‘The American Energy Moment’

Mark Green
Posted April 23, 2015

In a post earlier this month I suggested that the domestic energy surge – the government says the U.S. is No. 1 in the world in energy developed from oil and natural gas – is helping reduce oil imports and increasing U.S. energy security – and that it’s a big reason fewer than one in four Americans recently told Gallup they view the energy situation as “very serious.” Probably safe to say the other three are more or less comfortable with the country’s energy picture. 

Yet, whether comfort with the energy status quo is actually best for American energy is an open question. Speaker after speaker at this week’s CERAWeek energy conference in Houston cautioned that the ongoing U.S. energy revolution faces challenges – many of them stemming from policy choices and/or regulatory initiatives – that could slow or block oil and natural gas development and bring the energy revolution to a halt.

That would be an unfortunate squandering of a remarkable, historic shift for the U.S., created by its energy abundance. In Houston, API President and CEO Jack Gerard said dynamic growth in the domestic production of oil and natural is presenting the U.S. with long-sought opportunities for prosperity at home and security and leadership in the world. Gerard called it the “American energy moment.” Gerard:

“Our nation is conquering what for decades has been our most dogged economic, social and geopolitical vulnerability – energy dependence and energy insecurity. We got to this era of energy abundance and global energy leadership because of the entrepreneurial spirit of the private sector, the hard work of the American worker and the unique system of private property and individual rights of the American marketplace. To continue this progress we should be mindful that these advances could easily be stalled or even reversed without forward-looking energy policies that encourage safe and responsible domestic energy development and production, that support a robust refining sector, and embrace our nation’s bright energy future.”

Indeed, moments can be fleeting. America’s energy resurgence is at risk from a stale energy policy mindset, a leftover from another era when U.S. strategic vision was screened by scarce domestic energy. Coupled with a recent regulatory push that frequently imposes restrictions first and asks critical economic questions later, as Gerard put it, there are considerable headwinds building against increased domestic energy development. So, although industry has “shifted the oil market center of gravity to North America,” as ConocoPhillips Chairman and CEO Ryan Lance said, that progress, this “American energy moment,” faces challenges. Gerard:

“It has become apparent that during this administration’s final two years in office their focus is not on our nation’s 21st century energy renaissance or on securing our long-term status as global energy leader, but instead on a narrow political ideology driven by the upcoming climate change summit in Paris – the centerpiece of the president’s effort to burnish his environmental legacy.”

The effort is seen in a number of ways: EPA’s proposed new ozone standards could be the costliest regulations ever imposed, even though science doesn’t compel them and ozone levels are dropping under the existing standards; federal red tape that keeps energy development in areas under Washington’s control, onshore and offshore, lagging behind development on state and private lands; a new push to federally regulate methane emissions from energy production, even as EPA’s own data show these emissions falling, chiefly because industry efforts to capture emissions are working. Not missed at CERAWeek was an EPA official somewhat cheerfully noting the “regulatory opportunities” the agency sees before it.

There’s more: Marathon President and CEO Gary Heminger said the Renewable Fuel Standard, the ill-managed program that mandates ever-increasing use of ethanol in the fuel supply, doesn’t make economic sense and is a great source of uncertainty – so encumbering for big-investment industries like oil and natural gas.

Kinder Morgan Chairman and CEO Richard Kinder said pipeline construction is a prime example of the infrastructure investment the White House regularly calls for, but that opponents of oil and natural gas are turning the pipeline permitting process into a “chokepoint.” Did someone mention the Keystone XL pipeline?

Canadian Natural Resources Minister Greg Rickford – on a CERAWeek panel with U.S. Energy Secretary Ernest Moniz – said government’s infrastructure review processes should focus on the merits of infrastructure, not on other issues and agendas.

America has been gifted with a renaissance in the domestic production of oil and natural gas – the drivers of our economy and our modern lives, now and in the future, thanks to abundant reserves and an innovative, technologically advanced industry. Safe and responsible energy development is everyone’s goal, but access and regulatory policies need to ensure that, not stymie development altogether. Lance:

“We’re not opposed to regulation as an industry. … But regulations need to be smart, they need to be transparent, non-redundant and they need to be based on science and not hype. And clearly their benefits should exceed their costs.”

 Gerard:

“This tendency to overregulate rather than collaborate with industry in general is a problem that threatens our industry’s ability to sustain and grow the 21st century North American energy renaissance. … What we need are energy policies that embrace the 21st century opportunity economy and that place good energy policies ahead of political expediency and ideology.”

It’s critically important for Americans to see these issues clearly and to press policymakers to see them as well. American energy is in a good place, but  wise, visionary courses on policy and regulation are needed now to ensure America’s energy future. Without them, the “American energy moment," this generational opportunity, could very well pass.