heavily—you know, companies being fined, and it just feels like sometimes we’re attacking companies. We believe in Oklahoma that a company is trying to do the right thing; that’s our premise. They’re trying to take care of their employees, their customers, the environment, and we want to—we want to work with them. So, you know, I could give you—anyway, I don’t want to get off too much.

CARUSO-CABRERA: No, no, no. Speaking about critical materials, so the price of nickel has collapsed and you’ve got a lot of nickel manufacturing—or, a big processing plant in Oklahoma that’s going to launch. A lot of what’s happening with critical materials pricing has to do with what’s been in the news quite a lot and has been of great concern to the White House, is a yet-larger increase in manufacturing capacity in China and their ability to produce with subsidies, perhaps at a loss. Some wonder if it’s actually being done on purpose to drive out other producers or manufacturers around the world. How concerned are you about Chinese industrial policy? Do you think it’s proper to use that same industrial policy here in the United States?

STITT: You know, I certainly think we need to be very cautious of China specifically trying to, you know, drive our competition. So that’s exactly what—if you’re a—if you’re a business and you’re trying to drive out your competition, you’re going to cut prices until you bankrupt them and then you’re going to increase it, right, and for their own advantage. They understand that. That’s why we need to potentially look at tariffs. We need to potentially look at the strategic stockpile. We need to maybe empower a part of the U.S. government to set up relationships in Africa, in South America where we can set these relationships up with these mines. China’s doing that right now. They’re trying to get into these countries to set up those relationships and trying to secure that critical-mineral supply that they understand long term is going to be to their benefit. So we need to be—we need to be smart about that.

That’s why we’re talking about the strategic stockpile here in the U.S., and we need to develop those relationships, and maybe even set up—you know, a lot of these countries have these sovereign wealth funds, and they’re going in and securing these type of assets. We need to be—we can’t have our head in the sand on that.

CARUSO-CABRERA: Google’s largest datacenter is in Oklahoma. Why?

STITT: Well, really, it’s back to, I think, the reliable, affordable grid. So I think they have a—they love buying our wind energy. So about 50 percent of our electricity comes from wind, and I think you can tweak the amount that you buy depending on what you’re—what you’re trying to do and what your incentives are or what your needs are as a company. So I think that’s part of it. The workforce. And then once you’re established, they just keep expanding.

And data is going to become more and more important as we move forward. And AI, the explosion of AI, you’re going to need more and more of that. So we have more companies looking at Oklahoma all the time around datacenters because of, you know, the things that we’ve just been talking about.

CARUSO-CABRERA: The Biden administration put a pause on the construction of LNG export facilities recently. You don’t support that. A lot of governors don’t support that. Why?

STITT: So, and I’m the chairman of the Republican Governors Association policy group, and so we just led a letter—and we had twenty-five governors, so half of our—half of our states signed onto it—just asking the president to reconsider his pause on LNG exports. So LNG is something that—number one, it hurts our companies domestically, right? This is an asset that they should be able to be able to sell. But also, more importantly, it hurts our allies. So if you think about Japan and you think about Europe, they need—like I said before, they have to have energy for their citizens. And so we’re driving them into the arms of our adversaries because they have to get it from somewhere. So we’re driving them back to Russia, we’re driving them to China, and so to me it makes—it makes no sense.

And these pauses, these projects are years in the making, right, and no company is going to invest dollars and plan if the demand is not there. So they are projecting—they are projecting out what the demand is going to be, and these things are going to take five, six, seven years to get going. And so when you pause that, you’re really disrupting the free market and you’re hurting our allies more than anything.

CARUSO-CABRERA: New Yorkers will have read in the New York Times that Oklahoma’s one of the largest suppliers of pot to New York. Forty to 50 percent of the pot smoked in New York state comes from Oklahoma, according to your attorney general. It’s illegal for your pot to leave Oklahoma. What are you doing about that?

STITT: Oh, man, that’s funny.

CARUSO-CABRERA: But you know, the smell on the street, some people don’t think it’s so funny.

STITT: Yeah. Well, I was going to say I’ve smelled some of that Oklahoma pot on the street walking around. But—

CARUSO-CABRERA: Have you tried it?

STITT: You trying to get me to say what I told you in the back? So it’s kind of funny, I’ll tell you. So I was in my reelect campaign, and so we were at—we were in a TV debate, and so it was me and my opponent. And the guy was—the moderator was asking a question: Well, have you smoked marijuana? And I kind of spun and I didn’t really answer the question, and he came back and asked me again. Well, my parents are in the audience. And he says: Uh, Governor, you didn’t answer the question. And I was like, oh man, my mom is not going to like this. I’m thinking about Bill Clinton, should I say I didn’t inhale? And—but I said—I basically said, yes, in college I tried it, so. But anyway, OK, back to your question. And then my opponent said, oh, no, I never did it, so.

CARUSO-CABRERA: Goody two-shoes.

STITT: Goody two-shoes.

So before I became governor, we had a(n) initiative petition, which is basically a question to the people when you—on, you know, I think—I can’t remember exactly, it was—I think it was 2017, basically asking the question: Do you want medical marijuana in the state of Oklahoma? Well, Oklahomans are very compassionate, and if there’s going to be a medicine that’s going to help someone we’re going to say, sure. We had no idea that anybody with a hangnail was going to be able to get a medical card. So it is absolutely—it’s like recreational. And so what’s happened is then we—our barrier to entry was so small, so in other words we only charged twenty-five hundred dollars—$2,500 for a license to grow.

CARUSO-CABRERA: It’s a low regulatory framework state, so—

STITT: Everything has to be market. Everything has to be market. So we’re being adversely selected because 250,000 (dollars) for, like a grower’s license in California, 80,000 (dollars) for a grower’s license in Arkansas. So we were being adversely selected and we were just getting all the riffraff in Oklahoma, and we had, like, 8,000 growers pop up just from a state question. And so it took a while for us to get the regulatory framework involved. Now we’ve got half that number of growers. We’ve passed seed-to-sale, secret shoppers. And like you said, it’s—

CARUSO-CABRERA: Secret shoppers?

STITT: Secret shoppers, meaning going in to see if they will sell it to you out the back door, undercover.

CARUSO-CABRERA: Cover, OK.

STITT: And so we’re cracking down on this industry big time because we knew—and that’s back to—and so the whole industry just kind of exploded overnight. It was—it was—we were the latest state that passed medical marijuana, and so—

CARUSO-CABRERA: But it’s legal to grow. I mean—

STITT: It’s legal to grow.

CARUSO-CABRERA: You’re not doing anything illegal by growing in the state.

STITT: Correct, but you can’t sell it out of the state. We had to pass—and then we had legal challenges on seed-to-sale, so in other words we had to tag every plant to actually track it. So, again, I had to get rid of the person running the marijuana association, replace it with another person with coordination with our Bureau of Narcotics. And so we’re really cracking down on it. You should see that number come way, way down. Literally, we’ve gotten rid of half of the growers because there was a lot of—there was a lot of nefarious activity going on. And so we understood that. We’re trying to crack down on it.

CARUSO-CABRERA: And the—and the reason you want to get rid of—when you say nefarious growers, is it because the particular industry attracts an element that is problematic, in your mind? Is it, you know, Mexican cartels, Chinese cartels, et cetera? Is that—

STITT: We saw a lot of Chinese cartels coming in and buying, you know, farmland, buying these growing operations, you know, because they were doing it illegally. They were not—it wasn’t for medical use in the state of Oklahoma; they were growing way more than what actually for the medical use in Oklahoma, to be exported illegally across the country. So that’s what we had to crack down on.

And so when it pops up and it happens—and it’s a weird deal when every state is now doing this but it’s still illegal federally. You wish the feds would just, you know, let’s make a decision on this, because you got these states doing different things and it’s a—it’s a weird industry. I mean, the banking industry can’t—

CARUSO-CABRERA: It’s a very difficult—yeah.

STITT: Very difficult.

CARUSO-CABRERA: Mmm hmm. Yeah.

STITT: And it’s all cash now. Banks don’t want to touch the deposits. And it’s just ripe for corruption.

CARUSO-CABRERA: Another topic—note here in New York is the situation at Columbia, the situation at NYU with the protesters. We just saw what happened in Austin. Anything going on at Oklahoma University?

STITT: Excuse me. You know, no, knock on wood. I don’t think we have anything going on right now that I’ve heard of.

But I will tell you, Governor Abbott and I went to—went to Israel. We took a trip over there just shortly after the war began late last year. And one thing that—we met with Netanyahu. We met with President Herzog. And the thing that they told us that they wanted us to take back to Oklahomans and Texans and Americans, and the thing that really was an eye-opener for me, we’ve all heard of the Iron Dome, right? So—

CARUSO-CABRERA: In this room? Yes.

STITT: Yeah. So we’ve all heard of the Iron Dome. And they have rockets that are shot into their country, and then this Iron Dome technology will pick them off, and so they won’t explode. And so their paradigm now—this has been happening for the last fifteen years—that they’ll have sirens go off and they’ll have a hundred and thirty seconds, depending on where you are in the country, to go take shelter, because there’s a rocket coming in. Can you imagine that if Canada was launching rockets into New York over the last fifteen years, and you guys—we just hope that they’re being intercepted by our Iron Dome system, it’s not normal. And then saying, oh, New York, don’t fight back, it’s—you know, this is just normal, just trust the technology. It’s not normal. They have a right to defend themselves.

And when I see people chanting “death to America,” “we stand with Hamas,” Hamas is a very highly trained, well-funded military. They’re a military without any morals whatsoever. In Oklahoma, we have a concert. I’m sure you have them here. It’s called Rocklahoma. And young people go to this concert, and it’s a couple-day event. That was what was happening in Israel. And October 7, you have—you have terrorists come in with machineguns and literally start mowing down young people. I met them. I went to the Tel Aviv hospital.

And so I just find it very discouraging that people are—you know, we’re all for free speech, but this is hate speech and it should not be tolerated on our campuses.

CARUSO-CABRERA: Two minutes to questions. One final kind of national meta-question as well: TikTok. What’s Oklahoma doing about TikTok, if anything?

STITT: Well, I banned TikTok last year for our state employees on our state devices. You know, a couple reasons: concern about the ownership and what’s happening; but also my state employees, I want them working. I don’t want them on social media. So it was a no-brainer decision for me.

CARUSO-CABRERA: But does that mean they can’t have Instagram or Twitter or anything else?

STITT: No, they can—they can have all that.

CARUSO-CABRERA: All right. Well, obviously—

STITT: That was—

CARUSO-CABRERA: —there’s selective enforcement there.

STITT: That would—they would have probably impeached me if I tried to get rid of that. I don’t know. But, yeah. And we saw what’s happening now with Congress just passed and I think President Biden just signed that bill.

CARUSO-CABRERA: Are you supportive of that?

STITT: Sure. Yeah. I think we ought—we ought to be very cautious about, you know, losing our data, what’s happening, the intellectual property. You know, I think we ought to be concerned about it.

CARUSO-CABRERA: All right. Let’s take questions from the audience. Right here in the front. Oh, wait for the microphone, say your name, please introduce your affiliation.

Q: My question is about—(off mic). (Comes on mic.) But love to hear your thoughts on how you’re thinking about this, given that Oklahoma has both one of our nation’s largest reserves of uranium but also a bit of a history when it comes to uranium.

CARUSO-CABRERA: And nuclear being the reason why Germany is now constructing coal plants, because they got rid of nuclear, so.

STITT: Yeah. Yeah. Well, listen, we’re all for it. We think that is, basically, a renewable source of energy. We think it’s great.

You know, some of the big manufacturing, I’ve talked to some smeltering companies and aluminum and different things; their usage is, like, one gigawatt, and so big, big usage. And they’re thinking about maybe setting up their own generation behind the grid, so this is these modular nuclear facilities. You know, we’ve got nuclear-powered subs that we could take those reactors, and they could set it up behind the grid, and specifically service one manufacturer and one industry. Or you set up your own natural gas, set up long-term contracts with our natural gas pipeline groups. So I think all of that—people are just—they want to make sure that they have—businesses need assurance. They need reliability. And I think nuclear is just one of the more of everything approach that Oklahoma would be all for. So we’ve had those folks talk to us, and I know the different governors are generally for more of everything.

CARUSO-CABRERA: Joe, here in the front.

Q: Thank you, Governor. I know yesterday what—

CARUSO-CABRERA: Your name and your—

Q: Joe Gasparro, Royal Bank of Canada. I know yesterday was OSU Day at the Capitol, so go Cowboys!

STITT: Are you Oklahoma State?

Q: I’m not.

STITT: OK.

Q: I’m not.

STITT: He’s just—he’s done some research on the Cowboys.

CARUSO-CABRERA: Anybody from Oklahoma State?

Q: Unfortunately.

In your state of the union, you were very forward thinking, and you called on your legislature to think about, you know, creating courts that echo Delaware and Texas in terms of corporate governance and being business friendly. What has been the reception from folks about creating another, you know, business-forward court in Oklahoma? Thank you.

STITT: Thank you. Thank you. So the question was about business courts. You heard me talk about that in my State of the State—man, he listened to my State of the State. This is great!

And I went to Oklahoma State—go Cowboys—so the business courts, that’s a very interesting idea. As you know, most companies are all incorporated in Delaware, right? For hundreds of years, they have had a very business friendly—we knew how the courts were going to decide on a multiple of different issues. You just—you see them stumbling right now. You saw Elon pull out of Delaware. You see the attack on President Trump’s businesses here in New York. I don’t care if it’s President Trump’s businesses or President Biden’s businesses, what this court system is doing to a private business is wrong, and so I’m telling Oklahoma, this is our opportunity. Let’s step in, and let’s let businesses know we want to be the business-headquarter capital of the world, so I want to set up business courts—Texas just did this, Oklahoma City and Tulsa—and so it shouldn’t be a slip-and-fall case, so my trial attorneys shouldn’t get too upset with me.

But this is a business dispute over 2 (million dollars), $5 million, mergers, acquisitions, if there’s lawsuits against the board. You see Boeing now getting sued—their board members, they should have known about some crash that happened or something that happened.

So we want to protect businesses in Oklahoma. We think that helps education, it helps infrastructure, it helps health care. If I get—if I become the business capital of the world and the Singapore of the U.S., it is going—it’s going to be—all boats are going to rise. So that’s what I say about business courts.

CARUSO-CABRERA: So are you using Trump’s prosecution here as a talking point about bringing business to Oklahoma?

STITT: I’d say exactly what I just said. I say—I talk about Delaware, I talk about what’s happening in New York, in the court systems in other states, and in California—I love to make fun of California. So we talk about these anti-business states. I mean, Kevin O’Leary, you see him talking all the time about—

CARUSO-CABRERA: From CNBC, uh-huh.

STITT: Yeah. And so basically that’s what the business courts are. It would be a business-minded judge, right, that understands business law. It wouldn’t be just a family attorney or something, and so just more highly trained judges that interpret the statutes, you know, that Oklahoma puts into statute.

CARUSO-CABRERA: Oh, we have a question from the virtual audience. Go ahead.

OPERATOR: We’ll take our next question from Shanker Singham. Please state your affiliation.

Q: Hi, Governor. Shanker Singham. I’m the CEO of Competere, which is a trade and economic policy consultancy based both in London and in Washington.

And the question I wanted to raise with you was your comments about taking Oklahoma to the world. Oklahoma is one of the first—was one of the first states to engage in the conversation with the United Kingdom with regard to the negotiations of MOUs with the U.S. states. There are about eight U.S. states now who have signed MOUs with the U.K. Oklahoma is one of them.

Could you talk a little bit about that and the possibility that was raised in terms of facilitating trade between the U.K. and Oklahoma—digital trade corridors, agricultural protein summit—there’s a number of different initiatives that would bring the U.K. and Oklahoma interests closer together, so I appreciate a comment about that.

STITT: Thank you for that question. Well, the first, most important geopolitical issue facing our two countries is what are we going to do with Harry and Meghan.

CARUSO-CABRERA: You don’t want to go there.

STITT: But, yeah, we signed an MOU with the U.K. I think, you know, most of these—a lot of countries are just disappointed with Washington, D.C., not a lot is getting done. So they are literally going, you know, sub-nationally to our mayors, to our governors to set up relationships, and so, you know, to talk, look, about trade partners. So we signed an MOU with them; we’re working with several other countries, as well. But I think that’s—you know, whether it’s agriculture, whether it’s exchanging of students—so we bring our universities, and we do, you know, student exchanges, as well.

But there are a lot of similarities. They always want to talk about Oklahoma energy, and we take delegations over there. We invite them to Oklahoma to our think tanks on the energy side. It’s really important.

And I’ll tell you, the relationship with Oklahoma and the U.K.—this is a great story that a lot of people don’t know about—but during World War II, the U.K. was running out of oil, and so they—it was a secret mission—forty-two Oklahoman roughnecks—so a roughneck is a person that works on an oil field—they secretly went to the Sherwood Forest back in 1943, and drilled one hundred wells—forty-two roughnecks from Oklahoma drilled forty-two wells in one year, and took the production from three hundred barrels a day to three thousand, and then fueled D-Day. So we’ve got a great relationship. There’s a huge monument there in the Sherwood Forest of the forty-two Oklahomans that came over and secretly helped them.

I don’t think you could drill a hundred wells in one year with the permitting rules today, but it happened back in 1943. So that’s kind of a neat story, that we have a connection with the U.K.

CARUSO-CABRERA: But were you suggesting there is—the dysfunction that we see in Washington is leading other countries and representatives of other countries to go directly to the states. That’s the bottom line.

STITT: That’s the bottom line, yeah. We have these ambassadors that are reaching directly out to us. We’ve had the EU ambassador come to Oklahoma, France, all these different countries—Canada—and so I just think that’s—Taiwan—all the different countries are looking for relationships.

So we already trade. Our trading partners are Germany, and Japan, and, you know, Canada, Mexico. So we take these trade missions there. We’re setting up relationships directly with them. You see other governors doing this—doing the same thing. Just not a lot of policy coming out of D.C. right now.

CARUSO-CABRERA: In the back, and next, you.

Q: Hi, I’m Mark Hannah with the Institute for Global Affairs. And thank you, Governor, for spending the time with us this morning.

You mentioned you are a free-market guy, and I had a question about how your idea of a strategic stockpile fits within that, as well as your conversation with President Biden, talking about how we need to see reliability as a public good, and we need to make sure the government is protecting the coal industry so it’s there in a freeze.

And the second question I had is does your opposition to government intervention, interference limited—is it limited to coercive measures like mandates and quotas, or does it extend to non-coercive things like tax incentives and other things?

STITT: That’s a deep question.

CARUSO-CABRERA: See, you’re at the Council on Foreign Relations.

STITT: There is already a government entity that I—kind of similar to a sovereign wealth fund that we need to kind of encourage a little bit more, and that’s the problem. We don’t want to incentivize a private business to go set up these strategic stockpiles, but yet we don’t really have an incentive to get it done, or it’s not getting done. So the answer to that—I don’t know what the fix is that President Biden needs to think about this long term, or his energy policy needs to think about how do we go set up those relationships—the State Department—we know where these mines are, we know China is going after them in South America and also Africa. The State Department needs to be more forward thinking to set up those relationships strategically. But we can’t be—we can’t be all things to all people.

And I want to flip to our national debt just for a second because I want to get this in. So in ’23, we spent—our revenue, our income was 4.4 trillion (dollars), OK—’23 was 4.4 trillion, and we—how much do you think we spent? We spent 6.1 trillion (dollars), right, so 1.7 trillion (dollars) over our income. And that is our national debt, right, 44 ½ trillion (dollars).

And here’s how I think about this. When I bought my first house—I graduated from Oklahoma State, moved to Tulsa, got my first job. My first house was $66,000 right across from TU. I remember writing my first mortgage payment. I had a 30-year-fixed mortgage, and I wrote my first $550 mortgage payment, and $50 went to principal. And I was, like, dadgum, only $50 goes to principal, but at least I knew that in 30 years I was going to own my house, OK?

Well, back to our national debt. We don’t do principal and interest. We do interest only; that means we’re never paying it off, all right. So our interest payment now on our national debt is $1 trillion. That is 25 percent of our income, all right? Well, it gets worse because, in ’24’s budget, our income went up to 4.9 trillion (dollars). We’re doing good. Our economy is good. Our—it went up to 4.9 trillion (dollars). How much did we spend? 6.9 (trillion dollars). So we spent 2 trillion (dollars) over that goes onto our national debt. Our interest only payment now is more than our defense budget, which is about 850 billion (dollars).

We need to have a conversation. If you haven’t gotten a raise—if Oklahomans and Americans haven’t gotten a raise—a 20 percent raise over the last few years, since 2020, you’ve actually lost your buying power. You’ve actually got a decrease because of inflation. That is hurting American families.

CARUSO-CABRERA: How is that connected to his question, though, about critical materials and stockpiling?

STITT: Well, it’s not, but I think it’s important to—

CARUSO-CABRERA:

STITT: —it’s important to say—

CARUSO-CABRERA: OK.

STITT: —because—and I’ll—I’m going to circle back around.

CARUSO-CABRERA: OK.

STITT: Because of the State Department—when I was—I went on a CODEL, and I was in Kenya, and I was in Djibouti, and I went on this CODEL. A CODEL is a U.S. Senate—

CARUSO-CABRERA: Congressional delegation.

STITT: Correct.

CARUSO-CABRERA: Yes.

STITT: And so I was sitting in a room with all of the Kenyan generals, OK, and I was there with the State Department, and they were pitching us on their infrastructure. They needed—they’re fighting the Houthis, and they’re fighting the terrorists over there, and they need an expansion of their runways, and they need this hangar, and they need this infrastructure. And I don’t think—this room probably does, but I don’t think most Americans know that we’re building infrastructure in other countries around the world with our national debt. I’m not saying these projects aren’t important, but we have to have a limit. If there is no limit to spending, why don’t we spend 8.9 trillion (dollars)? Why don’t we spend 9 trillion (dollars), 10 trillion (dollars)? There’s got to be some governor on our spending.

That’s why the states are pushing for a balanced budget. I think we need thirty-four states to get a balanced budget in place. Oklahoma has passed that. We need—we have probably twenty states that have done it.

CARUSO-CABRERA: So are you implying that if we spent better then we could have stockpiled the critical materials?

STITT: The stockpiles need to happen.

CARUSO-CABRERA: OK.

STITT: The stockpiles need to happen. My point is we can’t be, in a State Department, everything to every country, and what happens is we start pushing for, you know, what’s good for that one little area. We need to think more globally, and we need to strategically think about the stockpile in this African country and the relationship here, here, here. We can’t be everything to every country in the world, and we can’t build infrastructure and set up relationships—deep relationships every single place in the world.

And I think China is doing a better job of strategically going after the resources, et cetera.

CARUSO-CABRERA: Let’s take another question from the virtual audience.

OPERATOR: We’ll take our next question from Anne Nelson. Please state your affiliation.

Q: I’m Anne Nelson from Columbia University, but also from Stillwater.

Over the last—Oklahoma Watch has reported that this year over six thousand classroom teachers have not returned to the classroom. That’s something like 14 percent of that workforce. And the superintendent of education, Ryan Walters, has been involved in various controversies. Are you concerned that Oklahoma’s situation in public education could affect your vision for attracting skilled workforce members to the state? Thank you.

STITT: You know, first off, workforce is one of the first questions we get from companies wanting to move here—can we get the workforce that we need? So that’s why I tell people all the time, you know, let Washington, D.C. play politics. We’re all Oklahomans. We just want to make our state a top-ten state, and we really all want the same things. And number one is education. We want the best education for our kids. We want the best infrastructure, health care, best economy. Those are the four things I always focus on.

I’ve given our schoolteachers two large pay raises. The Republican governor of Oklahoma has put more money in public education in my first five years than they did for twenty-five years before I got here. But there’s accountability. There is competition. We just got the largest—or I think it’s the best school choice plan done in the entire country last year, which is going to inject competition in the system.

CARUSO-CABRERA: What is it?

STITT: It is a refundable tax credit for every single family, dependent on income. It’s between 5,000 (dollars) to $7,500.

CARUSO-CABRERA: So it’s means tested to a degree.

STITT: Yeah, that’s correct. And, for example, I tell people, listen, rich people already have school choice. They can take their kids and put them in any school they want. But we just opened that up for every single working family in Oklahoma and—because, if any of you were governor and you’ve had to talk to the single moms, single dads—people would call me and just say, Governor, it’s not fair. My son or daughter is getting into drugs, or they’re at a school with low test scores, they’re not learning how to read, they’re falling behind, we have high dropout rates, gangs. What am I supposed to do? I can’t afford to move. And so it just breaks your heart. And so we’ve just injected that.

CARUSO-CABRERA: So it’s not a voucher system. It’s not a lottery for charter schools. It’s a full-on whoever wants to send their children to either a private school or a charter school can use a tax structure rather than a voucher or what they do in other states.

STITT: Yeah, but, I mean, you can call it a voucher, it’s a tax credit, but basically it’s $7,500 that would go in your name to the school that you want to go to. Charter schools—we already have those in Oklahoma; we’re promoting more of them. Those are public schools with kind of community management. New York City has a lottery to get into charter schools.

CARUSO-CABRERA: Right.

STITT: And I think—I think it pretty much—Harvard, Yale—I’ve read the research—if you win the lottery to go to a charter school here in New York City, your chance of incarceration as a male is like zero percent. It is unbelievable the outcomes. And I think there’s 163,000 people on the waiting list for charter schools here.

CARUSO-CABRERA: But her question was about the teachers not coming back, and that 14 percent. What is that about, and are you worried about it?

STITT: I don’t—that specific stat, I’m not sure about that, but alternative certifications, we’ve really focused on that as well. We want—some of it is the culture, so I promote teachers. We love teachers in Oklahoma. We’re trying to make sure that—because I know the best and brightest—when we have the best and brightest teachers in the classroom, that’s when kids excel. So I’m trying to encourage more of that.

We’ve got tax credits for kids going into—at the university into the teaching programs, alternative certifications—so in other words, I’m trying to recruit the doctors, and the lawyers, and the businesspeople, and accountants that, hey, your second career, we want you to come back and alternatively get certified to become a teacher in our public school system to give back. So we’ve got a lot of that going, but listen, we’ve got 700,000 kids in our public school system in Oklahoma, and we’ve got another probably 50,000 in the other schools, so we’re doing it.

CARUSO-CABRERA: It’s less than we have in just the city of New York, which is crazy.

OK, oh, right here.

Q: William Lese, Braemar Ventures. We focus on energy technology and understand that Oklahoma is an energy state, and of course, your belief in the pragmatism of having wind, and oil, and gas, and perhaps geothermal, and solar, and other things. While I applaud you for that pragmatism, on the other hand, climate change is very real, and we need solutions that are going to address that.

So my question to you is have you looked at carbon capture and utilization? In other words, not just burying it in the ground so it sits there, and not even for enhanced oil recovery, which of course is a mature industry, but rather, looking for technologies and policies that will support taking that CO2 and actually making something that’s market valuable and competes without subsidies.

STITT: Yeah, I mean, you said it very well. I mean, carbon capture is something we’re looking at. We want to—we’re working on clemency with the EPA where we can actually approve more of these, you know, buyer-owned DEQ instead of having to go to the feds. The feds—when you have to go to the regulatory environment, we take six years longer than China to do permits, we take six years longer than Europe. We have to have an honest conversation. And the NEPA reform that we got through was good. Judicial review needs to happen federally.

But yeah, we’ve got—you know, North Dakota is really leading on this carbon capture. Enhanced oil recovery is something that our oil and gas producers are looking at as well. But as far as adding other technologies, I don’t know specifically what they’re looking at, but we’re all for that.

Q: (Off mic.)

STITT: OK, you need to tell them—come talk to us.

I’ll give you one other story. A pipeline company in Oklahoma, a big national pipeline company came to see me—the CEO. He said, Governor, here’s the problem with permitting reform. We’ve got an existing pipeline. He said, it’s an existing pipeline in the ground in California. We’re trying to convert that to a carbon capture pipeline. And the permitting process is going to take us ten years to do those kinds of things.

It makes no sense. I’ve had governors on the East Coast come to me and say, hey, how come your energy cost is so much less than ours? And I’m, like, because you need more pipelines, you need more access to markets. And so they are wanting me to set them conversations up with our pipeline companies. But it just gets all muddied up in politics.

CARUSO-CABRERA: His delegation is sitting right to your left.

Question here in the back.

Q: Ry Rivard from Politico.

Speaking of conversations with East Coast governors, Democrats in this region—Democratic governors are very enthusiastic about the Inflation Reduction Act. What’s the story in Oklahoma? Is that the sort of policy that you would like to see if there is a second Trump administration or that the second Biden administration should continue?

STITT: Thank you for the question. Well, the IRA has certainly, you know, allowed companies in Europe and companies in Italy—we just landed a billion-dollar solar panel manufacturer investment in Oklahoma, so all that is helping bring supply chain back closer to home. There is no doubt about that.

But again, these are all great plans, but you always—we have to balance it back to the 4.9 trillion (dollars) in revenue, right? And so there’s got to be some governor on what our spending is. I don’t know if Trump is going to roll that policy back if he was to win the White House, but I think businesses need certainty. So, you know, starting and stopping is not good, I don’t think, for businesses long term.

CARUSO-CABRERA: So I hear you saying it should stay?

STITT: Yes, I would not roll back a policy. You can look—you can look forward, but I don’t think we should be changing what companies have already invested and what we’ve already decided to invest dollars in the U.S. and move supply chain closer.

CARUSO-CABRERA: Did your representatives in Congress vote for the IRA?

STITT: Probably not.

CARUSO-CABRERA: There are people who cry hypocrisy because so much of the IRA benefit has gone to actually Republican red states that voted against it.

STITT: Uh-huh.

CARUSO-CABRERA: Any—there’s no question there, I was just—(laughs)—any comment on that? Is that hypocrisy? Does that—

CARUSO-CABRERA: OK.

STITT: Sounds like President Biden. He says that sometimes, too. He’s like, and the money is going out there to the—to the red states.

But, no, I mean, listen, fair point. But again, you also—you also have the other side of the spending and the inflation, and I don’t know how they got the name Inflation Reduction Act.

CARUSO-CABRERA: (Inaudible.) Yeah.

STITT: So that was kind of weird, but again—I mean, listen. It’s—it is what it is. Businesses need certainty. It’s probably not something—it wasn’t—it’s probably not a policy that would have happened if Trump would have been in office for the spending side. And I think that the oil and gas, and the other companies will be—are a little frustrated because why are you picking winners and losers, why is the government always saying that, oh, we ought—we can incentivize this, and we’re going to underwrite this, and we’re going to use tax dollars for this, but we’re going to just take tax dollars from you. So it’s a good conversation.

CARUSO-CABRERA: A question from the virtual audience.

OPERATOR: We’ll take our next question from David Merkel. Mr. Merkel?

Q: Thank you. David Merkel with Summit International Advisors, a graduate of the University of Oklahoma.

My question is I’d like to return to the pause on the construction of liquefaction for LNG. The Biden administration is not enforcing sanctions on Iranian oil. They are giving a waiver to Chevron to continue importation of oil from Venezuela, but they are trying to reduce the export of LNG from the United States. It appears like it’s to try and help to keep the oil prices down and gas prices down for manufacturers in the U.S.

So I wonder if the governor wouldn’t mind talking a little bit more about the discussion among the twenty-five governors on the—you know, how much of a priority is this to try and move on the export of LNG.

STITT: Thank you. Boomer sooner to you.

Q: Thank you, sir.

STITT: So, you know, kind of like I said before, we don’t understand why this administration is really targeting LNG exports. Again, these projects are going to take four or five years to get going. Why would you pause those? It’s going to hurt our domestic producers. It makes costs go up. But really our allies rely on that, and so if they need natural gas, and we can’t set up a forward-looking—they can’t see in the future to get that from the U.S., what are they going to do? Where are they going to go? And they’re going to go to people that maybe are a little bit adversarial to us.

You bring up the Iran issue, the appeasement strategy. They are flush with cash right now. You see what’s happening. And so I don’t think—in a Trump administration I think you would see a stronger—you’d see a stronger position against Iran, and I think the world is paying the price for that right now. And you are seeing some of the things that are happening because of flush with Iran.

CARUSO-CABRERA: Right here.

Q: Jared Anderson, I’m a reporter with S&P Global.

You had mentioned coal, and the coal-fired power plant business model in the U.S. has been struggling a bit. And I’m just curious as to whether you’ve observed that trend in Oklahoma and if you have any initiatives to address it—the early retirement of coal power plants?

STITT: Yeah, Oklahoma—really, we’re not a coal state, so like I said, I think we’ve got maybe one coal-fired plant left that’s both—it’s a pricing deal. They can burn coal or they can burn natural gas, depending on the pricing.

The thing with coal is you can stockpile it, right? You can stockpile it on site, so it’s really—it’s more reliable for a baseload. But I’m seeing all the attack on coal-fired plants, and all the EPA regulations that are forcing them to be shuttered and shut down. And maybe that’s the right decision, but if you don’t have a conversation about what replaces it, and if you don’t do permanent reform to get new generation online, you’re going to be in trouble. I mean, it’s that simple.

Oklahoma is not going to be in trouble because we’ve got plenty of generation. We actually export like 50 percent of our energy to the Southwest Power Pool, which is a seventeen-state conglomerate that we share power with each other. But other states are going to be in trouble if they haven’t—if they haven’t been building and haven’t common sense. We’re going to take care of Oklahoma before we send our power to New York or to California, and so we need to have these honest conversations. If you’re going to force them to shut down coal, you need to make sure you can replace that, and you can get other forms of generation online that’s reliable and it’s affordable. I mean, it’s pretty—pretty common sense.

CARUSO-CABRERA: Had a question here. Microphone. OK.

Q: Hi, there. Jimmy Quinn with National Review.

There is some reporting in ProPublica linking the Chinese marijuana farms in Oklahoma to the Chinese embassy, and also to the illegal Chinese police station that was shut down by the DOJ last year. Is this something that you are tracking, and what is Oklahoma doing about PRC influence operations? Thank you.

CARUSO-CABRERA: You’re talking about the one that was in Queens.

Q: Yeah, downtown.

CARUSO-CABRERA: Yeah, you know, we had this—the feds shut down a secret police in Queens, yeah.

STITT: Yeah, and we think there may have been a—we think that’s maybe more prevalent around the U.S. with some of these secret Chinese police, so we are monitoring that in Oklahoma, as well.

We’ve banned the purchase of farmland in Oklahoma by CCP.

CARUSO-CABRERA: How do you know if they’re CCP? How do you do that? How do you actually—

STITT: Well, it’s—basically it’s foreign ownership—is how we say it—

CARUSO-CABRERA: OK.

STITT: —and then—and then there are straw buyers that they are using, and so then we’re having title companies kind of work through the title company industry to let us know if we do think there are some straw buyers. We just had an indictment on an attorney in Oklahoma that was kind of acting as a straw buyer in those situations.

So we’re trying to track down on it, but he’s right; there’s been a lot of—there was, I think, four or five people murdered at a Chinese facility—marijuana facility, so it’s very concerning. China is our number one adversary, but at the same time, they’re a big trading partner. I don’t think we should be just picking a fight to pick a fight with China. I think we need to have great relationships, but we also need to be cautious about what’s happening.

We haven’t really talked about the border, but there’s been 52,000 Chinese nationals come through the southern border. I just met with the consulate general from Mexico, and only 18 percent of the people coming through the southern border are actually Mexican nationals, and the rest are from around the world.

The terrorist list—we haven’t really talked about that, but I think the Democrat governors that I have relationships with in our different associations, they all agree with me. We have to have a secure southern border.

And I think that’s totally separate than immigration policy. We need to have a reformed immigration policy, and I’m even pushing for H-1B visas at the state level, which makes sense to me that if our companies need more workers, they would come to the state and say, hey, I need this, this, and this, and then the state should be able to offer visas. So we’re not against—we’ve got a great Mexican community in Oklahoma, but we have to know who is coming through our southern border. And that’s why myself and the other governors have been supporting Governor Abbott to try to do what he can to keep his citizens safe and to kind of stop the tide coming in.

CARUSO-CABRERA: Governor, thank you so much. It has been a pleasure to have you here at the Council on Foreign Relations.

STITT: Thank you.

END