The 1.4 Percent Energy Approach

Mark Green
Posted August 15, 2012

News item: The Interior Department announces its oil and natural gas plan for the National Petroleum Reserve-Alaska (NPR-A) that keeps roughly half of the 23 million-acre oil reserve off limits to oil development – which some think could block new pipeline construction needed to bring NPR-A oil to market.

Meanwhile, the administration seldom misses an opportunity to promote solar and wind power. A Wall Street Journal editorial (subscription required) notes an administration policy allowing construction permitting for solar energy projects on 285,000 acres of public land in six western states, while Interior says companies can petition to build solar projects on 19 million acres. This, the editorial says, is on top of expediting solar projects through the federal regulatory jungle, including streamlined National Environmental Policy Act approval:

"In short, green energy is getting an EZ Pass through the Administration's costly regulatory tolls. Since taking office in 2009, the Obama Administration has approved 17 major solar projects on public lands. All of this is facilitated through a program called the 'roadmap for solar energy development.' … Meanwhile, the Institute for Energy Research notices that the new solar policy is 'in sharp contrast to the Obama Administration's canceling lease sales for oil shale deposits in Colorado, Wyoming and Utah early in the President's term and significantly downsizing development plans for those resources since then.'"

Some context: Solar and wind, two of the largest parts of the renewable energy portfolio, supply about 1.4 percent of our country’s total energy. Oil and natural gas furnish about 62 percent.

America’s oil and natural gas companies support an all-of-the-above (and below) energy strategy that includes developing renewable sources. Yet, the energy reality is that oil and gas power our economy and way of life and will continue to do so for decades to come. While the administration talks a lot about developing more domestic oil and gas, its actions are for the 1.4 percent – even as it hamstrings the 62 percent.

This is evident in its limited NPR-A plan, rejection of the Keystone XL pipeline, an outer continental shelf leasing program that keeps 87 percent of our oil and gas resources off limits and more. In energy terms, administration policy and regulatory approaches have resulted in the United States of Red Tape.

API President and CEO Jack Gerard:

“We need to see more than lip service from the administration about ending this stranglehold on economic growth and to recognize the enormous economic benefit of America’s oil and natural gas. We need a pro-growth president who promotes more than just the 1 percent of our energy mix. … Talk is cheap. Americans are ready for political leaders who take action to deliver on the promise of domestic energy production.”

In a conference call with reporters, Gerard said a “holistic” approach is needed in energy leadership – one that sees and promotes all sources, that doesn’t “overlook the foundation of the energy we use” – oil and natural gas. Gerard:

“The business uncertainty and the choices of the administration are having a detrimental effect on investment in the economy and investment in American workers. … Never before have we had opportunity like we have today in America as it relates to energy policy.”

The American people certainly “get it” on energy. A new Harris Interactive survey of 1,016 registered voters found 71 percent favor increased access to domestic oil and natural gas resources. That support is strong across party lines (85 percent of Republicans, 72 percent of Independents, 60 percent of Democrats) and tops 65 percent in all age groups.

Unfortunately, the administration isn’t getting it. Its plan for the NPR-A follows a policy pattern of limiting access to available oil and natural gas reserves. U.S. Sen. Mark Begich, D-Alaska, said the plan appears to be crafted in a way that could prevent construction of a pipeline from the reserve to the Trans-Alaska Pipeline System (TAPS) that would take oil to market. Begich:

“I am very concerned about this choice by the Department of the Interior. The new preferred alternative still seems to close off several options for building a pipeline across the NPR-A. We’ve known since the beginning that a pipeline across the NPR-A is a critical piece of the puzzle for successful Arctic development.  I was pleased by Secretary Salazar’s statement that the United States cannot be left behind in the Arctic. However, today’s decision creates many more questions than answers about how we are going to get billions of barrels of oil from the Chukchi Sea into TAPS.”

Gerard said strong leadership is needed to turn America’s energy wealth into reality, creating jobs and delivering economic growth in the process – leadership characterized by a “broad, bold vision” – like the administration’s vision for other energies. Circling back to the Journal editorial:

“Maybe if Mr. Obama treated every American industry the way it does solar and wind power (subsidies aside), the U.S. economy would be growing faster and the unemployment rate would fall below 8.3%.  Just a thought.”