Posted January 29, 2018
Looking ahead to Tuesday night’s State of the Union Address, let’s hope the speech helps Washington focus on accelerating gains made by U.S. energy over the past several months. America’s natural gas and oil renaissance has boosted the economy and Americans’ individual prosperity while strengthening our country’s security and making significant environmental strides. Time to double down on that progress.
Recently we’ve seen energy policy moving in positive directions. As proposed, the administration’s five-year offshore leasing plan would put more of our outer continental shelf reserves back in the national energy conversation, and offshore development is important for our long-term energy security. The administration has committed itself to additional infrastructure, including pipelines and other energy projects, and has worked to remove unnecessary obstacles to progress.
Meanwhile, we’ve seen a number of initiatives to regulate energy more smartly, including last week’s EPA decision to withdraw its “once in always in” policy for classifying major sources of hazardous air pollutants under the Clean Air Act. Basically, the change will support facilities when they act to limit their emissions below major source thresholds. Howard Feldman, API senior director of regulatory and scientific affairs:
“This is smart policy that can provide certainty to the American economy and supports the use of new technologies in the natural gas and oil industry that protect the environment while producing affordable and reliable energy for consumers.”
In the energy space, smart regulation plays an important role in ensuring safe development – regulation that enhances safety without duplicative, sometimes counter-productive features that needlessly hamper responsible natural gas and oil development A couple of other examples of energy regulation getting smarter:
There’s this in the New York Times on recent developments with U.S. shale energy – largely developed with advanced hydraulic fracturing and horizontal drilling:
Overcoming three years of slumping prices proved the resiliency of the shale boom. … [T]he United States is becoming a dominant producer. It is able to outflank competitors in supplying growing global markets, particularly China and India, while slashing imports from the Middle East and North Africa. This year, the United States is expected to surpass Saudi Arabia and to rival Russia as the world’s leader, with record output of over 10 million barrels a day, according to the International Energy Agency. “This is a 180-degree turn for the United States and the impacts are being felt around the world,” said Daniel Yergin, the economic historian and author of “The Prize: The Epic Quest for Oil, Money and Power.” “This not only contributes to U.S. energy security but also contributes to world energy security by bringing new supplies to the world.”
Certainly, the Bureau of Land Management’s recent decisions to pull back a rule adding a new layer of regulation on hydraulic fracturing and delaying its venting and flaring rule are significant developments for U.S. domestic energy production. BLM’s rule was duplicative, didn’t improve on the success of existing state and federal regulations and could have slowed permitting and limited energy access to public lands in key western states.
As we’ve noted, current federal ozone regulation is a tangle of competing standards – existing 2008 standards that have yet to be fully implemented by the states and 2015 standards that the previous administration advanced – even though air quality was and is getting better under the 2008 standards. The 2015 standards could require states to restrict manufacturing, infrastructure construction and energy development, potentially placing hundreds of counties out of attainment. Congress should fix this inefficient, redundant regulation legislatively as soon as possible.
Before closing, a few words about tax policy and advancing U.S. energy. Tax reform enacted late last year will help grow the economy and add jobs – including in our industry. As API President and CEO Jack Gerard pointed out:
“[A]n updated tax code will allow our industry to accelerate investments and help unleash economic activity. Pro-growth reforms like strong cost-recovery provisions and a lower corporate rate can also drive innovations in new technologies to protect the environment and help provide affordable energy for consumers.”
ExxonMobil Chairman and CEO Darren Woods writes that the company plans to invest more than $50 billion over the next five years – to increase oil production in the Permian Basin, expand existing operations and to improve infrastructure:
These are all possible because of the resource base developed by our industry along with sound tax and regulatory policies that create a pro-growth business climate here in the U.S. The recent changes to the U.S. corporate tax rate coupled with smarter regulation create an environment for future capital investments and will further enhance ExxonMobil’s competitiveness around the world.
Again, the country needs Washington to focus on accelerating the progress U.S. energy has made and can continue to make, given the right policies and leadership. We mentioned access to energy reserves, regulation and tax reform. Add trade to that list. Provisions in the North American Free Trade Agreement that help open markets for U.S. natural gas, oil and refined products have been good for our economy. Those and provisions that protect U.S. investments and ensure the global competitiveness of U.S. energy companies should be preserved.
With the right policies the United States can ensure its global energy leadership for decades to come. Tuesday’s speech can help move that goal forward.
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.