During a recent conference call with reporters API Chief Economist John Felmy said the country is at a “crossroads of energy and economic policy.” That’s quite a crossroads. Chad Moutray, chief economist at the National Association of Manufacturers, pointed out that manufacturing has added 462,000 net new jobs since 2010, and that continued growth hinges on energy and regulatory policy. So, where do we stand?
The administration’s energy policy is a muddle, as IPAA President and CEO Barry Russell argues in this Roll Call piece:
“Obama calls to expedite infrastructure projects, but in the wake of rejecting the Keystone XL pipeline. Obama claims increased oil and natural gas production on his watch, but then follows up with accusations that oil companies are profiting at the expense of the American people. Obama repeatedly calls for an ‘all of the above’ energy strategy, but then singles out the oil and natural gas industry for new regulations and targeted tax attacks.”
OK. Not so great. How about regulatory policy?
Last week’s new EPA rule on emissions from oil and natural gas development had positive elements – for example, delaying industry compliance with some costly and labor-intensive requirements until 2015. Still, overall, the administration’s regulatory approach hasn’t been encouraging, chiefly seen in policies that limit access to federal areas onshore and offshore.
Fuel Fix reports that deepwater drilling in the Gulf of Mexico is getting busier, but take a look at the actual numbers:
“The government awarded 163 deep-water drilling permits for the Gulf in 2009. The number dropped to 74 in 2010, but has climbed since then to 79 in 2011 and 44 through March of this year.”
“[Analyst Robert] Kessler also noted that the time required for approval of exploration and development plans is still 150 days on average, compared to 54 days before the moratorium, another indicator of the added expense and challenge since the spill.”
Felmy cautioned that added regulatory layers “can slow development” of America’s vast energy resources. “Look at the totality of all EPA rules,” he said. “It really is an onslaught.” Moutray said the economic recovery is tenuous, and that the manufacturing sector is looking for broad energy options and sensible, stable policy from government:
“Energy is critical. We need affordable sources of energy to remain competitive globally. … We need an all-of-the-above approach that doesn’t pick winners and losers, that stresses the ‘all’ and not just favored projects. … We must have as many tools as possible for energy.”
Energy is the linchpin for economic growth – especially in the manufacturing sector. Developing energy from shale in Pennsylvania, North Dakota and Texas has produced jobs and a rising economic tide capable of lifting state and regional economies. Ohio and other states are poised to benefit as well.
The question is whether Washington will allow that kind of activity to go forward, or will it sap the momentum with red-tape delays and new layers of restrictive regulation, possibly duplicating effective state regulatory efforts? Will the administration continue to threaten higher taxes on an industry that pays its fair share already and is ready to do much more on energy and jobs? Will it get serious about domestic oil production, onshore and offshore, and end its obstruction of the Keystone XL pipeline?
As Felmy noted, these are components of an energy strategy that could see the United States reach energy self-sufficiency through North American resources in just 12 years.
Good questions for consideration at the crossroads.