Obama's speech contains good, bad news for industry

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Jan. 28 -- US President Barack Obama called for more domestic offshore oil and gas development in his 2010 State of the Union address on Jan. 27. He also said that it’s time to end tax cuts for oil companies.

The observations came during a speech that emphasized job creation, economic recovery, and deficit reduction as his administration’s top priorities for the coming year. Federal lawmakers should work together to solve serious problems the nation faces, Obama said. “The only reason we are here tonight is that generations of Americans were not afraid to do what is hard,” he maintained.

China, Germany, India, and other countries are moving aggressively, and the US should do the same, the president told House and Senate members. “They’re putting more emphasis on math and science. They’re rebuilding their infrastructure. They’re making serious investments in clean energy because they want those jobs,” he said. “As hard as it may be, it’s time to get serious about fixing the problems that are hampering our growth.”

American innovation should be encouraged, he continued, “and no area is more ripe for such innovation than energy.” He cited a North Carolina company that will create 1,200 jobs nationwide helping to make advanced batters, and a California business that will employ 1,000 people to make solar panels as 2009 clean-energy successes.

“But to create more of these clean energy jobs, we need more production, more efficiency, more incentives,” Obama said. “That means building a new generation of clean, safe nuclear power plants in this country. It means making tough decisions about opening new offshore areas for oil and gas development. It means continued investment in advanced biofuels and clean-coal technologies. And yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.”

Oil tax plans
Obama also signaled that his administration would try again to remove federal tax incentives that independent oil and gas producers consider crucial to their operations as part of a wider effort to make the federal government more financially responsible. “We’ve already identified $20 billion in savings for next year,” he said. “To help working families, we’ll extend our middle-class tax cuts. But at a time of record deficits, we will not continue tax cuts for oil companies, for investment fund managers, and for those making over $250,000/year. We just can’t afford it.”

Oil and gas association leaders’ responses varied. American Petroleum Institute Pres. Jack N. Gerard said on Jan. 28 that he was encouraged by Obama’s statement that decisions should be made about opening new offshore areas to development. “These are important and necessary decisions for the American people and the American economy,” he indicated.

Gerard said, “We support the president on jobs and are ready to do our part putting more Americans back to work. But to create these jobs, we will need policies that allow investment and development—policies that are pro-job, pro-consumer and pro-energy.”

Noting that Obama called for passage of comprehensive climate and energy legislation, National Petrochemical & Refiners Association Pres. Charles T. Drevna added that the president did not aggressively promote carbon cap-and-trade legislation.

“He should be applauded for turning his attention to the economy, jobs, continued investment in innovation, and increased domestic energy production. A cap-and-trade climate bill would only run counterproductive to his objectives,” Drevna said. “Aside from promoting new ‘green jobs,’ we hope President Obama will focus on preserving and creating red, white, and blue jobs, and that he will pledge to work with the American oil, gas, refining, and petrochemical community.”

Congressional responses
Congressional energy leaders also responded. “I’m pleased that President Obama continues to have energy and its connection to American jobs at the top of his agenda,” US Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) said on Jan. 28. “‘Green and clean’ is the best way to create the American jobs of tomorrow, and I look forward to continuing to work with the president on this.”

Committee member Mary L. Landrieu (D-La.) applauded Obama for promoting safe, clean nuclear power and for being open to offshore exploration. She said any energy bill should make the most of domestic resources “and our unmatched skill and innovation to reduce our dependence on foreign oil.”

Republicans on the committee were critical. Sen. John Barrasso (Wyo.) said that in order for the US economy to improve, the administration should stop pursuing job-killing policies. “It should shelve the cap-and-trade scheme that would increase taxes on the American people and employers. It should ditch its bureaucratic, secretive plan to regulate carbon from small businesses. It should end the burdensome oil and gas regulations that will kill more red, white, and blue jobs,” he said.

GOP energy leaders in the House also criticized Obama’s remarks. “If the president really wants to spur job creation and economic growth, he will stop blocking American energy production and allow us to develop our own resources in an environmentally responsible way,” said Doc Hastings (Wash.), the Natural Resources Committee’s ranking minority member. “In addition to creating millions of jobs, it will create an influx of new revenue to the federal government that will help pay down the trillion dollar deficit.”

“Countless energy-related jobs have been lost or prevented by the Obama administration,” said Rep. Rob Bishop (R-Utah), a Natural Resources committee member and chairman of the Congressional Western Caucus. “Though ‘green’ jobs sound nice in speeches, the reality is that we need all jobs, not just those that fit with a special interest agenda.”

Contact Nick Snow at nicks@pennwell.com.



Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...

Leveraging the Power of Information in the Energy Industry

Information Governance is about more than compliance. It’s about using your information to drive ...

Reduce Engineering Project Complexity

Engineering document management presents unique and complex challenges. A solution based in Enter...

Revolutionizing Asset Management in the Electric Power Industry

With the arrival of the Industrial Internet of Things, data is growing and becoming more accessib...

Latest PennEnergy Jobs

PennEnergy Oil & Gas Jobs