A Wall Street Journal editorial predicts a “regulatory flood” from the Obama administration now that the election is over – in health care, financial services and energy. Delayed rules for ozone air quality and industrial boilers, as well as a broad anti-carbon agenda can be expected, the Journal says, adding:
"The oil and gas industry is also targeted, hydraulic fracturing (fracking) in particular. The EPA has already issued a rule on shale production emissions and has one coming on diesel fuel in fracking. The Interior Department is promulgating rules on fracking on federal lands, and other rules can't be far behind, probably using the pretext of drinking water under the Clean Water Act."
The Washington Times depicts an almost breathless wait for the administration to show its hand on energy in general and more specifically on hydraulic fracturing – the key to America’s shale energy wealth.
Next month EPA is expected to release a preliminary report on fracking that likely will telegraph the full report due in 2014 – and also the administration’s overall energy path. The Times:
"The drilling process that has brought U.S. energy independence within reach faces renewed scrutiny from the Obama administration and an uncertain future in many states. Oil and gas industry leaders remain enthusiastic yet cautious that hydraulic fracturing, commonly known as 'fracking,' will be fully embraced by the newly re-elected President Obama and state leaders. … Many in the energy sector … fear the report will paint fracking in a negative light and give the White House political cover for cracking down on it... "
Meanwhile, there continues to be talk of raising taxes on oil and natural gas companies in connection with efforts to avoid the so-called “fiscal cliff” in Washington.
Yet the product of impending energy regulatory tsunamis, threatened new federal rules on hydraulic fracturing and the possibility of punitive, discriminatory tax hikes is uncertainty in the marketplace and a chilling effect on private energy investment and development – creating headwinds for President Obama’s goal of more domestic oil and natural gas production. The Journal:
"Having come close to losing re-election because of a weak economy, Mr. Obama now keeps saying 'our top priority has to be jobs and growth.' This new regulatory flood will increase costs and uncertainty and make that priority that much harder to achieve."
It’s unfortunate that such a flood could be gathering – with a recent IHS Global Insight analysis that U.S. shale resources could dramatically expand domestic energy output, create 1.7 million new jobs and generate trillions in capital spending for the economy, and with the International Energy Agency projecting that shale could let the U.S. overtake Saudi Arabia and Russia as the world’s largest oil producer by 2020. The only thing more amazing than having tremendous energy potential would be setting up unnecessary obstacles to its development. It’s like holding a winning lottery ticket instead of cashing it in.
No, when you have the winning Powerball ticket, you redeem it. To do so we need sensible, efficient regulation and regulatory systems, led by experienced and competent state-level regulators. We don’t need federal regulatory layers that merely duplicate what the states already are doing, with professionalism and efficiency.
Likewise, we need a fair tax system that doesn’t single out an industry or a handful of companies. Rather, we need one that encourages investment and development while assuring that U.S. energy firms can go up against global competitors.
This is the path to more domestic oil and natural gas – the president’s goal – and the desire of the American people.