Jack Gerard speech at Kay Bailey Hutchinson Energy Center Symposium
Kay Bailey Hutchinson Energy Center Symposium
February 10, 2017
As prepared for delivery
Thank you, Dan, for the kind introduction and for your leadership in our industry. To Sen. Hutchinson, we miss your steady leadership in Washington, but I’m not sure you miss us. I also want to thank Melinda and her team for hosting this event and for the invitation to share with you the American Petroleum Institute’s perspective on the road ahead.
We are now at the end of the third week of the Trump administration and it is clear that their approach to energy policy could not be more different than the previous administration’s.
With this change in policy comes new opportunity – opportunity for the energy industry – particularly the oil and gas industry -- to achieve its full potential.
The oil and gas industry has always been about doing what others thought was impossible. The women and men of the oil, natural gas and refining industry work hard every day to shape a brighter energy future based on science, facts and a long-term view that doesn’t believe that today’s limits should define tomorrow’s reality.
Just a few short years ago, few thought today’s reality of the United States leading the world in oil, natural gas and refined product was ever possible.
You may have noticed during last Sunday’s Super Bowl, a short 30 second ad in which we introduced a new energy awareness campaign called Power Past Impossible, which reached an audience of more than 110 million Americans, roughly half the households in the U.S.
The “Power Past Impossible” campaign’s goal is to broaden the national energy conversation about the importance of natural gas and oil, the products that come from them and their contributions to consumers’ everyday lives.
The “Power Past Impossible” ad and the ones to follow in the coming months will vividly illustrate how natural gas and oil provide value well beyond transportation fuels or cooking and heat.
And for the students in this room and your classmates here in Texas and across the country, Power Past Impossible is designed to spur your imagination and to remind you that the future is limitless if we harness the tremendous ingenuity, creativity and entrepreneurial spirit of the next generation.
The campaign will raise energy awareness by highlighting the central role oil and natural gas play in spurring innovation, advancing technological breakthroughs and enabling a modern quality of life that is unsurpassed.
Energy is so thoroughly woven into our daily lives that few will ever question whether it will be there, or where it comes from.
From the electricity that lights our homes, to many of the components in our smart phones, to the cosmetics, soap, shampoos and breath mints we use every day, to the chemicals that make modern medicine possible, energy is essential to modern society, with oil and natural gas as the foundation.
The United States has clearly powered past what most would have called impossible achieving global energy and environmental leadership simultaneously, a feat that conclusively disproved long held assumptions about what’s possible.
Most in this room know that energy production has dramatically increased, due largely to innovations in hydraulic fracturing and technological advances in horizontal drilling.
But fewer know that in addition to leading the world in the production of oil, natural gas and refined product, the United States also leads the world in emissions reductions.
According to the EPA, greenhouse gas emissions from electricity generation are at their lowest point in 25 years, thanks primarily to cleaner burning natural gas.
And thanks to our nation’s world class refineries which refine cleaner gasoline and diesel fuels in combination with more fuel-efficient vehicles U.S. air pollutants have fallen by 70 percent since 1970, even as vehicle miles travelled have increased by more than 170 percent.
The fundamental change under the Trump administration for our industry is that market realities and a respect for consumers and their preferences will drive smarter regulations that focuses on protecting the environment, growing the economy and allowing industry to do what we do best, providing products consumers want and creating well-paying jobs that the middle class needs.
The administration understands that all Americans benefit from a safe, environmentally responsible and thriving oil industry. And they recognize the importance of letting market forces, not government mandates, drive energy policies.
They understand and want to encourage what study after study confirms: The American 21st century energy renaissance has meant lower energy costs for the American people.
In 2015, it is estimated that the average household saved as much as $1337 due to utility and other energy-related savings. That same year Triple A reported that American drivers saved as much as $550 at the gas pump.
At a macro level, the United States’ energy abundance will continue to reduce energy and materials costs for American manufacturers, particularly producers of steel, chemicals, refined fuels, plastics, fertilizers as well as numerous consumer products that rely on these materials.
We see resurgence in our manufacturing sector because U.S. industrial electricity costs are now 30 to 50 percent lower than those of our foreign competitors. Further, American manufacturing costs are now 10 to 20 percent lower than those in Europe and could be 2 to 3 percent lower than in China by 2018, an important competitive advantage.
Continuing the current trend of North American energy development could contribute more than $500 billion annually to U.S. GDP and create as many as 3 million additional jobs by 2035.
Broadly, the change in administration means we have the opportunity to achieve America’s true energy potential by embracing, as this administration seems inclined to do, the market-driven innovation and entrepreneurial spirit led by the hard-working 9.8 million women and men who work directly and indirectly in the oil, natural gas and refining industry, including many of you here today.
The Trump administration’s renewed focused on domestic energy production and regulatory reform is an opportunity to achieve even more and to take a significant step to fulfilling the United States’ true, long-term energy potential and to continue to power past the impossible.
Two recent examples, resurrecting the Keystone XL pipeline and allowing the Dakota Access pipeline to continue, illustrate the new approach to energy policy and why policy matters.
These early decisions will not only create thousands of well-paying jobs, but equally important it sends a signal to the marketplace that the president will restore certainty and regular order to the permitting process for the Dakota Access Pipeline specifically and to future energy infrastructure generally, which most Americans would call simple fairness and commonsense, but what many. call honoring the rule of law.
We applaud President Trump for his embrace of America’s energy potential and for a national energy policy in which, as the president said during the campaign, “American energy dominance will be declared a strategic economic and foreign policy goal of the United States.”
The president’s approach has been to embrace private investment of all kinds, as a way to grow the economy and create well-paying jobs.
When it comes to energy infrastructure we know that allowing the private sector to decide where to invest its capital is good for consumers, our economy and can benefit thousands of middle class families across the country through job creation.
A recent study found that updating America's energy infrastructure could generate up to $1.15 trillion in new private capital investment, which for context is almost three times the size of the highway bill signed into law at the end of 2015.
In fact, IHS estimates that infrastructure investment nationally could support more than 1.1 million jobs, contribute $120 billion to U.S. gross domestic product and increase revenues to government by more than $27 billion from 2014-2025.
Conversely stifling investment can negatively impact consumers. For example, despite ample natural gas supplies nearby, the northeastern United States is home to seven of the top 10 most expensive states for electricity costs.
For example, most consumers in the Northeast pay between 40 to 60 percent more for their energy than the national average, not because they lack energy resources, but because their elected leaders continue to prevent needed investment in energy infrastructure.
A study from the New England Coalition for Affordable Energy reports that failure to expand natural gas and electricity infrastructure in the region could cost households and businesses an estimated $5.4 billion in higher energy costs and more than 167,000 private-sector and construction jobs between 2016 and 2020.
That’s not the kind of progress the American voters said they wanted last November.
What the American voter expects and deserves are the facts. And the fact is, recent history has disproved the false premise that economic growth and significant increases in energy production must, necessarily, come at the expense of environmental improvement, as an extreme vocal few who oppose any and all fossil fuels continue to suggest. Their energy vision for our nation is to leave our energy resources in the ground.
What would it mean for consumers, the economy and future job creation if we substantially limited the exploration, development and use of fossil fuels in America’s energy supply mix?
A soon to be released study that uses government data from the Energy Information Administration indicates that, for starters, the average American family would see their energy bill increase by as much as $1,970 by 2040.
And if you include “hidden” energy costs in other goods and services, total additional household costs could increase by $4,550 in 2040. It could mean a cumulative loss of $11.8 trillion in the nation’s GDP and the loss of almost 6 million jobs in 2040.
That’s just a few of the costs to America’s families and economy of an energy policy based on less energy. Making it clear that an energy vision built on simply saying no to fossil fuels is a bad deal for our nation’s consumers, economy and long-term energy security.
What’s more, the vision of less energy in the future simply flouts the overwhelming consensus of experts, who, almost unanimously, agree that we will need more energy from all sources for decades to come.
In the United States, oil and natural gas will supply 60 percent of U.S. energy needs by 2040, even under the most optimistic scenarios for renewable energy growth.
Worldwide energy consumption will increase 48 percent by 2040, largely due to expanding economic opportunities in developing nations, and more than three-quarters, 78 percent, will be met by fossil fuels.
The only question up for debate is which nations will help meet the collective need for more energy.
We want the answer to include the United States of America. Our goal is to ensure that our nation remains the global leader in oil, natural gas and refined products for years to come. To do that we need energy policies that build on industry innovation and entrepreneurial spirit.
We hope that the new administration will pursue environmental policies that build on the progress our nation has made in the last several years thanks in large part to the American energy renaissance.
We also hope that they will recognize that the innovation and core commitment to the safety of the millions of women and men of the oil, natural gas and refining industry is a national asset that should be encouraged and promoted.
We would suggest that it should be North American energy, developed, transported and refined by Americans, and it should be our economy that benefits from ever-increasing demand for energy both foreign and domestic.
In the coming days, weeks and months, as I mentioned earlier, the “Power Past Impossible” advocacy campaign will introduce for some and reinforce to many, the everyday, fundamental and profound benefits of oil and natural gas and the thousands of products they make possible.
And by extension, how policies that encourage American energy dominance, as the president has called for, are a good deal for consumers, our economy and the environment.
I encourage you to go to www.PowerPastImpossible.org to learn more about the campaign and to use it to educate your friends, families and neighbors.
The ad campaign and all of API’s advocacy outreach and energy literacy programs are intended to advance our vision of a world where more and more people have access to reliable, safe and affordable energy, no matter which state, nation, continent or hemisphere they call home.
And to promote policies that capitalize on this once-in-a-generation opportunity to show the world how energy abundance can be used as a positive force, and expanding and modernizing our infrastructure will be essential to our success as a global energy leader.
Our goal is to create a new American understanding of energy -- and with it a national energy policy-- based on science, the free market and entrepreneurial spirit.
It is our hope that we set aside the acrimony and division that has marked too much of past national energy policy discussions. And instead work together, as one nation, without regard to party, region or political outlook, on a positive, forward-looking energy future based on the understanding that our nation’s best energy future can only be achieved through a true all of the above energy strategy.
And as the last several years have demonstrated and our Power Past Impossible campaign will remind the American public, particularly tomorrow’s leaders and lawmakers, as we think about the future, it shouldn’t be limited by what’s possible today, because today’s reality is often yesterday’s impossibility. It should be, powered by our collective hard work and best vision for a future that we’d be proud to leave the next generation.
Thank you for your time.