API Chief Hails Oil & Gas Industry's Performance, Calls for Light Regulation
One of the perennial challenges facing Washington, D.C. trade groups is how to object to policies without becoming objectionable. Groups that are too strident in opposing a proposal risk getting sidelined or left out of future deliberations. Ultimately, the game inside the Beltway is staying relevant, regardless of which party controls the presidency or the Congress.
For the last four years, the Oil & Gas industry, led by the American Petroleum Institute (API) (Washington, D.C.), cheered President Trump's commitment to "energy dominance," which included significant deregulatory efforts. Now the industry, and that group, are facing a distinctly different situation, with a Democratic president and Democratic majorities in the U.S. House and Senate.
So Mike Sommers, API's president and chief executive officer, on January 13 took a pragmatic approach in his annual State of American Energy (SOAE) speech, pledging to work with the new administration and Congress, despite objecting to some of the initiatives he expects to be unveiled.
Pledging to "challenge myths (and) share undeniable facts," Sommers outlined his vision "for an affordable, secure, reliable and cleaner energy future, one marked by a shared commitment to innovation, action and problem solving."
That future sought by Sommers is more drilling, more pipelines, less restrictions and less regulation. That's been API's vision for some time. In this year's SOAE address, Sommers mixed data from the last decade or so with emotional appeals to contend that a less-regulated industry did a better job cutting greenhouse gas emissions, than would have been achieved if the Waxman-Markey climate change bill of 2010 became law.
"Cleaner U.S. natural gas for electricity generation has removed over three gigatons of CO2 emissions that otherwise would have been emitted between 2006 and 2019," Sommers said January 13, as Congress was gearing up to impeach President Trump for a second time. "Even before the recent economic downturn, U.S. emissions were about as low as in the 1990s, while economic growth doubled."
If it had passed, the Waxman-Markey bill, debated in 2010 at the start of the shale revolution, would have lowered U.S. carbon dioxide (CO2) emissions by 10% below 2007 levels by 2019, the API chief noted. "But in fact, because of industry innovations like improvements in hydraulic fracturing and horizontal drilling that enabled companies to reach more natural gas, U.S. CO2 emissions in 2019 declined at a greater rate--nearly 15% below 2007 levels," Sommers said.
"We haven't been waiting on guidance or on orders from others; we have done this all on our own initiative, with our own money, with our own engineering and technology."
Of course, the Obama administration helped the cause of oil and gas by enacting stringent emissions rules on coal-fired power generators that made it more expensive and less attractive to burn coal to generate electricity, which contributed to a widespread switch to natural gas, Sommers said.
Sommers implored Congress and President-elect Biden to let the industry pursue its economic interests with minimal added regulation because, he said, a less-regulated industry tends to produce better results: lower prices, more supply, more innovation, a cleaner environment and increased exports.
He said that the conversation around energy, oil and gas in particular, does not have to exist as a series of "either/or" debates: If we support energy production and use energy, it comes at the expense of the environment. Or if we protect the environment, it hurts the energy industry.
"History has shown this is a false choice," Sommers said. "Both developing energy and reducing emissions are essential to advance our society and protect the environment. Without energy and environmental progress, we risk national security, quality of life and the American experiment."
Still, a few minutes later, the API chief engaged in his own series of either/or policy alternatives: "Our new president and Congress have some big decisions to make on energy. Energy abundance or foreign dependence. American jobs or outsourced jobs. Economic revival or small-town decline. Progress or retreat."
The API opposes drilling restrictions in the Outer Continental Shelf and banning hydraulic fracturing on federal lands. It wants to expedite pipeline permitting and construction, putting an end to a time when pipelines have become "magnets for obstruction and litigation." Specifically, he referenced several stalled or cancelled pipelines, including Line 5, Dakota Access, Keystone XL and Atlantic Coast.
Expanding infrastructure is critical to ending what Sommers calls "energy poverty," which is what happens when infrastructure can't get built to bring natural gas from where it is produced to where it is needed. "In this energy-abundant country, the last thing anyone should have to worry about is energy."
The API chief several times referenced the centrality of oil and gas to American life, including the fact that many health-care supplies, including face shields, gloves, surgical gowns and other personal protective equipment, are made from petroleum products. And, of course, oil and gas fueled emergency vehicles, trucks to transport vaccines and airplanes to deliver medical supplies.
And he praised the ethos of oil and gas workers, who didn't need to be designated as "essential" to continue coming to work.
"Energy affordability is more important than ever as we recover from the pandemic," Sommers said January 13. "A government focused on recovery for all should reject policies that could drive up energy costs and hurt those who can least afford them. Our country has a lot of economic ground to make up, millions more jobs to recover. And when the business at hand is economic revival, no industry can help more than this one."
The API is getting some blowback for its stance on environmental issues. Just two days after the SOAE speech, French energy giant Total SE (NYSE:TOT) (Paris) announced it was withdrawing from the API. Total cited the trade group's support for the rollback of U.S. regulation on methane emissions; its participation with the Transportation Fairness Alliance, which opposes subsidies for electric vehicles, and differences regarding carbon pricing. Total also said the API supported candidates who argued against U.S. participation in the Paris Agreement.