The People of America's Oil and Natural Gas Indusry

Bearing the Weight of EPA’s Regulatory Push

Mark Green

Mark Green
Posted July 31, 2014

A couple of new warning lights concerning EPA’s regulatory approach in proposed standards for power sector emissions as well as the anticipated standard for ozone. In both cases the agency appears poised to regulate without thoroughly reckoning potential impacts that could harm the economy and individual consumers.

First, there’s EPA’s effort to regulate power sector emissions – with carbon pollution guidelines proposed for existing power plants, on top of the already proposed guidelines for new electric utility generating units.

Howard Feldman, API’s director of regulatory and scientific affairs, testified at EPA field hearings this week that the agency’s proposals could result in higher energy costs, impacting the oil and natural gas industry’s international competitiveness and negatively affecting the broader economy. Feldman also warned that the proposals could set a precedent for EPA incursion into management of the power sector that’s beyond its authority under the Clean Air Act. Feldman’s key points:

Feldman said EPA’s proposals could hinder the U.S. refining sector:

“Unfortunately the proposed EPA rule ignores the successful example of our free market and guarantees adverse consequences for nearly every consumer and business in the United States. American refineries, for example, have been a tremendous bright spot in the U.S. economy. But energy is the second largest cost associated with operating a competitive refinery. Given the potential impact of the rule on electricity prices, businesses like these will have no choice but to reevaluate new investments based on electricity sources that are less affordable and less secure.”

Feldman said the proposals effects could affect other sectors and consumers:

“The uncertainty caused by this rule could have a chilling effect on investments throughout the manufacturing sector, potentially costing millions of jobs and damaging all aspects of our economy. Moreover, by eliminating diversity in our fuel choices, this rule creates the potential for future electricity shortages and price spikes that would do the greatest harm to those who can least afford it – hardworking American consumers.”

That larger economic impact is at the heart of a new report released this week by the National Association of Manufacturers (NAM) that estimated a stricter new ground-level ozone air quality standard could reduce U.S. GDP by $270 billion per year and $3.4 trillion from 2017 to 2040. The study also identified other potential effects:

  • 2.9 million fewer job equivalents per year on average through 2040
  • Cost to the average U.S. household of $1,570 per year in the form of lost consumption
  • Increased natural gas and electricity costs for manufacturers and households across the country

We’ve posted on the ozone proposal before, noting API analysis that EPA’s standard would put 94 percent of the country out of compliance (map).

ozone

That would include places like Yellowstone National Park, where peak natural background levels of ozone are higher than the 60 parts per billion (ppb ) standard EPA is advancing. Feldman talked about this during a conference call with reporters in May:

“… we don’t know how to get to these levels. … Background at pristine locations is 65, 66, 67 (ppb). It means we have very little ability for our society to operate the way it normally does. … Our society does have some emissions, but that is the cost and benefit of our modern society, where we’re able to have the amenities and the social life that we like. So there is some impact on the environment. We’re talking about reducing that (head)room to almost zero.”

From the NAM report:

It is not clear that a stricter new standard could even be achieved, resulting in prolonged nonattainment. Even if it could be achieved, a stricter standard could have enormous economic consequences. The existing 75 ppb ozone standard has not even been implemented, meaning society has neither borne the costs nor determined whether there are discernible benefits of that standard. Before the EPA initiates a process that could cost as many as 4.3 million job equivalents per year and threaten manufacturers’ competitiveness, a more complete analysis is needed.

NAM President and CEO Jay Timmons:

“Manufacturing in the United States is making a comeback, and we’re reducing emissions at the same time, but tightening the current ozone standard to near unachievable levels would serve as a self-inflicted wound to the U.S. economy at the worst possible time,” said NAM President and CEO Jay Timmons. “This rule would undermine our work to expand manufacturing in the United States, making it almost impossible to increase operations, create new jobs or keep pace internationally.”

EPA’s recent initiatives have been described as a regulatory “onslaught” – one that could hinder and damage entire sectors of the economy, inevitably impacting consumers, while in a number of cases failing to provide significant environmental benefits. It’s the wrong approach for our economy and the country.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.