Oil and natural gas production has strengthened the U.S. economy and helped lower harmful carbon emissions into the environment, President Obama said during his Feb. 12 State of the Union address.
However, despite shale oil and gas benefits, such as creating millions of jobs and reducing reliance on foreign oil, Obama expressed his desire to abandon petroleum as a fuel for vehicles.
“Today, no area holds more promise than our investments in American energy,” Obama said. “After years of talking about it, we’re finally poised to control our own energy future. We produce more oil at home than we have in 15 years.”
The country also produces more natural gas than ever before, “and nearly everyone’s energy bill is lower because of it,” he said.
But Obama said to combat climate change he was proposing using some oil and gas revenues to fund an Energy Security Trust.
The trust would “drive new research and technology to shift our cars and trucks off oil for good,” Obama said.
American Fuel & Petrochemical Manufacturers (AFPM) called Obama’s energy policy remarks a lesson in the art of contradiction and denial.
“Despite the rhetoric on the promise of renewable energy, the fact remains that the country cannot blow, grow or glow its way to energy independence through billions in subsidies and massive mandates for alternative energy,” said Charles T. Drevna, AFPM president.
The group called it illogical for Obama to tout the benefits of oil and natural gas resources in one breath and call for the elimination of those same resources in the next.
“Our new resources boom happened on private lands in spite of his efforts,” Drevna said. “He says he is going to cut red tape for energy production, but all he has done is erect more barriers to production on public lands since he has been in office.”
Obama cited the abundance of fossil fuel for lowering energy costs, “yet inexplicably his policies are geared toward causing energy costs to skyrocket for the average consumer,” Drevna said.
The president’s speech focused on his all-of-the-above strategy. Obama said that in 2012 “wind energy added nearly half of all new power capacity in America.”
However, about 40% of the total 2012 wind capacity additions came online in December, just before the scheduled expiration of the wind production tax credit, according to the Energy Information Administration. In December 2012, 59 new wind projects totaling 5,253 megawatts began commercial operation, the largest-ever single-month capacity increase for U.S. wind energy.
Obama acknowledged that the natural gas boom has led to cleaner power and greater energy independence. Falling carbon emissions have widely been credited to the generation of electricity from natural gas instead of coal.
Obama said his administration “will keep cutting red tape and speeding up new oil and gas permits,” he said.
Obama also said he wants to work with Congress to encourage research and technology to make natural gas burn cleaner to protect air and water. And the president noted that over the last four years “our emissions of the dangerous carbon pollution that threatens our planet have actually fallen.”
Industry advocate Energy in Depth also noted on Feb. 7 that an Environmental Protection Agency report on greenhouse gases shows a significant drop in methane emissions from natural gas development. EPA’s latest data on petroleum and natural gas suggest a 66% decline in methane emissions from the agency’s prior estimates. Among other findings, oil and natural gas systems now emit fewer methane emissions than waste facilities such as landfills and water treatment plants.
Jack Gerard, president and CEO of the American Petroleum Institute, welcomed Obama’s interest in domestic oil and natural gas, saying that more development will create jobs and help the United States become an energy superpower.
“Obama must follow through by implementing a national energy policy, lifting existing restrictions in support of responsible development of our vast energy resources, approving the Keystone XL pipeline, and standing up against unnecessary and burdensome regulations that chill economic growth,” Gerard said.
Gerard said that even with an aggressive expansion of renewable and alternative energy, oil and natural gas will continue to provide the majority of the energy used for home heating, businesses and fuel for decades to come.
“We’re going to need all sources of energy to fuel a growing economy,” he said.
But Gerard said that 83% of federal land and offshore areas remain off-limits to oil and natural gas development.
Markets initially responded positively to Obama’s speech. S&P futures traded up about 3 points as markets continued to digest earnings reports as well as Obama's address last night, said Michael A. Hall, director and senior analyst, E&P equity research, for Robert W. Baird & Co.