Obama’s Energy Mandate: More Oil and Gas
Peter C Glover
During the presidential campaign Barack Obama was “economical with the truth” to say the least on energy matters. Claiming personal credit for the success of the shale gas and oil industry took some ‘Chicago politics’ hutzpah given the development took place mostly on private land. But with the fiscal cliff looming on January 1, the President will be involved in making some critical energy policy decisions. So just what is the president’s electoral mandate for his second-term? Will he throw his anti-fossil fuel ideology under the bus and in the economic interest of the nation? Or he will he persist in the expensive and highly-subsidized fiction of “millions of green jobs”?
Well the fact is, if a recent report publishing details of an election night on the issue of energy is anything to go by, the President has received a very specific cross-party mandate: more domestic oil and gas, please Mr President.
According to a Harris Interactive election night poll conducted on behalf of the American Petroleum Institute, 90 percent of Democrats and Republicans and 94 percent of Independents count energy as “very important” to them. Most significant for the re-elected President, the poll found that 73 percent of voters favor the production of more domestic oil and gas. Sixty-eight percent of voters recognized it increased taxes on oil and natural gas companies simply help to drive up consumer costs. And a second telephone poll conducted by Harris also found an astounding 75 percent level of cross-party in support of construction of the Keystone XL Pipeline. That figure included 60 percent of Democrats, 76 percent of Independents and 95 percent of Republicans.
With prospective new energy taxes and the Keystone pipeline high on the agenda for Congress, clearly energy is one issue for which the re-elected President does have a mandate – and it is not in tune with the anti-fossil fuel policies of the President’s first-term. Plainly, the electorate is clued up on the need to avoid derailing the enormous impact of shale gas and oil on the economy and on job creation. However, the President has resurrected his 2008 election pledge to take action on climate change. And that suggests further government action that could finally kill off a coal industry currently enjoying a boom in new export markets. Even as Obama was re-elected, the market punished coal stocks and their investors in anticipation of the slew of anti-carbon regulations in the political pipeline. And the climate commitment generally has the hydrocarbon industries in a state of high concern. So which way will a President no longer dependent on an electorate or on personal support jump?
Well, the evidence suggests that President Obama is already spending some of his political capital in furtherance of his anti-fossil fuel campaign. Just two days after his re-election, the government’s Interior Department announced a plan to shut down 1.6 million acres of federal land slated for oil shale development by the Bush administration. Even before the election, the US Bureau of Land Management (BLM) – yet another tier of bureaucratic governance – published proposed regulations governing oil and gas development on ‘federal and Indian lands’. So complicated and costly are these regulations considered to be that some suggest it threatens the still growing shale gas industry by, effectively, putting the vast energy reserves beneath “federal and Indian lands” beyond economic viability.
On the other hand, a new report by Moody’s Investors Service predicts that the President will reverse course and eventually approve the building of the Keystone XL pipeline. However, it qualifies this statement by warning that “approval will not be quick” with the prolonged permitting process risking “missing the very oil price boom that inspired Keystone in the first place.” And the report also predicts tougher times ahead for the oil and gas industry with a considerable expansion of regulatory reach and greater federal oversight of hydraulic fracturing and deepwater exploration.
So what can we expect from President Obama’s second-term?
An outright carbon tax would be a tough, even impossible, sell in a Republican dominated House. Its impact in the US manufacturing industry and on competitiveness would just be too destructive. Meanwhile, though government revenue from the successful shale gas and oil industries on private lands will continue to grow, expect restrictions on “federal and Indian lands” to continue putting the energy bonanza beneath their feet largely off-limits. So while taking the plaudits for some increased revenue and the creation of real jobs towards which he did nothing, expect the President to continue his anti-fossil fuel campaign; a campaign that will actively restrict on and offshore drilling on federal lands and the significant revenue government would earn from it.
Instead, we can expect increasing use of energy governance by executive fiat. That is, via the political expedience of the ideological energy industry ‘attack dogs’ at the EPA and Bureau of Land Management. Though it means eschewing greater government revenue from the energy industry, it has already proven a more expedient way of imposing regulations that effectively price new oil and gas development out of the market.
But whether the administration chooses open anti-carbon warfare on the floor of the House, or the ‘covert ops’ path inherent via his regulatory bodies, employing either would appear to refute a clear and cross-party electoral mandate. A mandate urging support for greater investment in oil and gas; and not one for putting increasingly burdensome impediments in the path of the oil and gas industries.
Are you listening, Mr President?
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