Election Day Priority: Getting Energy Policy Right

Mark Green
Posted November 1, 2016

With Election Day a week away Kyle Isakower, API’s vice president for regulatory and economic policy, and Erik Milito, API upstream group director, held a conference call with reporters to reiterate the embedded nature of energy in a variety of national issues and the importance of selecting leaders at all levels of government who will advance pro-development energy policies.

While America’s energy renaissance has helped our economy, strengthened America’s energy security and led the way in reducing carbon emissions from the power-generating sector, a regulatory avalanche aimed at the oil and natural gas industry could threaten many of these gains. Milito said EPA’s soon-to-be-finalized, multi-million-dollar hydraulic fracturing study must not backtrack from the report’s draft conclusion that fracking has not led to “widespread, systemic impacts on drinking water resources.” Milito:

“Our focus is on the facts and science here … We want to ensure that a report that’s going to be viewed globally is really accepting the state of the science as it really is.”

Milito also stressed the importance of access to U.S. energy reserves, especially offshore. America’s energy security today is the result of wise development decisions made years ago. U.S. voters should engage on energy policy – even when gasoline prices are low, as they are today. Milito:

“It’s because of our energy production we’re not in that position. We have to prepare for five, 10, 15, 20 years down the road, and these decisions made today are so critical so that we can continue to have affordable energy and have all these benefits that go along with it for the long term.”

Isakower said the country needs leaders who recognize the critical importance of sound energy policies:

“We’re looking for candidates who are going to benefit consumers by looking at energy policy in a cost-effective, environmentally sensitive way. With the advent of hydraulic fracturing we are able to produce oil and gas at much greater levels here in the United States that puts downward pressure on price, which helps consumers and also makes natural gas more abundant. Natural gas coming into the power sector, a larger market share in the power sector, is really the number one reason why carbon emissions have been dropping over the past 10 years in this country.”

Below, the conference call remarks from Isakower and Milito.

Kyle Isakower:

With one week left in the presidential race, most of our country is focused on the election and what its outcome will mean. The stakes are high – especially because America's status as a world energy superpower can either grow or wither based on specific policy decisions that will be made by this next administration, the new Congress and by state legislatures. Equally as important is what those policy decisions could mean for American families and every American consumer. 

Today, our nation is the number one producer of oil and natural gas in the world. The dramatic reversal of the American energy landscape in just a few short years is not the product of government regulation, but instead industry innovation.

America’s energy renaissance is helping to reduce costs for American consumers and businesses while lowering our emissions. The evidence is clear: Due to natural gas, carbon dioxide emissions from power generation dropped to 25-year lows in the first half of 2016, according to the Energy Information Administration.

AAA estimates that American drivers saved, on average, over $550 in 2015 on transportation fuel costs as a result of abundant energy brought about by unconventional development.

And average U.S. disposable household income was $1,337 higher in 2015 given lower home energy costs as well as other savings that have resulted from the US energy revolution.

Costs aren’t just lower, but by continuing to pursue our energy renaissance we can further boost our economy and create more good paying jobs. With the right energy policies, America’s oil and natural gas industry could support as many as an additional 1 million American jobs in 2025 and as many as 2.3 million by 2035. This makes clear that markets, not government mandates, should guide our nation’s energy policy.

What should be clear to both current and future lawmakers and candidates is what’s best for the environment doesn’t have to come at the expense of American consumers. The U.S. can encourage investment in U.S. energy projects with smart and cost-effective regulatory programs. 

U.S. energy policy that supports oil and natural gas can help the U.S. meet national energy, economic and climate goals. We encourage all officials to be aware of and reexamine the avalanche of new regulations now under consideration.

But the good news is that neither the current administration nor future policymakers have to choose among energy sources. The primary choice is whether to advance 21st-century American energy leadership or retreat to 20th-century energy dependence.

Erik Milito:

There are more than 100 rules and regulations recently proposed or pending covering oil and natural gas. I’m not going to address all of them, but some of the most significant would impact hydraulic fracturing, ozone standards, methane controls and the next five-year plan covering access to offshore areas.

The advanced engineering technology of hydraulic fracturing has proven to be done safely throughout the U.S. There is enormous potential for new jobs and economic stimulus from shale development. The country is better off today because of hydraulic fracturing, and the future can be even brighter if we follow the facts and science.

As we move forward to year end, a key calendar item is the finalization of the EPA’s five-year, multi-million-dollar hydraulic fracturing study. EPA’s draft report contains quantitative scientific data (including over 950 sources of information, published papers, numerous technical reports, information from stakeholders and peer-reviewed EPA scientific reports) that support existing language saying that there is no widespread, systemic impact on the quality of drinking water. Overall, the report demonstrates that industry practices, industry trends, and regulatory programs protect water resources at every step of the hydraulic fracturing process. The prevalence of industry best practices nationwide, combined with strong state regulatory frameworks is the reason why the EPA Draft Assessment found no widespread, systemic impacts on drinking water resources from hydraulic fracturing.

The air is getting cleaner: Hard collaborative work by the private sector along with federal, state, and local governments has substantially reduced ozone levels, improving overall air quality, according to the EPA data. A key driver of America’s success in cutting emissions of traditional pollutants and greenhouse gases has been the rise of clean-burning natural gas thanks to hydraulic fracturing. This proven technology has helped shift more electricity generation to natural gas, which emits less nitrogen oxides, sulfur dioxide, mercury and more than 50 percent less carbon dioxide than coal.  As a result, Americans enjoy cleaner air, more jobs, greater energy security, and lower consumer costs.

At the same time, EPA has been implementing various programs under its Clean Air Act authority.  Air quality improvements will continue as states add even more emission control technologies to achieve ozone standards set in 2008 under the National Ambient Air Quality Standards program.  Unfortunately, EPA then issued new, more stringent 2015 ozone standards before fully implementing the 2008 standards. Any unnecessary rush to implement the new standards could risk the gains made over the past several years and impose needless economic burdens on states and industry. The implementation schedule for the 2015 standards should be extended, not overlapped with standards that are being fulfilled.

Other agencies are piling on regulations as well. The Bureau of Land Management (BLM) rules on venting and flaring could require costly methane controls for some of the very same emission sources already regulated by the EPA, or under consideration by EPA for regulation. All of this comes on top of existing state regulations on the oil and natural gas industry. The success of the industry in reducing methane emissions is clear: Natural gas production has surged to record levels, yet methane emissions from those sources has declined. If the goal is to prevent emissions, not impede U.S. energy production, the BLM should focus on fixing permitting, infrastructure and pipeline delays that slow our ability to capture more natural gas and get it to consumers.

Another important decision due from the Obama administration by the end of the year is the offshore OCS leasing plan for 2017-2022. Seventy-seven percent of voters support producing more of America’s oil and natural gas, yet the government keeps 87 percent of federally controlled offshore acreage off-limits to energy development.

That’s despite studies suggesting that opening areas in the Atlantic, Pacific, and Eastern Gulf of Mexico could lead to production of more than 3.5 million barrels of oil equivalent per day and generate potentially over 800,000 new jobs. The administration took a welcome step in the right direction initially proposing to lift exploration restrictions for the Atlantic, only to backtrack months later, despite strong voter support. Making the same mistake now by removing the Arctic from the final plan would be very short-sighted.

Roughly six years ago, the president issued an executive order, calling on agencies to promote predictability and reduce uncertainty. Unfortunately, today the numerous overlapping rules stand to harm consumers, lower revenue to the government, weaken our national security and cause potential job losses.

As noted in the president’s executive order, certainty and predictability are key to ensuring and encouraging continued investment in U.S. energy projects.  Regulatory programs must be cost-effective and actually serve to address environmental concerns in order to drive the country forward in a positive way and boost jobs, generate much-needed revenue and enhance energy and national security.

Right now, the U.S. is leading the world in the production of oil and natural gas. As this administration prepares to release the last of its regulations and we approach the election, it’s important that the significant progress we have made continues.