Today we talk about five things in the news for the week of October 26, 2015:
- Republican High-Energy Trainwreck
- Four Republican Senators Go Green
- Petroleum Reserve Paves Road to Budget Deal
- House Looks at Limiting Eminent Domain
- Crude Imports Reverse and Creep Up
1. Republican High-Energy Trainwreck
The third Republican primary debate was a bit of a mess. I admit I enjoyed it, but the moderators in this “economic” debate failed to ask about the biggest economic topics of the day, like the Trans-Pacific Partnership or crude oil exports. And they did seem to feel a need to add a little snark to each question. They did touch on three interesting energy issues, though:
- Donald Trump says Ohio Gov. John Kaisich got lucky with fracking:
- KASICH: Folks, we’ve got to wake up. We cannot elect somebody that doesn’t know how to do the job. You’ve got to pick somebody who has experience, somebody that has the know-how, the discipline. And I spent my entire lifetime balancing federal budgets, growing jobs, the same in Ohio. And I will go back to Washington with my plan and I will present it within 100 days, and it will pass, and it will be strong again.
- TRUMP: First of all, John got lucky with a thing called fracking. Okay. He hit oil. He got lucky with fracking, believe me. That’s why Ohio is doing well. And that’s important for you to know.
- Dr. Ben Carson says no to all energy subsidies:
- QUESTION: Dr. Carson, you told the Des Moines Register that you don’t like government subsidies, it interferes with the free market. But you’ve also said that you’re in favor of taking oil subsidies and putting them towards ethanol processing. Isn’t that just swapping one subsidy for another, Doctor?
- DR. CARSON: Well, first of all, I was wrong about taking the oil subsidy. I have studied that issue in great detail, and what I have concluded is that the best policy is to get rid of all government subsidies and get the government out of our lives and let people rise and fall based on how good they are.
- New Jersey Governor Chris Christie supports some climate action:
- QUESTION: Governor Christie, you’ve said something that many in your party do not believe, which is that climate change is undeniable; that human activity contributes to it. And you said, quote, “The question is what do we do to deal with it?” So what do we do?
- GOV. CHRISTIE: First of all, what we don’t do is do what Hillary Clinton and John Kerry and Barack Obama want us to do, which is their solution for everything: Put more taxes on it, give more money to Washington, D.C., and they will fix it. Well, there is no evidence that they can fix anything in Washington, D.C. We’ve laid out a national energy plan that says that we should invest in all types of energy. We need to make sure that we do everything we can across all kinds of energy; natural gas, oil, absolutely. But also, where it’s affordable, solar. Wind in Iowa has become very affordable, and it makes sense.
2. Four Republican Senators Go Green
Four centrist Republicans joined forces last week to create an environmental working group:
Today, U.S. Senators Kelly Ayotte (R-NH), Lamar Alexander (R-TN), Mark Kirk (R-IL) and Lindsey Graham (R-SC) announced the formation of a Senate Energy and Environment Working Group that will focus on ways we can protect our environment and climate while also bolstering clean energy innovation that helps drive job creation. The group will meet periodically to discuss general energy and environmental issues and exchange ideas about potential legislation.
Senator Ayotte helped organize the group and is working to grow its membership among Senate Republicans who want to join the effort of making natural resource protection a national priority.
Sen. Ayotte seems to be taking the lead, which is not surprising as she is locked in a tight election. She recently came out in support of the President’s Clean Power Plan in a reelection campaign ad. This is could be a big deal. Many of President Obama’s initiatives, like his health care reform law, have essentially zero bipartisan support. Even a few Republicans could drastically change the prospects for climate regulations. It also suggests that opposing climate regulations is not viewed as a political winner in split states.
As far as I can tell, the other three Senators agree climate change is a problem but they do not necessarily endorse the Clean Power Plan.
3. Petroleum Reserve Paves Road to Budget Deal
Congress has been crazy the last few weeks. Speaker of the House John Boehner tried to quit, and nobody wanted his job. At the end of the day, Paul D. Ryan became the Speaker and John Boehner managed to pass a budget deal to “clean out the barn” so Speaker Ryan did not start off with a mess. He was not completely successful, says the Washington Post:
By Nov. 20, Congress must act on the expiring authority for the federal highway program, an issue that also could lead to another flare-up of the expiration of the Export-Import Bank’s authority to issue new loan guarantees. After that comes the Dec. 11 deadline for filling in all of the agency-by-agency details of spending plans, a process that was made easier because this week’s budget framework resolved the larger fight over the top-line dollar figure but defers intricate fights over funding levels for hot-button issues.
So, while the nameplates outside the speaker’s office formally flipped Friday morning, many of the same fights that led the most conservative faction to cause trouble for the old speaker remain in place for the new one.
As National Journal explains, the budget deal was made possible, in part by fracking:
Provisions to raise or save money include selling oil from the federal stockpile called the Strategic Petroleum Reserve, which contains 695 million barrels of oil stashed in caverns along the Gulf Coast.
Using the SPR to raise cash is easier when the U.S. is swimming in domestically produced oil tapped through hydraulic fracturing, and reliance on foreign imports is down sharply thanks to the drilling boom and increased conservation….
Crude-oil production is now around 9 million barrels per day despite some production loss due to the collapse in prices. And U.S. reliance on imports has been falling for years alongside the production surge (in fact, production surpassed imports in 2013 for the first time in roughly two decades).
Not everyone is crazy about the idea. Here is Republican Rep. Darryl Issa (R-CA) arguing against using that kind of gimmick to pay for increased spending:
4. House Looks at Limiting Eminent Domain
As we have discussed before, the federal government has eminent domain authority for building interstate natural gas pipelines and that makes it easier to build natural gas infrastructure. In 2005, a similar but less popular provision was created for interstate electricity transmission. That new provision has flared up into a controversy in Arkansas:
Houston-based Clean Line has applied to the U.S. Department of Energy to partner with the federal government under Section 1222 of the Energy Policy Act of 2005.
If approved, Clean Line would acquire under eminent domain the easements and rights of way on which to build a 3,500-megawatt, direct-current electricity transmission line through 12 Arkansas counties. The company says the project would cost about $2 billion.
The local Arkansas Congressional delegation is not a fan, and last week the House Natural Resources Committee held a hearing to consider a bill that would remove this authority. The effort is being led by Rep. Steve Womack (R-AR), who said this in his testimony last week:
For those who have not ever heard of Section 1222 of the Energy Policy Act, that’s likely because this mechanism is one that has yet to be used in its ten years of statutory existence. Now, this law has come into question following an announcement by the Department of Energy (DOE) to entertain a partnership with a private company, Clean Line Energy, seeking to route a transmission line from Oklahoma, across Arkansas, and into Tennessee. Initially, this company was denied a Certificate of Public Convenience and Necessity to exist as a utility in the state of Arkansas by the Public Utility Commission, because the project was determined not to be in the best interest of Arkansans. As a result, DOE is in the process of considering a new type of partnership, potentially usurping the state’s role, ignoring the lack of necessity for transmission in the region, and setting a dangerous precedent for the future of federal authority.
With that in mind, what would the APPROVAL Act seek to change? Simply, this bill makes a small adjustment to the approval proceedings for interstate transmission projects which will then allow governors and state public service commissions to have a say in the process prior to DOE exercising any federal eminent domain power.
5. Crude Imports Reverse and Creep Up
One of the best things to come out of the shale boom is the decline in U.S. crude oil imports. The Wall Street Journal reported last week that trend seems to be over for the time being:
U.S. crude imports declined 20% between 2010 and 2014 amid the domestic energy boom but have recently started to rise again. Total crude-oil imports rose for three straight months between April and July—a total of 1.7% in the period, according to the most recently available data from the Energy Information Administration. Imports of light crude grew more rapidly, from 5.6% of total imports in April to 11% in July.
This prompted some recriminations from PACE (Producers for American Crude Oil Exports), a group seeking to export crude oil:
According to the U.S. Energy Information Administration (EIA), U.S. crude oil in storage has exceeded 90 percent capacity and remains at 80-year highs. … Domestic refiners have an option to purchase U.S. crude oil or import it from foreign sources. This new data from EIA provides further evidence that some U.S. refiners – namely those who oppose lifting the U.S. crude oil export ban – are actively choosing foreign oil above U.S. interests. They are choosing increased U.S. dependence on foreign countries rather than sourcing their crude from U.S. companies that employ American workers.
Interview with Tim Wigley of the Western Energy Alliance (Starts at 20:23)
The Western Energy Alliance, once called the Independent Petroleum Association of Mountain States, bills itself as a nonprofit trade association representing more than 450 companies that are engaged in environmentally responsible exploration and production (E&P) of oil and natural gas in the American West. The Alliance is headquartered in Denver, Colorado, and its core states include Colorado, New Mexico, Utah, Wyoming, Montana, and North Dakota. The Alliance really focuses on public land issues like permit wait times, because public lands dominate the region.
I had a chance to speak with Tim Wigley, who has been the President of the Alliance for the last four years after a career in politics and policy. On September 28, the group launched a “Fossil Fuel Free Challenge” to draw attention to the role of oil and gas in our everyday lives. Tim says he came up with the idea for the Fossil Fuel Free Challenge during his time as a drummer in a local band. His guitarist was complaining about fossil fuels, and Tim wanted to make him understand how much he relies on fossil fuels for in his daily life.
In late September, the Alliance asked people to go five days without using fossil fuels or else admit that “life’s pretty good with fossil fuels.” It was not enough to stop driving your car. Fossil fuels help produce most other products we use in everyday life, from laptops, to bicycles, to clothes, to beer. Tim was particularly fired up about the fact that plastic kayaks (made from fossil fuels) have been used to protest offshore oil drilling.
Tim also shared his thoughts on a few other issues that the Alliance works on. One major issue is the Bureau of Land Management’s fracking rule (something we’ve discussed many times before). Tim and the Alliance think the federal government is overreaching into state regulatory programs that are working well. The Alliance fought to stop the rule in court, and has been successful. Tim says the rule is unlikely to be implemented while President Obama is in office.
The Alliance and the federal government did reach a mutual understanding on one issue recently, the saga of the Greater Sage-Grouse. The Department of Interior had been considering listing the bird as endangered, but instead opted to rely on “federal land management plans and partnerships with states, ranchers, and NGOs.” Tim was in the audience for that announcement a couple months ago, and he is pleased with the decision. He says it is an ongoing battle, however, as he is worried that Interior could still take actions that would harm Western economies. In general, Tim thinks the Endangered Species Act needs reformed as it often causes more harm than good. The Alliance is also strongly supportive of opening up crude oil exports and building the Keystone XL pipeline.