BIC Magazine recently spoke to API President and CEO Jack Gerard to discuss industry hot topics and how to get involved in the national energy discussion as the U.S. prepares for the upcoming presidential election.
BIC: What is the biggest hurdle impeding energy progress right now?
GERARD: The United States now leads the world in production of oil and natural gas and in reduction of carbon emissions, providing an opportunity to control our energy future while growing our economy and improving our environment. The biggest obstacle to achieving America’s full potential as a global energy superpower is government regulatory policy that, while sometimes well-intentioned, is more often duplicative or misguided.
America’s energy resurgence was the result of market-driven innovations. Domestic natural gas production has soared, and greater use of this clean, reliable and affordable energy resource has reduced power plant carbon emissions to levels not seen in more than 20 years while significantly reducing other air pollutants. Since 2000, U.S. oil and natural gas industry investments in zero- and low-carbon technologies have totaled $90 billion. Our refineries, meanwhile, are producing cleaner fuels and running more efficient operations than ever. And voters get it. Recent polling shows 77 percent support increased production of oil and natural gas.
Yet 87 percent of federal offshore acreage remains off limits to energy exploration. Although voters from Virginia to Georgia support offshore energy development, the Obama administration withdrew plans to include the Atlantic in its 2017-2022 leasing plan. In the Arctic, where Alaska’s Beaufort and Chukchi seas are estimated to contain more technically recoverable oil and natural gas than the Atlantic and Pacific coasts combined, a pattern of permitting unpredictability and regulatory uncertainty hinders production and undermines investment decisions. Onshore, federal policy presents bureaucratic hurdles that slow or prevent production.
Despite clear evidence that methane emissions from oil and natural gas operations have declined even as production has greatly increased, the administration has proposed unnecessary regulations that will take longer and cost far more than allowing industry’s market-driven performance to achieve the goal of further emission reductions.
BIC: What work needs to be done to strengthen energy infrastructure?
GERARD: The American energy revolution presents new infrastructure demands that are both an economic opportunity and a necessity. Expanding our pipeline system to accommodate increased production will generate jobs both within the industry and other jobs, such as in construction, that support industry. Enhanced and improved infrastructure means we move energy safely and efficiently, maximizing the economic benefits.
Updating America’s energy infrastructure could generate up to $1.15 trillion in new private capital investment, support 1.1 million new jobs and add $120 billion on average per year to our nation’s GDP over the next decade, according to a study by IHS.
Long term, infrastructure delivers affordable energy, which has helped American families save $1,337 per year and given U.S. manufacturers a competitive edge, putting downward pressure on power and materials costs.
Pipelines are one of the safest, most efficient ways to transport the energy families and businesses need. The most recent data show liquid pipelines transported 16.2 billion barrels of crude oil and petroleum products at a safety rate of 99.999 percent in 2014, while the safety rate for the nation’s 320,000 miles of natural gas pipeline is also 99.999 percent. Pipelines are also instrumental in our success in reducing greenhouse gas emissions, delivering the clean-burning natural gas that is a primary factor in cutting carbon emissions.
Eighty percent of American voters support increased development of national energy infrastructure, and both the House and Senate have approved bipartisan legislation that would ensure natural gas pipelines are permitted more efficiently. At the federal and state levels, policymakers can create shovel-ready jobs by moving forward with energy infrastructure projects.
BIC: What pressing energy topic do you hope will be addressed by the new administration?
GERARD: Recommitting to an “all of the above” energy strategy that includes oil and natural gas is key to strengthening America’s 21st-century energy renaissance and building on our place as a global energy leader.
According to the U.S. Energy Information Administration, world energy consumption will increase 48 percent by 2040, largely due to expanding economic opportunities in developing nations, and 78 percent of global energy needs will be met by fossil fuels. In the United States, oil and natural gas will supply 60 percent of U.S. energy needs by 2040, even under optimistic scenarios for renewable energy growth.
Suggestions that we can power our economy without fossil fuels is not only unrealistic; it presents an entirely false choice. Not only will oil and natural gas still supply the majority of our energy in 2040, but natural gas is essential if renewables like wind and solar are to succeed, with natural gas providing reliable, affordable power when the wind doesn’t blow and the sun doesn’t shine. We are leading the world in oil and natural gas production and in reducing carbon emissions, so we know energy production and environmental progress aren’t mutually exclusive. By recognizing that fact and embracing our status as a world energy leader, the next president can implement a true “all of the above” strategy without risking energy security, economic growth and consumer savings.
BIC: What is ahead for North American refining?
GERARD: Our state-of-the-art, world-leading refineries support over 1.2 million American jobs, produce countless everyday products, and supply the over 140 billion gallons of gasoline and 55.9 billion gallons of ultra-low sulfur diesel per year that keep our economy moving. U.S. refiners invest billions each year to develop cleaner, safer fuels and next-generation technologies to meet air quality goals.
The refining industry will continue to pursue technological innovations, but burdensome and costly regulations sometimes interfere.
Ethanol requirements under the federal Renewable Fuel Standard (RFS) can negatively impact both refiners and consumers. Although approximately 90 percent of vehicles on the road today were not designed to use higher ethanol blends, and automakers warn ethanol-related engine damage may not be covered by warranty, proposed ethanol volumes released earlier this year by the Environmental Protection Agency (EPA) would force an additional 700 million gallons of ethanol and other biofuels into the nation’s fuel supply in 2017. Increasing ethanol volumes each year regardless of demand or market conditions pushes us closer to breaching the blend wall — the point at which the RFS requires more ethanol in the fuel supply than can be safely blended as standard E10 (10-percent) gasoline.
If EPA fails again to take action to protect consumers, Congress should step in. Bipartisan legislation to reform the RFS has gained more than 100 co-sponsors in the House, and the diverse coalition of industries and organizations calling for action should make RFS reform a top congressional priority.
BIC: What is the Vote4Energy campaign, and how can industry get involved?
GERARD: Energy is the rare issue that is not partisan. Voters across the political spectrum support increased oil and natural gas production, and they recognize energy’s role in job creation, economic growth and national security.
Building on that consensus and educating voters about the importance of pro-growth energy policies is the goal of API’s Vote4Energy campaign. Vote4Energy seeks to drive a national energy discussion that’s focused on the facts and keeps what’s most important front and center: Energy development means more American jobs, a stronger U.S. economy and continued global energy leadership.
We’ve hosted a number of events this year in Washington and throughout the country, including at the Republican and Democratic conventions, to keep voters informed about our candidate: energy.
To learn more about the Vote4Energy campaign and how to support it, visit www.vote4energy.org. For more information about API, visit www.api.org or call (202) 682-8000.
