WASHINGTON, Jan. 6, 2016 - The U.S. oil and gas industry will continue to reduce its greenhouse gas emissions while increasing domestic production in 2016 so long as the federal government doesn’t pile on any additional market regulations, said Jack Gerard, the American Petroleum Institute president and CEO, as API released its annual “State of American Energy” report.
While praising Congress’ recent decision to lift the 40-year-old ban on crude oil exports, Gerard had sharp criticism for several administration policies, including the Renewable Fuel Standard and EPA’s Clean Power Plan.
“Ignoring clear consumer preference and in spite of the current record levels of domestic crude oil production, EPA continues to push the Renewable Fuel Standard, a relic of our nation’s era of energy scarcity and uncertainty,” Gerard said in his address.
The Clean Power Plan, which EPA says will reduce carbon emissions from power plants for the first time, similarly “picks winners and losers in the energy market,” undermining consumer preference and market competition, Gerard argued.
What’s more, the rule is “a regulation-based solution for a problem that is already being successfully addressed in the marketplace,” he said.
The oil and gas industry is second to none when it comes to investing in zero- to low-carbon emitting technologies, he said. Between 2000 and 2014, the sector invested $90 billion in these technologies, just short of the $110 billion the federal government put up during the same period, according to a 2015 study commissioned by API.
Along with these investments, Gerard said a steep increase in natural gas utilization has helped to reduce U.S. energy-related carbon emissions to a 20-year low. The Energy Department’s Energy Information Agency says the record low is also attributable to a spike in renewable energy consumption, an increase in nuclear energy use and a number of coal plant closures.
“In 2015 there were several months in which natural gas produced more electricity than any other fuel for the first time in U.S. history,” Gerard said. “By no coincidence, that period also saw the lowest carbon emissions from the power sector.”
The same 2015 study found the oil and gas industry reduced its own emissions by the equivalent of 55.5 million metric tons of CO2 in 2014, “all while dramatically increasing… production.”
Gerard said the oil and gas industry’s solution for reducing its carbon emissions “is based in facts and experience” and “is better for consumers and… the environment,” and “doesn’t unintentionally displace economic activity,” like the CCP would.
Gerard said he also wants to see federal regulatory hurdles preventing private investors from breaking ground on new energy transmission infrastructure projects, and from investing in energy extraction projects on federal lands, eliminated or significantly reformed in 2016.
According to API’s State of American Energy report, crude oil production on federal land stayed flat, while natural gas production fell 35 percent between 2009 and 2014. During the same period, crude output jumped 88 percent on private and state lands, and natural gas production increased by 43 percent.
Gerard said this discrepancy in production “is driven by ideology, not geology.”
“The oil and gas reserves don’t go to the line between federal and state lands and stop,” he said. “There’s a reason dollars aren’t being invested to drill on federal land. There’s great (regulatory) uncertainty, and the costs are much higher.”
The U.S. is also short on infrastructure for energy transmission, like pipelines and marine terminals, which limits the earning potential of the energy sector, and has caused energy prices to rise in some areas, according to API’s report.
In New England, for instance, the report says residents paid up to 69 percent more for electricity last winter than the national average – while industry paid up to 90 percent more – because of “strained” infrastructure. Gerard said this “strain” has been exacerbated by “outdated policies” and an “anti-fossil fuel political ideology” that has long discouraged investment in infrastructure, like the Keystone Pipeline.
In an effort to “educate the electorate” voting in the 2016 presidential election, API has revived its “Vote4Energy” campaign. Gerard said he hopes the initiative will spur a national conversation on “the facts” and “the science” around oil and gas production and policy, and prompt the presidential candidates “to share their vision for America’s energy future.”
Tom Buis, co-chair of the renewable energy group Growth Energy, said in a release Tuesday that Gerard’s speech was “nothing new” from “Big Oil.”
“API wants to kill any competition that may threaten their bottom line and record profits,” Buis said. “They will stop at nothing to end the Renewable Fuel Standard, blocking the widespread adoption of renewable fuels that consumers demand.”
Bob Dinneen, CEO of the Renewable Fuels Association, also rejected Gerard’s claims.
“I’m not sure what reality Jack is living in, but it is clear that he believes API’s actions and policies are making our nation more energy secure when nothing could be further from the truth,” he said in a news release on Wednesday.
Dinneen points out that even though U.S. oil production has risen in recent years, refiners still import “a substantial amount” of crude oil and that roughly 45 percent of oil processed by U.S. refineries last year came from imports. And about a third of those imports came from OPEC nations with Russia and Colombia as major suppliers.
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