Tuesday, January 17, 2012

President Obama is for Shale Natural Gas & Oil !

Another election-year transformation. From the Jan. 17 Wall Street Journal A re-election campaign is a terrible thing to waste, and this year’s race is already producing miraculous changes at the Obama White House: The latest example of a bear walking on its hind legs is the President’s new embrace of . . . natural gas from shale. Last week the White House issued its latest report on jobs and it includes a section on “America’s Natural Resource Boom.” The report avers that a few years ago there were widespread “fears of a looming natural gas shortage,” but that “the discovery of new natural gas reserves, such as the Marcellus Shale, and the development of hydraulic fracturing techniques to extract natural gas from these reserves has led to rapidly growing domestic production and relatively low domestic prices for households and downstream industrial users.” Please pass the smelling salts to Interior Secretary Ken Salazar and Lisa Jackson at the Environmental Protection Agency. To the best of our knowledge, this is the first time the White House has favorably mentioned the Marcellus Shale, the natural gas reservoir below Pennsylvania, West Virginia and other Northeastern states. And now he’s taking credit for this soaring production. As the White House report puts it: “Of the major fossil fuels, natural gas is the cleanest and least carbon‐intensive for electric power generation. By keeping domestic energy costs relatively low, this resource also supports energy intensive manufacturing in the United States. In fact, companies like Dow Chemical and Westlake Chemical have announced intentions to make major investments in new facilities over the next several years.” And that’s not all: “In addition, firms that provide equipment for shale gas production have announced major investments in the U.S., including Vallourec’s $650 million plant for steel pipes in Ohio. An abundant local supply will translate into relatively low costs for the industries that use natural gas as an input. Expansion in these industries, including industrial chemicals and fertilizers, will boost investment and exports in the coming years, generating new jobs.” We checked to see if someone slipped a press release from the Natural Gas Council into the White House report by mistake, but apparently not. The report does add the obligatory disclaimer about hydraulic fracturing that “appropriate care must to be taken to ensure that America’s natural resources are extracted in a safe and environmentally responsible manner” with safeguards “to protect public health and safety.” But no one disagrees with that. The catch is that this endorsement runs against every energy policy pursued by the Obama Administration for three years. The Institute for Energy Research reports that royalties from oil and gas drilling have fallen more than 90% since 2008 because of Interior Department permitting delays and rejections. The EPA recently issued a flawed report on groundwater contamination that could shut down the fracking process the President is now touting as a jobs producer. EPA’s political goal is to grab power to supercede state drilling regulation. The industry regards new EPA authority as a real threat to its future. Each year Mr. Obama has also supported a $40 billion tax hike on the oil and gas industry because, as he put it in 2009, the tax code “encourages overproduction of oil and gas” and “is detrimental to long-term energy security.” Even the Securities and Exchange Commission has imposed extensive new reporting requirements on oil and gas fracking companies. It’s certainly smart politics for Mr. Obama to distance himself from the anti-fossil fuels obsessives, and no doubt his political advisers are hoping it helps this fall in the likes of Ohio and Pennsylvania. On the other hand, this could be a one-year wonder, and if he wins Mr. Obama might revert to form in 2013. A good test of his sincerity would be to replace Ms. Jackson and Mr. Salazar

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