Obama's State of the Union Energy Claims Undercut by Record

Tuesday’s State of the Union address is noteworthy because it appears to signal a change in the Administration’s approach to US energy development. If so, this is welcome news. Truly embracing an “all of the above” energy strategy that allows for the robust development of our oil and natural gas resources in the immediate term would boost economic development, lessen our dependence on hostile oil regimes, and save American consumers from record-high fuel costs.

However, while these words are encouraging, the Administration’s actions over the last three years tell a different story.

One highlight was the President’s emphasis on natural gas — a game-changer for the US economy. President Obama mentioned the words “manufacturing” and “manufacturers” fifteen times. This is because manufacturers of such commodities as steel, paint, fertilizer and chemicals, who use natural gas as a feedstock, have seen record low prices for the commodity in the United States. The boom in natural gas, created by the combination of two old technologies – horizontal drilling and hydraulic fracturing — has made the resource abundant and extremely affordable. Low energy prices, driven by an increased supply, benefits all Americans. This resource has been and should continue to be developed safely and without jeopardizing our environment. Unfortunately, the Environmental Protection Agency has spent considerable time and effort over the past few years trying to impose new regulations on natural gas production that could, in effect, render future production uneconomical.

The President also failed to mention the Keystone XL pipeline. His Administration’s decision just last week to reject the Keystone XL pipeline, a $7 billion energy infrastructure project built completely with private funds, could bring over 700,000 barrels of oil from Montana, North Dakota, and our trusted friend Canada and create thousands of union jobs during construction. If his Administration is serious about generating new jobs and economic growth through energy policy, there is no better, or more immediate, way than approving this “shovel ready” project.

While his emphasis on the return of domestic manufacturing rightfully deserves attention, he left out several other key energy issues – some of which could strengthen energy security and put Americans back to work in weeks, not years.

Despite claims that oil production has increased under his Administration, the reality is that road blocks and bureaucracy have slowed the permitting process to a crawl. It seems that President Obama is out of touch with his regulators, who seem to jump through hoops to ensure production does not move forward in a meaningful way. Under the Obama Administration, offshore leasing revenues have fallen from $9.48 billion the year before he took office to a measly $36 million last year. This is not because the prospects for offshore oil and gas have declined but because the Administration’s permitting and leasing programs have made the offshore areas that much less attractive. Permitting activity in the Gulf of Mexico is down over 60 percent from the historic average for deep water and shallow water wells.

For companies who have already paid the US government more than $3 billion to explore offshore Alaska, the Administration has thrown up road block after road block, placing onerous regulations on top of factually inconsistent conditional approvals before an operator can even begin to explore the estimated 27 billion barrels of oil these untapped reserves contain. This is on top of years of delay the project has already experienced. The President’s promise to eliminate the bureaucratic red tape that inhibits job creation is laudable, but it’s his actions, not words, that matter to energy consumers. It is time his Administration moved forward in support of sensible offshore development.

President Obama also claimed that he would make available more than 75 percent of the country’s offshore oil and gas resources. However, his Administration’s offshore leasing plan leaves the Atlantic and the Eastern Gulf of Mexico off-limits to energy exploration and production. Due to this decision, coastal states like Virginia and South Carolina – states that have expressed interest in offshore activity – cannot assess their resource potential due to these restrictions.

The President also failed to mention gasoline prices which, with a national average of $3.38, are at an all-time high for this time of year. Making matters worse, experts project that 2012 will be the most painful year for our truckers, highway users, commuters and anyone who depends on gasoline and diesel to deliver basic commodities like food. Yet, as prices climb, we have failed to pursue an energy policy that values the benefits domestic production will have for our trade deficit, our energy independence, and our consumers.

Investing in alternative energy is an additional key part of our “all of the above” energy solution. Yet permitting for new transmission lines to carry wind and solar power to market is facing the same bureaucratic delays and obstacles that the oil and gas industry faces.

With Iran threatening to close the Strait of Hormuz and instability in other key oil exporting countries, our nation’s inability to secure a sound energy future will have devastating consequences for our economic and energy security.

As the President seemed to indicate last night, “no” is no longer an answer to his Administration’s approach to energy policy. Consumer Energy Alliance believes that any sensible energy policy must recognize that we have the intellectual capacity and technology to develop our natural resources AND protect the environment. Those who urge this Administration to “get the US off oil” do not seem to grasp the reality; oil and fossil energy will be the dominant resource for decades to come. Our challenge is not falling victim to this false choice of energy development versus the environment. It is encouraging is President Obama’s 2012 State of the Union signaled that he is now going to embrace the need for energy development, and its promise for job creation and economic growth.