Domestic energy development and a wide swath of regulatory issues associated with energy production should be addressed more emphatically during the presidential campaign, officials at several industry associations believe.
“Energy hasn’t been absent from the campaign, but I think it deserves a higher profile,” Brendan Williams, vice president, advocacy, at the American Fuel and Petrochemical Manufacturers, told Breaking Energy.
Dan Whitten, vice president, strategic communications, at America’s Natural Gas Alliance, observed that President Obama and Governor Romney have both touted the benefits of natural gas.
In a statement to Breaking Energy, Whitten also said that “it is encouraging to see that increased production and use of this clean, affordable American resource is one area on which both candidates agree.”
But gas production might be the only energy topic indicating an alignment between the candidates, and “there is certainly an opportunity for Gov. Romney to differentiate himself from the Obama administration and the current regulatory environment, which is making it significantly harder for refiners to compete in the global marketplace,” Williams said.
“Unfortunately,” he continued, “one of the things we’ve seen from the current administration is a war on fossil fuels, and it seems like the federal government is doing everything it can to inhibit [fossil fuel] growth. If Gov. Romney wants to differentiate himself and really highlight an issue for swing state voters, it would be turning around our regulatory direction from the current flurry of overly burdensome, costly, and conflicting regulations.”
The swing states are Florida, Michigan, Nevada, New Mexico, Ohio, Pennsylvania, Virginia and Wisconsin. Some of those states produce energy, but even those that don’t offer fertile ground for energy production advocacy, says Jason Hayes, communications director for the American Coal Council.
“There may not be any mining in Florida,” Hayes told Breaking Energy, “but they use coal to produce electricity, and if coal becomes more difficult to use and electricity becomes more expensive, voters living on fixed incomes – especially senior citizens – become more politically motivated.”
It’s unfortunate that the two agencies are operating at cross-purposes.” – Hayes
Hayes acknowledges that EPA’s pending greenhouse gas regulations and Utility MACT rule are just two of the many factors affecting the U.S. coal industry. But “the additional burdens of environmental regulations are bringing us to a tipping point,” he says, warning that a tidal wave of shutdowns is inevitable.
“Middle-of-the road studies,” Hayes continued, “are predicting that 34-to-40 gigawatts of coalfield energy could close over the next decade, but some are predicting as much as 80 gigawatts.”
Higher Energy Costs, Energy Security and Job Losses at Stake
According to a NERA analysis, Hayes pointed out, “the shutdowns would result in 1.4 million job losses. Some of those would occur in associated industries, like Class I railroads, which earn 25% of their revenue from shipping coal. But there will also be enormous job losses among coal industry employees, who earn an average of $70,000-to-$75,000 a year. Those are extremely well-paying careers and they are already being lost.”
Hayes points out that the Obama administration has supported clean coal research at DOE, but adds, “It’s unfortunate that the two agencies are operating at cross-purposes. DOE is doing the research, but EPA’s [greenhouse gas] regulations will ensure that, without carbon capture technologies, there won’t be any coal plants built in this country for the foreseeable future.”
Hayes says swing-state voters should be informed that the loss of coal-fired plants could raise their electricity costs. But energy issues appear to have traction all across the country, as a Harris Interactive poll recently determined.
Conducted for the American Petroleum Institute, the poll found that 65% of the registered voters who participated in the survey “strongly believe” that greater oil and gas development could lead to more U.S. jobs; 62% “strongly believe” that this development could lower energy costs for consumers; and 49% “strongly support” policy changes allowing more offshore oil drilling.
Sixty-six percent of the Harris respondents said they viewed energy security and domestic energy production as “very important” issues for their voting decisions.
Referring to a finding that 71% of the respondents “strongly” or “somewhat” support increased access to domestic energy resources, Rayola Dougher, senior economic adviser at the American Petroleum Institute, told Breaking Energy that she doesn’t know if such support “will sway voters who haven’t made up their minds, but it’s clearly an important issue for a majority of them.”
Dougher pointed out that “87% of our offshore areas are off-limits to development,” adding that “we’ve seen a 70% reduction in lease sales on western federal lands. We’re also hearing about permit delays of 200 days or more for BLM-managed lands. You can go to North Dakota and get a [state] permit in 20 days, and that, along with new technology, is one of the reasons North Dakota has gone from producing 3,000 barrels a day in 2005 to 547,000 barrels a day [in 2012].”
AFPM’s Williams said that “press reports are indicating that the availability of Bakken oil [from the North Dakota region] is one of the factors that will allow two Northeast refineries to compete economically and remain open.”
But all U.S. refineries, Williams warned, are facing the prospect of an EPA regulation requiring a 90% reduction in gasoline sulfur, “which will be a challenge in itself because refiners have already reduced sulfur by 90% [below 2004 levels]. They would have to install additional units with energy-intensive equipment to achieve the reduction, which will effectively increase greenhouse gas emissions at a time when EPA is proceeding with their greenhouse gas regulations.”
Another regulatory conflict, Williams said, arises from the joint, DOT/EPA decision to increase fuel economy standards and the EPA decision to allow a 50% increase in the maximum allowable percentage of ethanol in gasoline (for post-2001 vehicles). Williams warns that “blending more ethanol into the fuel supply will lower fuel economy at a time when the CAFE standard requires an increase. This is just one of the irreconcilable conflicts you get when you have an administration looking at energy policies from different silos.”
This article kicks off Breaking Energy’s 2012 presidential debate coverage, read a companion piece here.