Depressed prices have made oil and gas a very minor issue in the 2016 US election campaigns, but candidates’ few references to the industry are so polarized that they reveal unusual and discouraging ignorance, speakers agreed during an Apr. 26 discussion at the Center for Strategic and International Studies.
“Our lives are so extraordinarily dependent on oil and gas resources that most of us don’t realize it,” observed Tisha Schuller, a strategic advisor at Stanford University’s Natural Gas Initiative who formerly was president of the Colorado Oil & Gas Association. “Energy may be a sideline topic this election, but when it’s been raised, it’s been overwhelmingly negative. That’s absurd, but it shows how much we take energy availability for granted.”
Karen A. Harbert, president of the US Chamber of Commerce’s Institute for 21st Century Energy, said, “Energy has not been a part of this election because prices are so low. The candidates aren’t going to be able to get away with that over the long term. The energy cycle also runs on a different timetable than the election cycle. [Its] renaissance did not happen because of government decisions, but because of technological innovation in the industry.”
Mark Brownstein, vice-president of the Environmental Defense Fund’s Climate and Energy Program, said, “At least in some of the presidential campaign rhetoric, we’re seeing some stark choices.” He urged candidates to consider two points: One, much of the progress has occurred at the state and local level in places like Wyoming where people don’t want to have to choose between development and environmental protection. Two, there’s a consensus to address climate change which has emerged globally, and an expectation that every nation will need to do its part. “Whoever the next president is will have to wrestle with that,” Brownstein said.
Oil and gas technology and innovations may have been the primary force behind the US’s change into a net oil and gas exporter from an importer, noted Frank A. Verrastro, senior vice-president and James R. Schlesinger Chair for Energy & Geopolitics at CSIS, who moderated the discussion. “If you look forward with the sum of parameters we’re putting around the market, policies could be the next dominant force,” he said.
Schuller noted that while she was at COGA, Colorado enacted five precedent-setting oil and gas regulations in 5 years—four of which were with EDF’s help—which started with prolonged negotiations involving regulators, county and local governments, oil and gas producers, ranchers, outdoor recreation organizations, environmental groups, and other stakeholders.
Behind the successes
“Now, there’s not a climate there where they could do a sixth because public attitudes have become so polarized. Local efforts and compromises helped Colorado achieve so many successes,” Schuller said. “How willing would you be to work for a meaningful compromise when it can be characterized so negatively by candidates running for office? Are advocates more interested in perpetuating a fight than reaching a solution?”
Energy policy negotiations also need to recognize any kind of energy comes with tradeoffs, Schuller said. “Even in informed energy discussions where decarbonization is being emphasized, we’re not acknowledging the contributions the oil and gas industry can make,” she said. “As negotiators, we must give our opponents space to evolve. When Colorado developed the nation’s first successful methane regulations, companies were definitely sitting at the table. The really interesting, progressive steps forward we can make are messy. You can’t vilify people up here and expect to get work done down there.”
Harbert said, “All of us who have been in the energy business for a long time have to admit that we were dead wrong about where this country would be in 2016. Energy may not be part of this election, but definitely will be part of the next president’s agenda. We have not had a modernization of overall policy that reflects how much has changed.”
Harbert noted that when the US went through a deep financial crisis in late 2008 that was followed by a deep recession, the oil and gas industry was the only one that was hiring because of technological exploration and production breakthroughs from the combination of hydraulic fracturing and horizontal drilling.
“Where energy used to be an input into our economy, now it’s embedded in it. Its supply chain which winds so deep throughout the economy has reached so many areas, particularly rural locations, that it can’t be ignored,” Harbert said. “The next president will need to decide how to harness this opportunity. But if we continue to impose regulations that increase costs, we run the risk of making a lot of what we’ve attracted go away.”
Close to carbon limit
Climate impacts, however, can’t be ignored, Brownstein said. “There is, in fact, a limit to how much carbon we can put into the atmosphere and have temperatures on the planet we would consider acceptable. We’re coming very close to reaching that limit,” he warned. “What we’re talking about is a need for a fundamental energy transformation. The only question is how quickly we’re willing to do it.”
Brownstein said it would be a mistake to emphasize long-term programs and ignore short-term opportunities. “There are things we can do in the meantime to reduce the impact oil and gas have on the environment for however long we use it. That’s where the methane issue comes in, because it’s eight times as potent a greenhouse gas as carbon dioxide,” he said.
“To look at this basket of short-term impacts strictly over the long term undervalues their effects,” Brownstein said. “We’ve seen dramatic increases in storms and heat waves. If you want to curtail these extreme tipping events, you go after the impacts which are happening right now.”
Verrastro suggested that policymakers need to look seriously at what decarbonization would look like and how the country could get there. “As we look at the phenomenal onshore development, we’ve restricted development offshore where wells produce much more. You can’t rely solely on onshore development to meet future demand,” he said.
Harbert said, “Companies which have stronger balance sheets where they can invest offshore are holding off. Yet if you look at what’s going to be needed 35 years from now, we’ll be looking at another 2 billion people globally, and they’ll want energy. 2050 is a long time from now, but it’s going to take a lot of money. Decisions will be made during the next administration which will affect this. Offshore is going to be a huge component to meet future demand because of its production scale.”
Schuller said, “Having access to energy frames acceptance of environmental policies. Accomplishing this around the world will be necessary. The framing of the conversation is important. If you sit around a table in Colorado and tell people they have to get rid of emissions, it’s difficult. People are tired of being vilified.”
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