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US POLITICS
Laurie Wiegler looks at why Americas 2012 energy policy is pure politics until after the election
Rena Schild/ Shutterstock.com
Energetic posturing
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INCE his inauguration in 2009, many Americans have criticised President Barack Obama for not meeting expectations, even posturing on issues he once espoused. This phenomenon is perhaps no more prevalent than when it comes to energy, with many expecting the Democrat to have heralded a greener era. That said, Obama appears far greener than his Republican opponent for the presidency Mitt Romney, who concluded his acceptance speech at his partys convention on 30 August, saying: President Obama promised to begin to slow the rise of the oceans.And to heal the planet. My promise is to help you and your family.
Above: Gas drillers are receiving mixed messages as Obama seeks to balance energy security and environmentalism. Far left and overleaf: protesters against the Keystone XL Pipeline encircle the White House in November 2011 in Washington.
I would definitely say there is a disconnect between the presidents rhetoric on natural gas and implications of his policy. Julia Bell, Independent Petroleum Association of America
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US POLITICS
government. In 2010 alone, Americas independent producers paid more than US$69bn in taxes to state and federal taxes, Bell adds. The tax provisions of the oil and natural gas industry are not handouts; rather, they are provisions, which manufacturing companies receive across the board, aimed at encouraging further reinvestment in American energy development, she concludes. Steven Agee, dean of Oklahoma City Universitys Meinders School of Business says: President Obama has embraced natural gas, which is good; he should. We have an abundant supply of it domestically and we need to take advantage of it. It can be used in so many ways that it hasnt been before. However, Agee is dismissive of Obamas energy policy or the presidents energy policies overall. In my view, over the last 30 years weve never had a national energy policy. Every person running for the presidents position has said were going to have a national energy policy and then they get in and nothing happens. Agee says for the past 40 years, the US plan has been to simply import oil to supplement existing nuclear, hydro and solar resources that are already installed, without developing a plan for further development. Obama promised to reverse this trend, says Agee: [the president] talked about using more renewable resources and having a positive impact on the environment, [but] weve never had a national, legitimate oil and gas policy. Every president talks about reducing our dependence on foreign oil, particularly from hostile foreign governments, yet they never develop a domestic energy policy that does, he adds. And now, the president is talking up natural gas expansion as if it will eventually eclipse oil exploration, which is disingenuous considering the plethora of deepwater rigs punctuating the Gulf of Mexico. True, as a sceptical Bell points out, increased permitting requirements have made it tougher to get drills pumping on federal lands, and the offshore moratoria (post-BP oil spill) was only recently lifted. Walter Nasdeo, research director at Ardour Capital Investments in New York says that hes seen the effects of politicising energy. Yes, natural gas is in the news right now and a lot of people are speaking about the benefits and the amount of natural gas out there. Theres a lot. But Nasdeo insists that this readilyplentiful and cheap energy source remains economically volatile because one cannot count on low prices in the future. An energy paradigm needs to encompass
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all the ways we can make power and fuel, he says. Obamas natural gas mantra, rather than appealing to one constituency, is more of a broader attempt to appeal to folks straddling [the fence], who are saying we need to be completely oil or completely alternative energy. Is Obamas current rhetoric trustworthy? Everything hes saying is calculated to win votes right now, says Nasdeo.
whole worlds views on nuclear energy, and this is not really a political issue, per se. The US Nuclear Regulatory Commission (NRC) earlier this year approved two new reactors to be built, the first since the late 70s. The reactors will go up in Georgia at Southerns Vogtle plant. Did the timing have anything to do with politics? Perhaps the Obama administrations desire to court the traditionally pro-nuclear Republican vote? Although the presidents position on nuclear energy is a supportive one as early as the 2008 campaign he said nuclear power was fine as one component of an energy mix, and even prior to the Fukushima disaster he aimed to boost federal loan guarantees above US$50bn public support is unclear. And during an election year, this means Obamas position is not as vocal.
As Hore-Lacy points out: In the US the Democrats lean more towards populism, and the Republicans a bit more towards the practicality; all the hype about renewable energy wind and solar is, at its extreme, total nonsense There is a role but its at the . margins, not at the centre. What is also at the centre in the US is European-like petrol and oil prices. For such an automobile-loving culture, the very real fear of US$4/gallon in the near future provides fodder for the Republican party, even though prices dropped considerably this year. While, arguably, the president has little to do with fluctuating fuel prices, the fact is that the cost of petrol has spiked considerably since he took office. In January 2009 the average cost of a gallon of petrol was US$1.68, according to Consumer Reports. As of February this year, in Connecticut (one of the most expensive states) it was around US$3.60, and by 11 September, the Automobile Association of America (AAA) said the national average was US$3.83/ gallon.
Certainly, the oil and gas camp is in a stronger position to argue for the continuation of a fossil fuel economy when Americans are rightfully disgruntled to be sometimes spending more to fuel their tanks than feed their families. Shell is being allowed to drill oil from the hallowed Arctic, even as The New York Times reported on 10 September that the oil giant suspended work due to difficulties working with sea ice. I do believe the facts support the case of a pro-oil and gas economy, says Bell. The industry supports 9.7m jobs in the US as a whole andin an election year, the jobs are very important to the American people.
[between now and the vote at the end of the year], you will start to see wind projects start to fall by the wayside because they wont be able to raise the extended amount of capital by the end of the year. If investors are not confident of the renewal of the PTCs, Nasdeo says there could be a major near-term effect as far as the election goes. Yet even so, and with a degree of friction during the process there are too many people working in the wind industry to not renew it. He claims that if the PTC is not renewed you will see individual states that rely on wind to meet a renewable portfolio standard roll back [their wind programmes]. A better bet may or may not be solar. Nasdeo points out that the tax equity credit for solar is in place till 2016, yet obviously one memory still fresh in the minds of many is the recent debacle involving Solyndra an Obama and US Department of Energybacked manufacturer of cylindrical solar panels. When the company went bankrupt in September 2011, it ended up costing US taxpayers around US$527m. Its a sting not easily salved. The problem is when people say solar I think its a very narrow definition and it goes back to the modular manufacturers where you can see the significant effect on stock price. I think one area people arent as close to understanding is project development, which is on a big upswing right now. Theres a lot of work being done, such as with the tax equity programmes [for solar], Nasdeo adds. It will be interesting to see how many more times the president fluctuates on energy policy before 6 November, especially if the natural gas detractors gain momentum, or another crisis be it seismic, nuclear, oil and gas or otherwise helps boost the Republicans position. tce