API's Jack Gerard said the U.S. has 'transitioned from an era of energy scarcity and dependence into a global energy leader.'

US Model Offers Abundant Energy, Environmental Protection: API

Jan. 5, 2016
The U.S. model for energy offers abundance, lower prices and a cleaner environment, the head of the American Petroleum Institute says, calling for policies that support greater energy production and infrastructure.

The U.S. is enjoying an energy renaissance that is providing consumers with significant savings while reducing air pollution and increasing U.S. energy security, the head of the American Petroleum Institute said, warning against anti-fossil fuel policies “borne from political ideology and unmoored to science or to fact.”

In his annual address introducing API’s State of American Energy report, API President and CEO Jack Gerard said the nation is enjoying “lower costs for American consumers, a cleaner environment and American energy leadership.” He called it “the U.S. model.”

Regarding the three major legs of the model, Gerard noted:

Consumers are benefiting from lower oil and gas prices. He cited data by the U.S. Energy Information Administration that the average U.S. consumer saved $700 in 2015 on transportation fuel costs. Moreover, American households saved $1,200 in 2012 on home energy costs, according to an IHS estimate, and could save $3,500 annually by 2025.

Environmental benefits continue to accrue as the use of natural gas increases. According to the EPA, Gerard said, greenhouse gas emissions in 2013 were 9% lower than in 2005 “even as population, energy use and gross domestic product have increased.” Gerard cited a study by T2 Associates which found that the oil and natural gas industry “reduced its own GHG emissions by the equivalent of 55.5 million metric tons of CO2 in 2014.”

America’s energy leadership will depend on fossil fuels, which will provide 80% of its energy consumption through 2040, according to the EIA. That means, said Gerard, that “fossil fuels will remain the foundation upon which our modern society rests for decades to come.” And he noted that the next president of the United States will “lead a nation that is first in oil and natural gas production, first in refining ever-cleaner fuel and first in reducing greenhouse gas emissions.”

Gerard stressed the need for continued investment in energy production and infrastructure. He cited a study by Wood Mackenzie that pro-development energy policies over the next 20 years could provide federal, state and local governments with an additional $1 trillion in revenue while lowering average annual household energy expenses by $360. Policies that discourage energy development, he said, conversely could lower government revenue by $500 billion from 2016 to 2025 and hike household energy costs by $242 annually.

Gerard praised Congress for lifting the 40-year-old ban on the export of crude oil last month. He called for further policy changes, including ending or significantly amending the Renewable Fuel Standard. Gerard told reporters there were clear majorities in both the House and the Senate to significantly amend the RFS.

He blasted the Obama administration’s Clean Power Plan as an attempt to “pick winners and losers in the energy market, not based on market conditions, consumer preference or economic reality.” He said the plan would drive up costs for consumers. Moreover, he noted that while the White House said the plan would eliminate the “rush to natural gas,” natural gas would not hamper the development of wind and solar power, but rather provide the “reliable base load power necessary to integrate those intermittent sources.”

Energy infrastructure needed in the U.S. could prompt $1.15 trillion in private capital investment, Gerard said, citing an IHS study. He added, “IHS also projects that infrastructure investment could support more than 1.1 million jobs nationally, contribute $120 billion to U.S. gross domestic product and increase revenues to government by more than $27 billion through 2025.”

Gerard said the impact of government policy was illustrated by the difference in energy production on state-controlled versus federally-controlled lands.

“Federal data shows crude oil production remained flat between 2009 and 2014 on federally controlled land while natural gas production declined 35%,” Gerard said. “By contrast, on private and state lands, where development does not need permission from the federal government, production increased 88% for crude and 43% for natural gas. These dramatically different trend lines are a function of political ideology, not geology.”

Energy infrastructure limitations are having a particular impact on New England, according to Gerard. He noted that EIA found New England residents paid up to 69% more for electricity than the national average last winter and that industry paid up to 90% more.

Asked about tensions in the Middle East, Gerard said increased production of oil and natural gas by the United States had changed the “geopolitics of energy” significantly. Markets see less risk in the situation because of U.S. production, currently 9 billion barrels a day, he said, and as a result there is less volatility in oil prices.

Popular Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!