Obama's Scorched Oil and Gas Policy
The clock is ticking on the Obama Administration. With only 18 months remaining in his final term, federal energy planners and agency regulators are working as quickly as possible to impose new rules on the oil and natural gas industry.
As one industry lobbyist told the Houston Chronicle, “The agencies are all in hyperdrive to get the rules across the finish line or have them well-positioned in the regulatory queue so that their path forward past Jan. 20, 2017, is clearly established.”
The rush to increase regulations on oil and natural gas is nothing but bad news for an industry that has already contracted because of a large drop in wellhead revenues. Ditto for consumers who need infrastructure investments today for affordable, plentiful energy tomorrow.
Oil and gas has been a rare bright spot in Obama's economy—and in spite of, not because of, his policies.
Ending four decades of concern over imported oil, the United States is now the largest oil and natural gas producer in the world. Advanced technologies, including hydraulic fracturing and directional drilling, have harvested an energy bounty that has lowered costs for consumers, created thousands of jobs, and nearly single-handedly lifted the nation from the depths of The Great Recession.
Punishing the good in the name of climate change (is there anything not related to climate change these days?) is a legacy issue for the President. Yet some measures in Obama's thicket of impositions could impede the fight against his so-called “greatest threat to future generations.”
By proposing new methane emission regulations, for example, the administration will hike drilling costs for natural gas. Even the EPA’s own data shows that methane emissions already have fallen dramatically due to the industry’s voluntary actions and rules already on the books.
The administration also has finalized new hydraulic fracturing regulations for wells drilled on public lands despite a new EPA report that found “no widespread, systemic impacts to drinking water sources.”
Of course, the administration’s fracking rules will not apply to this White House's new prohibitions on nearly 300 million acres of federal land. The Arctic National Wildlife Refuge, portions of the Arctic Ocean, and large tracts of several Western states are among the parcels the White House is preserving “for future generations.”
Moreover, the offshore leasing plan for 2017–2022, which the Interior Department hopes to complete soon, does not include leases in the energy-rich eastern Gulf of Mexico or along the Pacific Coast. Instead it proposes to allow the industry to pick over bones in the previously explored and developed western Gulf and possibly in a small portion of the Atlantic Outer Continental Shelf.
There also are new offshore drilling rules, including a regulation requiring Arctic drillers to have two rigs on hand—one to drill the well and a backup rig in case a relief well is needed. This, despite a National Petroleum Council report calling on the administration to encourage Alaskan offshore drilling now or become more dependent on foreign oil in the future.
All of these regulations, including tougher ground-level ozone standards, are moving forward in lock-step with the regulations on carbon dioxide from power plants. This drastic, controversial proposal combined with other regulations will shutter scores of coal-fired power plants and reduce electrical power by as much as 130 gigawatts, enough to serve the residential needs of more than 100 million Americans.
These new regulations are just a few of the counterproductive, top-down rules which will be proudly trumpeted at the next presidential library. They will be added to the plethora of similarly misguided edicts such as the ethanol mandate as well as the “sue and settle” rulemakings accomplished by collusion between administration officials and environmental groups.
Based on this record, it is abundantly clear that the administration’s final months of “hope and change” will be marked by continuing hostility toward natural gas, oil, and coal. The overriding goal—in addition to making electricity costs “necessarily skyrocket”—is to keep these fuels in the ground. This raft of regulations is the president’s workaround to his inability to push cap-and-trade legislation or a carbon tax through Congress.
The administration’s own energy analysts admit the economy runs primarily on natural gas, oil, and coal--and will for decades to come. As a result, Obama's vindictive energy agenda has become a rear-guard assault on neutralizing, if not reversing, one of the great industrial achievements of our time.