Natural Gas for Energy, Economy and the Environment

Mark Green
Posted January 12, 2016

During his last State of the Union address, President Obama could declare victory – an energy victory that has seen surging domestic production, lower consumer costs, economic growth and environmental progress, all happening together, on his watch. The president can say this U.S. model is winning the day, because it is. He should say this model is exportable to the world, because it is.

Fact: The U.S. is the world’s No. 1 producer of oil and natural gas. The domestic revolution in the production of oil and gas has reduced net oil imports and positioned the U.S. to claim its place as a major player in global energy markets. At the same time, the U.S. is leading the world in reducing greenhouse gas emissions:

Fact: Affordable natural gas – the average price at the national benchmark Henry Hub in 2015 was the lowest since 1999 – is largely the reason wholesale electricity prices at major trading hubs (on a monthly average for on-peak hours) were down 27 percent to 37 percent across the U.S. last year compared to 2014. That’s a real benefit for consumers.

Fact: Natural gas is winning in the marketplace. Here’s a chart, reflecting data from the U.S. Energy Information Administration, showing the change in annual U.S. energy consumption by fuel source over the past decade (measured in quadrillion Btu):

These are all characteristics of the U.S. model, a market-driven model for energy growth, consumer benefits and climate progress. The president can own it. We wouldn’t mind a bit.

Before the State of the Union message, API President and CEO Jack Gerard argued for the U.S. model during a conference call with reporters. The U.S. energy revolution offers a clear path on jobs, climate and international security, Gerard said, but it will require new thinking at the White House. Gerard:

“We believe it’s time for the administration to reexamine its assumptions about energy policy. When the president took office, the U.S. energy renaissance was in its early years, and its impact wasn’t yet clear. But now we know. We know the United States can lead the world in both emissions reductions and in oil and natural gas production. We know that energy production has been a catalyst, not an obstacle, for U.S. success in reducing emissions. We know the crucial role strong oil and natural gas production has to play in creating jobs, growing the economy, reducing consumer costs, making American businesses more competitive and making our nation more secure.”

Unfortunately, Gerard said, federal policy “already hinders production almost every chance it gets.” This is seen in severe limits to energy development offshore and onshore. It’s seen in the president’s rejection of the Keystone XL pipeline, despite strong economic and environmental arguments for building it. It’s seen in continuation of the flawed Renewable Fuel Standard and the administration’s proposed Clean Power Plan, which picks energy winners and losers. And it’s signaled by the administration’s regulatory plans. The president has opportunity afforded by the domestic energy revolution, but it will require a course change. Gerard:

“Instead of pursuing a barrage of job-crushing new regulations – many of which are duplicative and unnecessary – we call on the president to take the opportunity to seize the initiative and embrace policies that recognize the value of the energy resurgence and acknowledge that the goals of environmental progress and energy production are not mutually exclusive.”

Rather than embrace the winning U.S. model, the administration appears set on a path of reactionary regulatory policies that could squander opportunities created by America’s natural gas bonanza. Gerard:

“You can’t impose an additional 100 regulations on an industry and expect them to continue to effectively grow activity, create new well-paying jobs, generating revenue to the government.  … Industry’s been leading in methane reductions for many years. Now we’ve got regulators trying to catch up with what industry’s already demonstrated what it can do, and that’s lower methane emissions. There’s no reason for the federal government to now step into this void to impose unnecessary regulation, because what it does is it stifles innovation and it chills our ability … to advance technological development.”

Gerard said the Clean Power Plan’s boost for renewable energy ignores the market successes of natural gas:

“Right now the U.S. model – a fact-based, proven, demonstrated model – shows you reduce carbon emissions in the United States by allowing the marketplace to bring more and more cleaner-burning natural gas to the market. That wasn’t government mandate that got us to where we are today. … It’s demonstrated to work, so why would you put a finger on the scale through a government mandate the drives a particular choice in energy, when in fact you can accomplish a broader purpose for less cost to consumers and an opportunity to create more jobs right here at home?”

Declare victory, Mr. President. Embrace the energy revolution that’s occurred during your terms – or at least don’t needlessly stand in its way. Facts, science and sound analysis should prevail over ideological agendas. Accept a U.S. model that’s working – for domestic energy, the economy and the environment.