President Obama reiterated his commitment to an “all of the above” energy strategy in his State of the Union address Tuesday. In the past, this strategy has looked more like a “renewable or nothing” plan. However, the President did make surprisingly supportive comments regarding our booming oil and natural gas industries, saying that his “administration will keep working with the industry to sustain production and job growth….”
The President also stated that in order to spur the growth of the natural gas industry he would “cut red tape.” That would be a great first step, but here are a few other areas where we could unleash the enormous potential of the energy sector with just a few snips of the old red tape:
1. Keystone XL Pipeline: H.R. 3, the Northern Route Approval Act, which would clear the way for the construction of the Keystone XL pipeline, passed the House with bipartisan support – but remains lost in the netherworld of Harry Reid’s obstructionist Senate. The Keystone XL pipeline would bring with it 20,000 much-needed jobs over time, and support thousands of other jobs in many sectors. That’s not to mention an additional 500,000 barrels of oil a day from Canada, our largest and most stable trading partner. This would inject our economy with billions of dollars in additional activity. Of course, taxpayers shouldn’t have to wait for the Senate to act (or, more likely, not act). President Obama’s State Department can stop their delay tactics and approve the pipeline’s permit at any point.
2. Permitting Reform: H.R. 1900, the “Natural Gas Pipeline Permitting Reform Act,” and H.R. 3301, the “North American Infrastructure Act,” would streamline the permitting process for natural gas pipelines, putting in place commonsense deadlines and guidelines to remove the regulatory limbo where many projects find themselves. The inability to get energy products swiftly and safely from place to place is hampering markets and hurting consumers who have to pay higher prices, or even worse, are going without.
Back in November, the Boston Globe reported on the capacity crunch facing New England:
The projects come as New England struggles to address growing demand for natural gas and supply constraints created by tight pipeline capacity. Those constraints have led to shortages and price spikes during the peak demand periods, such as extended winter cold snaps, helping to drive the region’s already high energy costs even higher.
“Some days there just isn’t spare gas to be sold,” van Welie said.
Additional pipeline capacity, van Welie added, would help alleviate the issue and could also lead to lower energy costs in New England … .
Today, the cold weather is testing both pipeline and storage capacity in both the Northeast and the Midwest. National Public Radio’s Jeff Brady reported:
With drilling booms in places like Pennsylvania and Texas boosting the country's supply, there's plenty of gas to go around. The problem is building the pipelines and other infrastructure needed to deliver it. This has led to some extreme cases where natural gas prices have been bid way up. Last week in New York, one desperate buyer was willing to pay about 25 times the typical price for gas.
And in Ohio:
Like in the Northeast, the problem is not supply so much as getting the gas to where it's needed, when it's needed. During the cold spell in early January, one utility had problems that left a few thousand customers without gas for more than a day. State regulators are asking customers to conserve to make sure that doesn't happen again.
3. War on Coal: President Obama has made it clear over the years that coal is his least favorite source of energy. Still, it is a crucial part of any true “all of the above” energy policy. Given its widespread availability and the fact that many alternatives are still prohibitively expensive and unreliable, coal should continue to be a part of our energy profile for the foreseeable future. The President’s Environmental Protection Agency (EPA) and other administrative departments have tried to throw up one roadblock after another to keep coal out of the picture. The “War on Coal” has been so successful that almost no new coal-fired electricity plants are being built in the U.S. The few that are have to be outfitted with costly new carbon capture technology. The Washington Post reports:
Last year, the Congressional Budget Office concluded that it was unlikely the technology would become cost-competitive anytime soon. Power plants that can capture and store their carbon are initially expected to cost about 75 percent more than regular coal plants. And those costs won't fall unless there's either a huge technological breakthrough or utilities invest a lot more of their own money in building new plants. Neither appears imminent.
Representative Whitfield (R-KY) has introduced a bill, H.R. 3826, the “Electricity Security and Affordability Act,” to help rein burdensome EPA regulations by enacting common-sense checks and balances that would restore accountability in the rule-making process. The legislation establishes new guidelines for future power plants that are well within the realm of the possible (for a nice change), repeals earlier proposed rules, and requires more Congressional oversight.
4. Renewable Fuel Standard: The corn ethanol mandate imposed by the Renewable Fuel Standard (RFS) has had far-reaching negative consequences. Corn ethanol drives up costs for consumers in the form of lower gas mileage, engine damage, and volatile food prices. It encourages farmers to plant on marginal land better left untilled. The list is long. The RFS also set up a market for Renewable Identification Numbers (RINS), which are renewable fuel credits to help refiners comply with the EPA’s cellulosic fuel mandate. Unfortunately, this market has become rife with fraud. Companies that have unknowingly bought and used fake RINs in their attempts to comply with the law have been hit with huge fines by the EPA.
Currently, the EPA is considering lowering the volume of ethanol it will require refiners to blend into the gasoline supply in 2014 due to the fact that gasoline consumption is down, yet the law requires greater and greater volumes of ethanol to be blended. That’s only a small, uncertain improvement – one that won’t fix the longer term problems imposed by the RFS. Still, it does reinforce the fact that the RFS is a broken, failed policy – hurting everyone but the corn growers for whom the RFS has been little more than a wealth transfer from one portion of the agriculture sector to another.
A bipartisan team of legislators in the House comprised of Rep. Goodlatte (R-VA), Rep. Womack (R-AR), Rep. Costa (D-CA), and Rep. Welch (D-VT), has introduced H.R. 1462, the Renewable Fuel Standard Reform Act, which would eliminate the corn ethanol mandate, reduce the cellulosic ethanol mandate, and cap ethanol blends at E10.
Washington shouldn’t be picking and choosing winners and losers. Red tape, costly regulations, and unsustainable mandates – not to mention subsidies, tax credits, and loan guarantees for “green energy” projects – all wreck havoc on the energy market. Too often, the end result is higher costs for consumers. Further, these misguided policies have left taxpayers holding the bag for failed government backed enterprises. If President Obama is serious about an “all of the above” energy policy, the remedy is simple: get government out of the energy market.