CNBC’s “Squawk Box” has this interview with former GE Chairman Jack Welch in which he discusses the impact regulation could have on U.S. energy development and the economy – central themes in the 2012 election:
Removing barriers to developing natural gas is every bit as important as resolving the "fiscal cliff" of spending cuts and tax increases that looms ahead, the head of the Jack Welch Management Institute at Strayer University said … “We have a chance in this country to make this the American century," Welch said.
More from Welch:
"This gas thing is huge. The gas that we have found is in the first inning — it's like the Internet in 1990. This is the first inning of the great American century." States such as Pennsylvania and West Virginia are at the forefront of natural gas exploration because of their low regulatory burdens, while New York lags, he added. "The regulatory wall is a huge deal. It's equal in my opinion to what happens in the marketplace as the fiscal cliff," Welch said. "The regulatory wall is obviously right in front of you."
Energy regulation – on oil development as well as natural gas – is just one of a number of policy choices at stake as Americans vote for president, members of Congress and for state and local officeholders.
Choices made in the polling booth will affect our strategic approach to energy development, as well as policy on drilling for more domestic oil and gas and energy taxes. These, along with the regulatory climate that will be created – Welch’s chief concern – will shape America’s future energy path.
So, as America votes, let’s consider again the choices that are at stake on energy regulation, taxes, access and overall energy approach.
Welch and others see America’s natural gas and oil reserves, multiplied by horizontal drilling and hydraulic fracturing technologies, like a winning lottery ticket that simply needs to be cashed in. IHS Global Insight’s new study projects major new oil and gas development, trillions in capital spending and millions of new jobs created. But only if Welch’s “regulatory wall” is avoided.
That means common-sense regulation – with states taking the lead – that avoids needless duplication at the federal level. Indeed, that’s the choice – effective and efficient oversight by state regulators who know the geology, hydrology and other relevant features where they work and live, versus Washington’s predilection for one-size-fits-all approaches.
A National Journal (subscription publication) article underscores the importance of this choice on regulation. The Journal reports that that EPA is “currently sitting on about a dozen new major regulations, completed, and ready to roll out the door, but on hold until after the election. Nearly all of them will have a significant impact on the coal and oil industry.”
For strengthening America’s energy security, that’s the wrong path. We need a regulatory system that’s transparent and bases its rules on sound science, one that considers legitimate cost-benefit analysis. We need a system that’s open to all stakeholders and avoids unnecessary layers. All will promote regulatory certainty, which is critical to investment.
Election choices will affect the course of energy tax policy. The past two years have been marked by efforts to increase taxes on the oil and natural gas industry. In some instances a handful of companies have been targeted for tax hikes. It’s simply the wrong path for energy security. The Wood Mackenzie consulting firm found that increased oil and gas taxes would reduce energy production, cost jobs and reduce revenue to the government – more than $220 billion by 2030. As Americans vote they need to look for candidates who will push for fair tax policies that encourage domestic energy investment and international competitiveness.
Americans’ election choices will have a bearing on access to reserves and our country’s overall energy approach. Will ours be a vision of safely and responsibly developing America’s energy riches or one of scarcity and rationed opportunity? Will we develop the oil and gas we’ve been blessed with, offshore and onshore, or will we continue to keep vast areas off limits? Will we strengthen our close energy relationship with Canada by building the Keystone XL pipeline and other infrastructure, or will we weaken it through the extended, illogical delay of such shovel-ready projects?
Americans understand the importance of more domestic oil and natural gas. More than seven in 10 supported increased resource access in a recent survey. Whether that public opinion will turn into action depends in large part on the election choices we make – the energy choices we make.
Is 2012 the energy election? Energy has been a consistent theme on the campaign trail and in the presidential debates. It’s at the center of any discussion of job creation and economic growth, as well as America’s future prosperity. “If you’re interested in energy policy,” writes the American Enterprise Institute’s Kenneth P. Green, “this election is one for you. Go vote.”
Indeed, please do.