By Olman Valverde
President Obama’s references to energy policy during Tuesday evening’s State of the Union speech indicated that he remains committed to an “all-of-the-above” approach to energy policy. The President offered words of support for environmentalists, climate activists, the natural gas industry and solar.
For the oil industry, however, the President called for a change to tax policy that would reduce support for fossil fuel production, that is not being well received by industry. It is also far from clear that there is political support for this proposed change.
The President acknowledged the benefits to the U.S. economy from the production of natural gas. At the same time, it was clear from his comments that climate change will continue to dominate the discussion of fossil fuel energy.
One potential positive sign for the oil industry was that President Obama did not mention or directly attack hydraulic fracturing, the key reason for the growth in domestic energy and its consequent significant benefit to the American economy. However, his reference to “if extracted safely” indicates an awareness of the concerns of environmentalists.
The President said:
“One of the biggest factors in bringing more jobs back is our commitment to American energy. The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades.
“One of the reasons why is natural gas – if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change.
“Businesses plan to invest almost $100 billion in new factories that use natural gas. I’ll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas.
“My administration will keep working with the industry to sustain production and job growth while strengthening protection of our air, our water, and our communities.
“And while we’re at it, I’ll use my authority to protect more of our pristine federal lands for future generations.
“It’s not just oil and natural gas production that’s booming. We’re becoming a global leader in solar, too. Every four minutes, another American home or business goes solar; every panel pounded into place by a worker whose job can’t be outsourced.
“Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it, so that we can invest more in fuels of the future that do.
“And even as we’ve increased energy production, we’ve partnered with businesses, builders, and local communities to reduce the energy we consume.
“When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I’ll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump.
“Taken together, our energy policy is creating jobs and leading to a cleaner, safer planet. Over the past eight years, the United States has reduced our total carbon pollution more than any other nation on Earth.
“But we have to act with more urgency – because a changing climate is already harming western communities struggling with drought, and coastal cities dealing with floods. That’s why I directed my administration to work with states, utilities, and others to set new standards on the amount of carbon pollution our power plants are allowed to dump into the air.
“The shift to a cleaner energy economy won’t happen overnight, and it will require tough choices along the way. But the debate is settled. Climate change is a fact. And when our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say, ‘Yes, we did.’”
Olman J. Valverde is an oil and gas lawyer with the law firm of Luna & Glushon.