Democrat leaders of the House Energy and Commerce Committee released a 648-page draft bill on global warming and energy today. Committee Chairman Henry Waxman, (D-CA), and Rep. Edward Markey, (D-MA), unveiled their proposal designed to cut greenhouse gases by 20 percent by 2020 and 83 percent by mid-century. The draft summary, “The American Clean Energy and Security Act of 2009” also contains measures promoting renewable energy, energy efficiency and “green” jobs.
While offering a shorter timeline for emission limits than has been previously suggested by the Obama administration, the legislation aims to create a national renewable electricity standard that begins with 12 percent in 2012 and reaches 25 percent by 2025.
Despite the wide range of goals included in the proposal, there are still many questions yet to be answered on how some of the objectives would be completed. The draft does not indicate how pollution allowances would be distributed – if they would be sold at auction or given away to specific industries. Waxman and Markey are determined to complete the bill and reach a final committee vote on the measure before the Memorial Day recess. Continue reading
... in the computer...
President Obama answered 7 or 8 questions today from the internet. Out of the 100,000 plus questions submitted, the President took time to respond to the pressing issue of marijuana legalization. Supposedly such an act would create thousands of jobs and boost the economy. President Obama made a joke and then made it clear he was against legalization. How this happened: folks were given the opportunity to write in questions on whitehouse.gov then vote on the best ones. The idea, presumably, was that the President would answer the most popular questions from the preset categories the White House had established. Reading about all of this after the fact, I looked to see if energy was included in these categories; it was, kind of.
“Green Jobs and Energy”
The top two questions in this particular section, the most popular among those that had visited the site, were on marijuana legalization. Green jobs, get it? Serious times, indeed. 20,104 people asked 7,442 questions on “Green Jobs and Energy” and the President took the pot question. Fair enough, a softball, I get it. And to be honest even with all those questions asked, few would have provided such a straightforward and executive response. Not to mention that the majority of them were marijuana related. I looked over a few hundred of the questions myself and found some drug free gems- I’ll list them here, and give my take as President of this post.
Seats five! No welding!
On Monday, Tata Motors of India rolled out the latest in affordable mobility, the Tata Nano. The basic model features 624 cc two cylinder engine with 33 horsepower and a maximum speed of about 65 miles per hour. This is a no frills automobile, manual windows, manual steering, no air bag, no welding. In fact, when I googled “Tata Nano Emissions Controls” I was given only a finger pointing back at the screen with audio of derisive laughter (that’s a different post altogether).
I applaud Tata motors for recognizing a consumer base and moving forward to provide those consumers with an automotive option that falls within their household budgets. Indians seem to be excited at the prospect of seeing I-N-D-I-A in their T-A-T-A, just as Americans took pride with their Chevrolets all those years ago. However, this automobile will only add to a difficult global energy situation going forward.
India’s population is roughly 1,000,000,000, or about three times that of the United States. That is a sizeable consumer base, second only to China. Assuming Tata motors only sells their pride and joy within the borders of India (which is unlikely) we will still see a considerable increase in energy demand. The only factor abating a drastic increase in energy demand is the depth and duration of the global recession. As the global and Indian economies recover, so too shall their demand for crude oil and without the supplies to meet that demand the world can expect to see some gas station sticker shock in the future unless sound energy policy is implemented.
The Obama administration’s budget framework takes aim at the heart of the US oil and natural gas industries as they scramble to find their way through the economic downturn just as every other American small business. The only discernable difference is that the US oil and natural gas industries have the audacity to produce oil and natural gas and had the temerity to earn a profit from those efforts. The proposed tax increases would leave American consumers vulnerable to future price volatility as global demand increases.
US independent oil and natural gas producers can add vital product to a global market that will desperately need it in the years to come. Again, the primary factor now stemming the tide of high energy prices is the recession we find ourselves in. Without sound and thoughtful energy policy American consumers can look forward to more imports at higher prices – just another, if not the best reason to avoid decimating a robust American energy industry.
Though the New York Times today called it “A Bill Whose Time Has Come,” R.J. Smith at Amy Ridenour’s National Center Blog has a different take altogether on the Omnibus Public Land Management Act that today will face its final vote in Congress.
Not surprisingly, Smith’s viewpoint is a lot closer to mine. His entry is a scathing and sadly honest look at a bill that will, as he puts it:
…further shut down the West, destroy domestic energy production, lock-up tens of millions of acres of public lands in categories that much of the public will never be able to use. Destroying energy production, mining, timber harvest, grazing, and recreation.
Bad enough in normal times. Unforgiveable in a recession and energy shortage.
True, that. Smith also points out that this bill has not been without opposition.
A courageous band of defenders of energy production, natural resources use, public multiple-use of the public lands, and property rights and private land ownership have tenaciously fought this massive 160+ bill package since the fall of 2007.
Courageous defenders… tenaciously fought…
A tough one for the good guys.
You can read the rest of Smith’s article here.
Petroleum based business success. In a bottle. Someone call the White House...
On Monday, March 16th, President Obama and Treasury Secretary Geithner made the case for American small business during a White House press conference. It was an encouraging development for many of the small business owners and employees that help drive the American economy. However, taken together, President Obama’s plan to assist small businesses and his FY10 budget proposal send a mixed message. The summation of recent statements made by both Obama and Geithner now suggest that while they value what defines independent producers, responsible for 90 percent of American natural gas and oil wells, they are still in favor of imposing detrimental tax proposals on these American small businesses.
With a median number of 12 employees, independent producers are American small businesses by definition, and the Obama administration should have clarified their support for what natural gas and oil independents really are. The budget outline proposed by the President would eliminate eight key provisions that aid America’s smaller natural gas and oil companies. The effect would cripple the independent producers that find and provide American energy for the nation, and would negate any improvement that might be seen from the small business announcement made.
The following is a closer look at the comments made by the President and Secretary Geithner during the press conference. Continue reading
IPAA is pleased to announce that on Tuesday, June 16, 2009 Larry Nichols will speak on the Future of Energy Policy during our Midyear Meeting. Larry is a highly respected 30 year veteran of the energy industry. His impressive and extensive list of accomplishments stretches over the course of his entire career. In 1971, Mr. Nichols co-founded Devon Energy Corporation and has been its’ Chief Executive Officer since 1980. He also has been a Director of the following companies: Baker Hughes, Smedvig ASA, BOK Financial Corporation. Mr. Nichols serves as a Director of the Domestic Petroleum Council, the National Association of Manufacturers, the Natural Gas Supply Association, the Independent Petroleum Association of New Mexico, the Oklahoma Independent Petroleum Association, National Petroleum Council and serves on the Board of Governors of the American Stock Exchange. Mr. Nichols serves as a Director of several trade associations that are relevant to the conduct of Devon’s business. Mr. Nichols holds a degree from Princeton University and a law degree from the University of Michigan.
Larry Nichols is will bring a great deal of experience and insight to the table as he addresses the Future of Energy Policy.
To view the Midyear Meeting schedule, a list of other speakers, or register, please visit our website.
Okay, I know this is my third post in a row about jobs, but this time I’m not talking about political appointments here in Washington, D.C.
During this economic crisis, President Obama has proposed taxing the AMERICAN oil and natural gas industry by $31 billion. Will this help create jobs? No it won’t. In fact, taxing these American businesses will hurt their ability to start new energy investments and eventually force many of them to shut down.
Here’s proof positive that increasing American natural gas and oil production is good for job growth and revenue creation. In Fort Worth, Texas, the Chamber of Commerce recently commissioned a study to look at the effects of a natural gas drilling “boom” that has taken place in the region. Thanks to new investments in American energy exploration, the city of Fort Worth is seeing impressive job creation and wealth. According to The Dallas Morning News:
Despite slumping natural gas prices and a gloomy economy, some believe the Barnett Shale remains North Texas’ golden egg.
Economist Ray Perryman on Wednesday said the region is faring much better than it otherwise would because of exploration and drilling in Texas’ largest underground natural gas field.
“Even in 2009, which is likely to be the trough of the current downturn in energy markets, the benefits are expected to include $6.5 billion in output and about 70,000 jobs,” Perryman said in releasing his third annual report on the economic impact of the Barnett Shale. “That’s money and jobs that wouldn’t otherwise be here.”
What sense does it make to hurt American natural gas and oil producers if this is the benefit they can add to our economy — as well as help us reduce our dependence on foreign oil? This is a serious question we need to be asking our nation’s policymakers in the next few months.
Rx: Facts, Research.
The Boston Globe has an op-ed yesterday defending the Obama Administration’s plan to levy taxes totaling $31.5 billion on the natural gas and oil industry. The author, Derrick Jackson, wastes no time in pulling out the time tested canard of “Big Oil”. What the author does, what defenders of such shortsighted policy always do, is fail to comprehend the complex and diverse nature of the natural gas and oil industry and exactly who the US exploration and production industry is and who it is not.
IPAA’s member companies drill 90 percent of the wells in the US, produce 82 percent of America’s natural gas and produce 68 percent of America’s oil. Independent producers have been reinvesting 150 percent of their profits. According to preliminary results from a 2007-2008 IPAA member survey, the median number of employees for an independent company stands at 12 and the median gross revenue for FY07 stands at $8,171,000. These numbers are a far cry from the characterization that the entire industry is Exxon Mobil and stands in stark contrast to that claim.
Going deeper into the numbers listed above the US industry is coping with drastic price drops, tightening credit markets, punitive tax policy, and uncertainty in private investment avenues. Reinvestment, exploration, and drilling all require cash flow. Each item listed goes straight to the heart of cash availability. US producers have, after weathering a long period of low prices, come out the other side to use new revenue to upgrade equipment, shore up cash reserves, and reinvest in finding new sources of energy. To impose punitive tax policy on the industry at this time would be short sighted and would not serve the interests of the United States or President Obama’s stated goal of lowering US dependence on foreign sources of oil. Continue reading
If only this were a joke.
On Wednesday, March 4th, Treasury Secretary Timothy Geithner testified before the Senate Finance Committee at a hearing on the White House’s proposed budget for fiscal year 2010. The American public has been awaiting a signal from the Obama administration about how they intend to move forward on what has so far been an energy plan that lacks details. Secretary Geithner offered some of the first concrete evidence of where America is heading. If Geithner is to be taken at his word, the American people can expect higher consumer costs, fewer jobs, and greater dependency on foreign sources of natural gas and oil.
In what were some of the most uninspiring and discouraging comments made by a top Obama administration official in regard to an energy plan, Mr. Geithner displayed a glaring lack of understanding of who America’s independent producers of natural gas and oil are, and what they do.
It is true that investments must be made in alternative sources of energy in order for them to be successful. However, the Obama administration’s proposal is not only the wrong way to achieve this goal, it is also full of dangerous contradictions. By taking capital away from American independent producers, a domino effect is started: less capital → less investment in projects → fewer wells drilled → less production of natural gas → less supply of natural gas → greater need for natural gas from other resources → higher level of imports from foreign nations → higher costs to consumers. And this is only one path the dominos will take. Continue reading