The United States has left behind decades of energy scarcity and become a global leader in energy production, the president of the American Petroleum Institute said today, and the country must forge an energy policy that reflects this new reality.
The U.S. is now the number one producer of natural gas, the world’s leading oil refiner and will become the top producer of crude oil in 2015, Jack Gerard, API’s president and CEO, told a Washington event introducing the organization’s annual State of American Energy report.
As domestic energy production has grown, it has created 600,000 jobs between 2009 and 2011, he noted. In 2014, Goldman Sachs found, the 60-cent drop in the price of a gallon of gas, which Gerard attributed to increased global supply, had the equivalent economic impact of a one-time tax cut of $100 billion to $125 billion.
And Gerard said more investment in energy infrastructure would result in even greater economic gains. He cited a study by IHS that “essential infrastructure improvements in just the oil and natural gas area could, over the next decade, encourage as much as $1.15 trillion in new private capital investment, support 1.15 million new jobs and add $120 billion on average per year to our nation’s GDP.”
While calling for a “true all-of-the-above” approach to energy development, Gerard pointed out that fossil fuels will continue to provide the majority of the world’s energy needs for the foreseeable future.
“The U.S. Energy Information Administration estimates that 25 years from now, oil, natural gas and coal collectively will account for 80% of the country’s energy consumption,” Gerard said. That report also estimated that renewable energy sources would grow to 12% of the nation’s energy supply, while nuclear would contribute 8% of the total.
Consumption of liquid fuels will continue to grow, Gerard said, citing an estimate by EIA that global development in emerging markets will help drive a 25% increase in demand over the next 25 years.
Gerard said the U.S. has a “responsibility to use our nation’s vast energy resources” to help a world where 1.3 billion people have no electricity and more than 3 billion lack access to a reliable supply of electricity. Increased U.S. production and export of oil, he said, would help the U.S. economy and employment but also help the environment by having production occur in the U.S. with its “edge in technology and innovation….”
Among the policy issues affecting energy production that Gerard addressed:
Keystone XL pipeline: Noting that it has been “languishing for 6 years,” Gerard said Congress should pass a bill approving the pipeline, which he said would create 42,000 jobs. Informed that the White House had announced it would veto the Senate bill introduced today, Gerard said he was “disappointed” by the announcement but believed the pipeline will be approved in 2015. He said the administration’s action “doesn’t bode well for relationships between the White House and Capitol Hill.”
Renewable Fuel Standard: Passed in 2005, the standard is administered by EPA and requires transportation fuel sold in the U.S. to contain a minimum volume of renewable fuels. Gerard said the standard had been created at a time of energy scarcity and had “outlived its usefulness.” Moreover, he charged EPA was unable to manage the program as it was two years behind timelines for setting renewable fuel volumes.
Ozone: Gerard said EPA’s proposed tighter ozone rule was not needed to protect public health but would significantly harm the nation’s energy production potential. He cited a NERA study that the regulation could cost $270 billion a year, making it the most costly regulation in U.S. history.
Crude Oil Export Ban a 'Burdensome Relic'
Crude Oil Exports: Gerard called the ban on crude oil exports a “burdensome relic of America’s era of energy scarcity.” He said allowing the exports of American oil would both help the U.S. trade deficit and increase the global supply of oil, thus helping to lower oil prices. Gerard said allowing exports could increase U.S. production by 500,000 barrels of oil a day.
Climate Change: In his address, Gerard said that U.S. greenhouse gas emissions were near a 20-year low, a result of increased use of natural gas, and not “government regulation or mandate.” He noted there were calls for regulating methane despite the fact that methane emissions from hydraulic fracturing have fallen by 73% from 2011 due to technological innovations in the industry. And he claimed that the oil and natural gas industry has been a leader in investing in greener energy technologies, spending from 2000 to 2012 “more on low and zero-carbon emitting technologies than the federal government has spent.”
"Energy is central to our way of life and we will need more of it for many years to come," Gerard concluded.