Going Beyond Rhetoric on Natural Gas

Over on the White House Blog, there’s genuine enthusiasm for natural gas, and for good reason.  Natural gas is clean-burning, affordable and so abundant that a number of experts describe it as a game-changer, a 100-year energy source.

In the here and now, natural gas that comes from shale through hydraulic fracturing is lifting state and regional economies while revitalizing the U.S. manufacturing sector. Heather Zichal, deputy assistant to the president for energy and climate change:

“Since taking office, President Obama has supported an all-out, all-of-the-above strategy that develops every available source of American energy. A strategy that’s cleaner, cheaper, and full of new jobs. As part of that effort, the Administration has focused on expanding production of natural gas. After all, we have a supply of natural gas that can last America nearly 100 years. And this Administration will continue to take steps to develop this energy resource in a way that can help fuel our economy and, according to industry experts, support more than 600,000 jobs by the end of the decade.”

Zichal is right about the need to expand natural gas development. And it can be done, given the right policies. Eye-popping growth, job creation and industrial/manufacturing revitalization – occurring in states like North Dakota and Pennsylvania – can happen on a larger scale. With the right policies.

Unfortunately, the administration’s actions don’t always match its rhetoric. Although Zichal says the administration is “focused on expanding production of natural gas,” this is not occurring in the places where the administration has the most control of development: on federal lands. The chart below (Energy Information Administration data) shows that natural gas production on federal lands is declining – even as production on non-federal lands is taking off.

Certainly, the Interior Department’s approval this week of more than 3,600 natural gas wells on federal lands in eastern Utah is a move in the right direction. But then, Bureau of Land Management rules on hydraulic fracturing on federal and tribal lands threaten development with new regulatory hurdles. API President and CEO Jack Gerard, during a conference call with reporters:

“These rules are headed in the wrong direction. They would create superfluous, costly requirements, threatening jobs, revenue and energy production while providing little or no environmental or safety benefit. One must ask, where is the need?”

More Gerard:

“It takes 14 days to get a drilling permit to work on private land in North Dakota.  It takes more than half a year on average to get a federal drilling permit for development on federal lands.  A report by SWCA Environmental Consultants concluded that lengthy delays by BLM in reviewing projects in Wyoming put the development of an estimated 17,000 wells on hold.”

It’s good that the administration, at least rhetorically, is embracing the promise of natural gas. But reaping the blessings of this abundant resource takes more than cheerleading. It takes policy actions – policy restraint, in some cases – to turn natural gas’ potential into reality.

View the original article here

Taking the President’s Energy Rhetoric to Task

The more the president talks about energy, the more heat he creates for himself. Here’s the Washington Post’s Fact Checker, weighing his rhetoric about the U.S. consuming 20 percent of the world’s oil while having just 2 percent of its proven reserves:

“ … this is a good example of what we call ‘non sequitur facts’ — two bits of information that actually bear little relationship to each other. The president is trying to make the case that the world has finite oil resources, and the United States — the world’s biggest oil consumer — needs to use less oil in the future. But using ‘oil reserves’ as a key metric gives an incomplete picture of U.S. oil resources.”

The Fact Checker points out that “proven reserves” is a specific term. The oil must have been discovered, confirmed by drilling and be economically recoverable – the latter dependent on the global price of crude.

But guess what? Proven reserves figures change as we drill new wells, discover more oil, hard-to-get oil becomes economically viable and new technologies come on line. That’s how the U.S. could produce something like 200 billion barrels since 1990 – even though its proven reserves peaked at 40 billion barrels in 1970. That’s how, even though U.S. production and consumption will grow, projected proven preserves in 2035 will be 30 percent greater than at the end of 2010 (U.S. Lower 48).

Here’s what the president isn’t telling Americans: There’s approximately 200 billion barrels of undiscovered, technically recoverable American oil that isn’t counted with “proven reserves” – or mentioned in his speeches, a fairly gaping fact omission that’s deliberately misleading.

More Fact Checker:

“Measuring the U.S. consumption against its proven oil reserves makes little sense. Europe, with the exception of Russia, Kazakhstan and Norway, has virtually no oil reserves. Japan, a major consumer, has zero. China’s oil reserves are about half the size of the United States. In fact, in the relative scheme of things, the United States is relatively blessed with proven oil reserves — and, given the U.S. technological advantage, also with potentially large resources of oil yet to be tapped. … (I)n the context of higher gas prices — which is how the president often uses these figures now — it just is not logical to compare consumption to ‘proven oil reserves.’ This is a lowball figure that does not begin to describe the oil known to be within the U.S. borders.”

The United States is energy rich, not energy deficient, as the president makes it sound at a time when U.S. consumers are taking a beating. America has options. There’s oil in remote Alaska, off both coasts and on federal lands. With the right policies and leadership the U.S. could see 100 percent of its liquid fuel needs met domestically and from Canada by 2024.

Meanwhile, columnist Charles Krauthammer picks up on a key bit of illogic in the president’s recent energy riff – that decreasing U.S. demand for crude oil affects global prices but increasing U.S. crude supplies doesn’t. Krauthammer:

“‘The American people aren’t stupid,’ Obama said (Feb. 23), mocking ‘Drill, baby, drill.’ The ‘only solution,’ he averred in yet another major energy speech last week, is that ‘we start using less — that lowers the demand, prices come down.’ Yet five paragraphs later he claimed that regardless of ‘how much oil we produce at home … that’s not going to set the price of gas worldwide.’  So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does.”

Krauthammer is spot on here. Given the fact that crude oil accounts for 76 percent of the price Americans pay at the pump, the crude supply is the biggest factor in the energy equation. Decreased crude oil demand at one end of the equation can have an effect, but so can increased crude supply at the other. The president is for the first part but in denial on the second. Sen. Chuck Schumer certainly gets the importance of supply, renewing his call for Saudi Arabia to commit to make up for any lost Iranian production.

Supply matters, and the U.S. can affect supplies – even if the president won’t say it. API President and CEO Jack Gerard, speaking at a House Energy and Commerce subcommittee hearing earlier this month:

“A strategy that confidently deploys resources here at home will send a clear message to global markets that the United States is serious about affecting supply. To the American people it will say help’s on the way.”

View the original article here

Taking the President’s Energy Rhetoric to Task

The more the president talks about energy, the more heat he creates for himself. Here’s the Washington Post’s Fact Checker, weighing his rhetoric about the U.S. consuming 20 percent of the world’s oil while having just 2 percent of its proven reserves:

“ … this is a good example of what we call ‘non sequitur facts’ — two bits of information that actually bear little relationship to each other. The president is trying to make the case that the world has finite oil resources, and the United States — the world’s biggest oil consumer — needs to use less oil in the future. But using ‘oil reserves’ as a key metric gives an incomplete picture of U.S. oil resources.”

The Fact Checker points out that “proven reserves” is a specific term. The oil must have been discovered, confirmed by drilling and be economically recoverable – the latter dependent on the global price of crude.

But guess what? Proven reserves figures change as we drill new wells, discover more oil, hard-to-get oil becomes economically viable and new technologies come on line. That’s how the U.S. could produce something like 200 billion barrels since 1990 – even though its proven reserves peaked at 40 billion barrels in 1970. That’s how, even though U.S. production and consumption will grow, projected proven preserves in 2035 will be 30 percent greater than at the end of 2010 (U.S. Lower 48).

Here’s what the president isn’t telling Americans: There’s approximately 200 billion barrels of undiscovered, technically recoverable American oil that isn’t counted with “proven reserves” – or mentioned in his speeches, a fairly gaping fact omission that’s deliberately misleading.

More Fact Checker:

“Measuring the U.S. consumption against its proven oil reserves makes little sense. Europe, with the exception of Russia, Kazakhstan and Norway, has virtually no oil reserves. Japan, a major consumer, has zero. China’s oil reserves are about half the size of the United States. In fact, in the relative scheme of things, the United States is relatively blessed with proven oil reserves — and, given the U.S. technological advantage, also with potentially large resources of oil yet to be tapped. … (I)n the context of higher gas prices — which is how the president often uses these figures now — it just is not logical to compare consumption to ‘proven oil reserves.’ This is a lowball figure that does not begin to describe the oil known to be within the U.S. borders.”

The United States is energy rich, not energy deficient, as the president makes it sound at a time when U.S. consumers are taking a beating. America has options. There’s oil in remote Alaska, off both coasts and on federal lands. With the right policies and leadership the U.S. could see 100 percent of its liquid fuel needs met domestically and from Canada by 2024.

Meanwhile, columnist Charles Krauthammer picks up on a key bit of illogic in the president’s recent energy riff – that decreasing U.S. demand for crude oil affects global prices but increasing U.S. crude supplies doesn’t. Krauthammer:

“‘The American people aren’t stupid,’ Obama said (Feb. 23), mocking ‘Drill, baby, drill.’ The ‘only solution,’ he averred in yet another major energy speech last week, is that ‘we start using less — that lowers the demand, prices come down.’ Yet five paragraphs later he claimed that regardless of ‘how much oil we produce at home … that’s not going to set the price of gas worldwide.’  So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does.”

Krauthammer is spot on here. Given the fact that crude oil accounts for 76 percent of the price Americans pay at the pump, the crude supply is the biggest factor in the energy equation. Decreased crude oil demand at one end of the equation can have an effect, but so can increased crude supply at the other. The president is for the first part but in denial on the second. Sen. Chuck Schumer certainly gets the importance of supply, renewing his call for Saudi Arabia to commit to make up for any lost Iranian production.

Supply matters, and the U.S. can affect supplies – even if the president won’t say it. API President and CEO Jack Gerard, speaking at a House Energy and Commerce subcommittee hearing earlier this month:

“A strategy that confidently deploys resources here at home will send a clear message to global markets that the United States is serious about affecting supply. To the American people it will say help’s on the way.”

View the original article here