Energy industry could be hit by tougher regulations in Obama second term

Coal company shares fell in pre-market trading on the news of President Obama’s re-election, including shares of Alpha Natural Resources which previously announced layoffs for 1,200 workers and the closing of eight coal mines partly due to “a regulatory environment that’s aggressively aimed at constraining the use of coal.”

“(The drop is) 100 percent related to election results,” said Eric Green, senior managing partner at Penn Capital Management.

The Obama administration could also revive some rules which were rejected by the courts, like the Cross-State Air Pollution Rule (CSAPR), which was recently struck down in federal court, and estimated to cost $853 million

“I think under Obama [CASPR] would come back, probably reinstated in 2014,” Kevin Massy, associate director of the Brookings Institution’s Energy Security Initiative told the Daily Caller News Fondation.

However, there are still other major regulations still in place, seven of which will cost 887,000 jobs per year, with annual costs as high as $16.7 billion per year according to a report by National Economic Research Associates (NERA).

Fracking could also be in jeopardy as the Obama EPA is expected to release two reports on fracking which could set the tone for regulation in his second term. The shale oil and gas boom has almost exclusively taken place on private and state lands which means its largely out of federal hands, but that could change, says Pyle.

“What Obama will certainly continue to do is try to regulate the technology that makes [fracking] possible,” Pyle said. “His EPA has been caught with their hand in the cookie jar on several occasions trying to claim that fracking has caused groundwater contamination, and it hasn’t.”

However, the shale boom is expected to continue under an Obama second term, but tighter air and water standards for fracking are expected.

“The shale boom is going to continue under whoever is in the White House,” Massy said. “It’s going to be very hard to put the genie back in the bottle in regards to natural gas and, subsequently, shale oil production on those lands.”

“The Obama administration EPA is looking closely at the issue of fracking and has an ongoing study on water standards,” Massy added. “We’ll probably see tighter standards for water and air quality.”

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