Why Do Oil and Gas Producers Disapprove of Obama?

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One of the most pronounced themes to emerge from President Obama’s State of the Union address is his dedication to shale gas that he says is this country’s newfound fortune. So why the disdain from oil and gas producers?

Politically, the president can’t straddle the fence. But he is able to show support for increased natural gas usage because it has wide appeal and because it would displace coal consumption. And while most environmentalists would rather see the emphasis on renewable fuels, they will nonetheless work to enact more safeguards with respect to the drilling process.

“We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy,” Obama intoned. “Experts believe this will support more than 600,000 jobs by the end of the decade. And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use” that are blamed by some for polluting drinking water supplies.

The president goes on to point out that he is opening up more offshore areas to drilling -- a move that he had committed to make before the BP oil disaster in the Gulf of Mexico. Now that the administration has reviewed that situation and implemented new safety measures, he said that exploration can go on.

But he also jabbed the oil industry, noting that its profits are greater than ever and that it should get off of the government’s dole -- a place where it has been perched for a century. The same monies that have gone to it ought to now support innovative green technologies: “Government support is critical in helping businesses get new energy ideas off the ground.”

Oil and gas producers are disapproving, saying that the president is out to “stifle” development. They want more access to areas now off limits to development and will continue to push for the Keystone XL pipeline that would run from Canada and into Texas -- a point raised by Indiana Governor Mitch Daniels in his rebuttal. The Keystone line is “perfectly safe” and would employee thousands, he says.

Scoring Big

Natural gas production, incidentally, is sky high. The October 2011 report by the U.S. Energy Information Administration [3] says that about 2,500 billion cubic feet of natural gas was plumbed from the earth -- the most on record.

“This is progress, but it falls far short of what we could do with greater access to domestic supplies and sounder regulatory policies,” says Jack Gerard, head of the American Petroleum Institute. [4]  “We hope the administration will look at the numbers and do what we've been asking them to do for a long time: Work with us to produce at home even more of the oil and natural gas our nation will require.”

President Obama, of course, will not tow the industry line. Part of his re-election effort must involve shoring up his environmental supporters. To that end, the president notes that renewable energy has doubled from its relatively small base since he came to office. Thousands are employed because of it -- something that could snowball if Congress were to pass his so-called Clean Energy Standard that sets future goals for wind and solar, he says.

The president has recently scored big with the greenies, first by enacting a new mercury rule to dramatically cut those releases and second, by rejecting efforts to build the Keystone XL pipeline. Environmentalists, furthermore, laud his efforts to increase fuel efficiency standards for new cars to 54.5 miles per gallon by 2025.

“Yet (the administration) also ceded ground to polluters,” writes Frances Beinecke, president of the Natural Resource Defense Council [5], in her blog. “Its decisions to expand offshore drilling and postpone smog standards, for instance, will benefit dirty industries and make it harder for Americans to protect our health and resources. So our work goes on.”

For the environmental movement, that means getting the EPA to enact promised new regulations on carbon and coal ash, as well as ensuring that hydraulic fracturing does not contaminate drinking water supplies. Meantime, they are keeping up the relentless beat to build more green energy facilities.

Those are causes to which the president is sympathetic but they are not ones easily accomplished. Conciliation is key not just to earning concessions but also to broadening the political support he needs to win the presidential campaign.


EnergyBiz Insider is the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has also been named one of the Top Economics Journalists by Wall Street Economists.

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energybizinsider@energycentral.com