Of the energy-related lines in the president’s State of the Union address earlier this week, none stood out more than this one:
“… the natural gas boom has led to cleaner power and greater energy independence. That's why my administration will keep cutting red tape and speeding up new oil and gas permits.”
Certainly, the president is right, that the development of natural gas – especially from shale, developed with hydraulic fracturing – and oil are a big part of shrinking imports and cleaner air.
First the environment. We’ll keep saying it: Increased use of natural gas is a major factor in the reduction of U.S. carbon emissions to 1992 levels, which is allowing the U.S. to lead the world in emissions reduction, according to the International Energy Agency – all while producing more than ever before.
On imports, the U.S. Energy Information Administration (EIA) put out the chart below with its recent Annual Energy Outlook 2013 Early Release, showing how growing domestic energy production (again, think shale) is reducing the amount of energy (think: oil) we have to import to meet domestic needs – falling from 30 percent in 2005 to 19 percent in 2011. EIA projects net imports will be just 9 percent in 2035:
These are significant trends that could be extended with the right policies that increase access to U.S. reserves. Which gets us back to the president’s State of the Union pledge. Simply put, more needs to be done to keep red tape, delays and potential unnecessary regulation from hindering domestic energy development.
According to the House Natural Resources Committee (using Bureau of Land Management data), on average it has taken 30 percent longer for the federal government to approve new drilling permits under the current administration than in four years previous. The Institute for Energy Research notes that the average wait for a federal drilling permit in fiscal year 2011 was 307 days – compared to 10 days for a state permit in North Dakota, 14 days in Ohio and 27 in Colorado. Clearly, the process needs to be faster, more efficient and more predictable – all key in creating a better environment for energy investment. It’s entirely within the president’s power to make good on this pledge.
Likewise, the president could intervene with a number of federal agencies that are reviewing, studying or proposing new regulations on natural gas development and hydraulic fracturing – activity that already is well-regulated at the state level, as we recently noted. Again, the potential for new, unnecessary federal regulation threatens more delay and increased costs that discourage investment and innovation.
At the same time, the president’s commitment to better natural gas and oil permitting should be copied in some states. A Washington Post editorial encourages Govs. Andrew Cuomo in New York and Martin O’Malley in Maryland to follow the president’s lead:
So, whereas Mr. Obama is promising to fast-track development, many of his fellow Democrats are dragging their feet. Mr. Cuomo’s administration, for example, said Tuesday that, after years of consideration, it would miss another deadline to write new fracking rules, which could trigger another lengthy delay in the development of New York’s large gas reserves. Maryland Gov. Martin O’Malley (D) in 2011 halted permitting in his state pending a study, but the legislature failed to fund the research. Now [state] Del. Heather R. Mizeur … wants to establish a formal moratorium, and the O’Malley administration is saying that, even if the study is done by an August 2014 deadline, the state might have to complete more studies. The president’s approach is better.
It is – provided we see follow-through on red-tape cutting and permit expediting by federal officials. As the president promised.