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

Michael Bastasch DCNF Managing Editor
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The energy industry could see itself under a renewed attack by regulators and environmental groups during President Barack Obama’s second term as the administration could tighten regulations on oil, gas, and coal.

“It’s going to be a rougher second term for oil and gas given the way the environmental debate is going and the diminished incentive Obama has to protect oil and gas after his last election is behind him,” said Robert McNally, a former White House energy adviser under George W. Bush and current head of the Rapidan Group consulting firm.

Reuters reports that Obama slowed fossil fuel regulations during the campaign as his challenger Mitt Romney championed expanding drilling and more state authority over oil and gas regulation while painting Obama as anti-fossil fuel.

“Obama streamlined regulation on drilling for natural gas from shale and delayed finalizing rules on mercury emissions from power plants,” according to Reuters. “The light touch may have helped the president gain support from voters anxious about jobs in gas-rich Pennsylvania and Ohio.”

Despite the regulatory slowdown, it has been reported that the Environmental Protection Agency has more than 50 staffers gearing up for a “November Surprise” to finish new greenhouse gas standards.

“[I]t’s pretty clear that if President Obama secures a second term, the Obama-EPA will have a very busy next four years, moving full speed ahead to implement numerous major rules and regulations that he has delayed or punted due to the upcoming election,” reads a report by Inhofe on EPA actions during an Obama second term.

The brunt of the environmental regulations have been felt by the coal industry and have contributed to the planned shutdown of more than 200 coal-fired generators across 25 states, reports the American Coalition for Clean Coal Electricity.

Coal mining companies and miners also saw 9,000 mining jobs were lost in October, with mining employment decreasing by 17,000 jobs since May of this year.

‘We will see energy prices continue to go up as a result of these policies,” Thomas J. Pyle, president of the Institute for Energy Research told the Daily Caller News Foundation, adding that “coal is toast” in an Obama second term due to onerous EPA regulations.

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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