The Obama Administration Is Winning Its War On Fossil Fuels

REUTERS/George Frey

Keith Mauck Principal, American Energy Communications
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With just 16 months remaining in President Obama’s second term, the administration is moving swiftly to make renewable energy more competitive by raising the cost of fossil fuels and regulating them out of existence. If the War on Coal is an apt example, apparently the strategy is working. More than two dozen coal companies have filed for bankruptcy so far.

Now the president’s regulators are focusing on an even larger industry with bigger players — the oil and natural gas companies.

According to reports, the oil and gas industry soon will experience a “regulatory avalanche” consisting of several federal regulations, including the recently announced methane emissions rule. Its goal is to reduce the amount of methane gas that escapes from oil and natural gas operations by 45 percent from 2012 levels.

Methane is considered a potent greenhouse gas associated with the threat of climate change. But it’s not clear the new regulations will have any impact on the climate. It will, however, affect the budgets of drilling companies, which already are taking action to reduce methane emissions.

Even the Environmental Protection Agency’s own data show methane emissions from natural gas systems have fallen 11 percent since 2005. During the same period, methane from hydraulically fractured natural gas wells has declined nearly 79 percent, while U.S. natural gas production has soared.

Furthermore, slapping the industry with this new regulatory burden, estimated to cost about $320 million to $420 million per year, makes little sense at a time when oil and natural gas producers already are reeling from the market correction. The price of oil has dropped to the $40 a barrel range, reducing the amount of capital available to start new drilling projects. Stock prices for oil and gas companies have plummeted, and more than 100,000 U.S. oil and gas workers have been laid off.

Adding to the financial pain is the president’s Iran deal, which is likely to flood the global market with a torrent of Iranian oil when sanctions are lifted. Lower oil prices might be a boon to the pocketbooks of U.S. consumers in the short term, but over the long-term they set the stage for tight supplies and higher prices.

We have witnessed this roller coaster-like phenomena dictated by the laws of supply and demand several times in the past decade. Each time it occurs, it sends shock waves through the economy and the household budgets of American families.

It also affects the 3 million users that have visited 3 shale social networks that I publish online. The users primarily are land and mineral-rights owners. Many have signed leases with drilling companies and use the royalty payments to support their families and small businesses.  There is an estimated 8 million royalty owners in the United States.

In fact, it is private royalty owners who have helped the United States become the world’s largest oil and natural gas producer.  Statistics show all increases in oil and natural gas production have occurred on non-federal lands since 2012, because U.S. property has been made available to energy development during the Obama administration. Furthermore, the administration has set aside millions of potentially energy-rich acres both onshore and offshore to prohibit drilling.

The president’s environmental supporters want these anti-fossil fuel actions to continue. “We’ve seen the administration willing to take on King Coal,” Jamie Henn, co-founder of the climate activist group 350.orgtold a reporter recently. “They’ve got to go after bigger bad guys, like Big Oil and the Koch brothers.”

This approach to energy policy, however, ignores an important point: The United States does not run on political agendas. It runs on energy, and it will continue to need oil and natural gas long after President Obama has left the White House. Federal government analysts project that oil and natural gas will fulfill 62 percent of our energy needs in 2040, with coal continuing to provide about 18 percent. Renewables’ share of the energy pie will rise from about 7 percent today to only 10 percent in 2040.

That’s a very small return for a very costly — and questionable — government initiative aimed at stamping out fossil fuels.

Keith Mauck, J.D. publishes GoMarcellusShale.com and is co-founder of ShaleCast.com.