US Chamber of Commerce Blog
Without energy, almost nothing in your home works. Not your air conditioner, your lights, your computer, your phone, your refrigerator. Not even your car. Nothing.
No business can run without energy either. It is as vital as other economic inputs, such as labor and raw materials. When energy is more affordable, a business can invest in other parts of the business. But when energy becomes less affordable – because of market forces or regulations that restrict production – businesses can’t hire more workers, pay employees more, invest in better equipment, or grow the business.
Over the past few years, we’ve been blessed with an American energy renaissance. Both oil and natural gas production have skyrocketed. Energy imports have declined and the United States is now exporting energy to hungry global markets. This abundance has attracted manufacturing and investment to the United States.eia_electricity_generation_2016.png Energy Information Administration chart on electricity generation sources for 2016.
One of America’s greatest strengths is its diverse portfolio of energy resources. In 2016, natural gas is forecasted to provide 33% of electricity, coal 32%, nuclear 19%, renewables 8%, and hydropower 6%. That kind of diversity helps our economy withstand the ups and downs of markets, and ensures that we aren’t overly reliant on one particular resource.
There are loud voices who claim that America is on the wrong track and who seek to limit the varieties of energy we have available. They’re misguided and wrong.But wait: Why is there a war on American energy?
Instead of embracing all kinds of energy production wherever it makes economic sense and with appropriate environmental protections, energy opponents want government to pick energy winners and losers. They wish we abandoned fossil fuels, “keep it in the ground,” and blindly hope that renewable energy can somehow supply our needs. But that’s simply impossible with an economy and lifestyle that is dependent upon always-available, 24/7 energy.
Listen to the The Business Impact podcast on the value of energy diversity.
President Barack Obama’s administration is doing plenty to help this ill-devised attack on our modern way of life. With oil and natural gas, the Administration has blocked development off the Atlantic Coast, made it nearly impossible to access our resources in the Arctic Ocean, and issued unnecessary regulations to burden onshore federal lands.
The Administration has in particular waged a ruthless “War on Coal.” EPA has launched a series of regulatory attacks on coal-fired power plants – the biggest being EPA’s Clean Power Plan. Through an expansive suite of regulations, the president is doing all he can to make coal (and coal-related jobs) a thing of the past.Then what’s the argument for more energy development?
First, we get more oil, natural gas, and coal to power our economy.
We’ve seen the benefits from domestic oil and natural gas development—both on and offshore. Because of advanced extraction methods (like fracking), the United States has increased total energy production for six-straight years, despite a 10% decrease in coal production.
With increased domestic oil and natural gas production, U.S. energy security has improved for three years straight, according to the Institute of 21st Century Energy’s Index of U.S. Energy Security Risk, and oil prices have fallen from $110 a barrel in 2014 to under $50 a barrel in 2016. As a result, households have saved $747.30 per year on energy costs between 2008 and 2014.u-s-oil-production-2008-2015.png U.S. oil production: 2008-2015
Second, there are the jobs created through energy production. According to the American Petroleum Institute, oil and natural gas supports 9.8 million jobs, and coal supports over 700,000 jobs, according to the National Mining Association.
Third, we become less dependent on energy from other countries, especially ones that don’t like us. In 2005, the United States imported 30% of its energy demand. That’s now down to below 10%. Because of the shale energy boom, we are now exporting oil and natural gas around the world.
This trend can continue by opening up more areas to energy development and removing unnecessary regulatory barriers to ensure continued access and increased energy security and affordability.Can we produce energy safely?
We can and we do – every day.
Take oil and natural gas. Despite anti-fracking fear mongers’ protests, propaganda “documentaries,” and millions of dollars spent trying to convince people that hydraulic fracturing is dangerous, neither government nor university researchers have found that it hurts the environment. In the words of an EPA draft report, fracking has not had “widespread, systemic impacts on drinking water.”
Energy companies have every incentive to be mindful of the environment, and regulators at every level enforce regulations and issue permits to ensure energy development is done properly.What about protecting the environment?
It is being done. Hey, we live here, too. We all want clean air and clear water.
History has shown that economic growth leads to environmental progress. Economic development drives technological progress that allows economies to produce more goods and services with less waste.
With higher incomes from a growing economy, we have more means available to protect the environment. Based on many indicators, our atmosphere is today cleaner when it comes to methane, ozone, and sulfur dioxide (a component of acid rain). Only a vibrant economy can generate the technologies needed to accomplish this.epa_ozone_chart.jpg EPA ozone air quality chart.
Affordable energy is required to power that economic growth.
As for climate change, it’s about finding the right policies. Just as the problem is global, a solution must also be global in scope, be realistic and achievable – and not put the United States at a competitive disadvantage. The approach that President Obama’s administration is pushing — EPA’s Clean Power Plan — doesn’t meet any of these criteria.Is there more to the American energy debate than fossil fuels vs. renewables?
Energy isn’t an either-or proposition. We can continue to use more renewable energy while continuing to enjoy the unique benefits of traditional sources. As our economy continues to grow, we will need more energy from all sources—and so will the rest of the world.
The energy debate must also focus on energy infrastructure. Whether it’s pipelines to move oil and natural gas, electrical power lines to link the parts of the country where power is produced to where its used, or export facilities to sell coal and other fossil fuels to world markets, these projects are more often the target of opponents and regulatory red tape. In 2015, Washington passed legislation to speed up permitting reviews and approvals. That was welcome. It’s up to organizations like the U.S. Chamber to fight groups who will do or say anything to block these needed projects.
We also must not forget the significant contribution of nuclear power, which supplies the United States with 20% of its electricity. One of the big hurdles facing its continuing viability is the federal government’s failure to follow the law and build a permanent nuclear waste storage facility at Nevada’s Yucca Mountain. The government should fulfill its responsibility to ensure nuclear power’s continued reliable and emissions-free contribution.What’s the bottom line?
American economic growth, job creation, and improved quality of life depend on affordable, abundant energy. We can either import it — often from countries that aren’t friendly with us — or rely on domestic sources.
The energy debate shouldn’t be pro- or anti- any fuel source. It has to promote an “All of the above” approach—and it can’t just be rhetoric. That’s the smart path that ensures households and businesses have the energy they need to keep moving and compete in an increasingly competitive world.
Lower energy prices over the last two years have boosted consumers’ disposable income and have improved our manufacturing competitiveness—good news in an economy that continues to weaken. Falling prices, however, mean falling profits in the U.S. energy industry, a fact that’s already cost our economy tens of thousands of energy jobs and puts other jobs at risk.
What can lawmakers do to make sure we don’t lose more good-paying energy jobs? The answer is simple: drive U.S. energy exports.
Last December, Congress ended the 40-year U.S. ban on crude oil exports. Just a few weeks later, U.S.-produced crude was on its way to Italy. It’s now flowing to all corners of the globe. The highly respected consulting firm IHS predicts that the end of the oil export ban will support an average of 400,000 new jobs each year.
With the ban lifted, Congress must focus on expediting liquefied natural gas (LNG) exports. This past February, a tanker left a Louisiana port on its way to Brazil, becoming the first-ever LNG shipment from the continental United States. The U.S. Energy Information Administration predicts our country will be a net natural gas exporter by 2017 and remain one through 2040. This means more jobs and more investment here at home.
The House and Senate have each passed comprehensive energy legislation that will expedite LNG permitting. Now the two chambers must work quickly to reconcile their differences and get a bill over the finish line.
There’s also a national security argument for increasing our energy exports. Too many of our allies are dependent on unsavory regimes to meet their energy needs. Adding U.S. supply to the global market will make these countries less dependent on dictators and demagogues.
The number of oil and natural gas drilling rigs operating today in the United States is at a multi-decade low. The current low prices will not last forever, and we must put the proper policies in place to capitalize on our country’s extraordinary untapped resources. The U.S. Chamber of Commerce will continue to push back against burdensome regulations that will stifle the U.S. shale revolution, while Congress must make it easier and less costly to produce energy domestically.
Until recently, the U.S. energy sector was one of the few bright spots in a weak recovery, producing well-paying jobs for American workers. To keep energy-related jobs here at home, lawmakers must pass policies that will expand markets for our energy products and enable the continued prudent development of all traditional and alternative energy resources.
Michael Kinsley, a long-time observer of national politics, explained 30 years ago in The New Republic that “a ‘gaffe’ occurs not when a politician lies, but when he tells the truth.”
In 2008 President Barack Obama, when he was running for the highest office in the land, committed one when he said, “[E]lectricity rates would necessarily skyrocket” because of his energy policies. If EPA’s Clean Power Plan goes into effect after withstanding legal scrutiny, that’s what will happen.
Democratic presidential candidate Hillary Clinton recently committed her own gaffe for saying, “We’re going to put a lot of coal companies and coal miners out of business.”Hillary Clinton: "We Are Going To Put A Lot Of Coal Miners & Coal Companies Out Of Business"
As politicians often do, she claims she was misunderstood and wants to replace those coal jobs with ones in renewable energy. But she, along with her opponent, Sen. Bernie Sanders endorses an extreme and unworkable “keep it in the ground” energy strategy. Dan Byers at the Institute for 21st Century Energy points out, “Secretary Clinton proudly supports those regulations that destroy coal jobs, and has every intention to see they are implemented and even further tightened under her watch.”
Moving past parsing political speech, we face a hard truth: The American coal industry is being driven into extinction.
The Sierra Club boasted that’s its efforts have helped to shut down a remarkable 100 gigawatts of coal-fired electricity capacity since 2010 (roughly 1/3 of the country’s coal generation). Of course, the Sierra Club’s “success” means pain for most Americans, in the form of fewer jobs and higher energy prices. The National Mining Association estimates that 100 gigawatts gone equals at least 170,000 jobs lost [subscription required].u-s-coal-mining-jobs.png U.S. coal mining jobs: 2007-2015
Energy Information Administration chart: Power plant retirements in 2015.Source: Energy Information Administration.
Another way is looking at what types of power plants have been shutting down. Spoiler alert: Wind and solar aren’t being tossed aside.
“[T]he country lost roughly the same total capacity of all of Kentucky’s electric sector coal plants that year,” Morning Consult’s energy writer Jack Fitzpatrick points out.
SNL Financial looks at the harm being done to the coal industry from another angle. The market capitalizations—how much stocks are worth—of the four largest coal companies have fallen by 99% since 2011.snl_financial_coal_market_caps_2016.gif SNL Financial: Changes in market capitalization for coal companies.Source: SNL Financial.
Some of this is market-driven. The shale boom has produced an abundance of natural gas that has been replacing coal in electricity generation.
However, regulatory hits such as the Clean Power Plan have made it more expensive to operate coal-fired power plants, forcing them to shut down, pushing down coal demand, and costing mining and power plant jobs. These losses ripple into communities.
If history is any indication, innovations and global events will alter the supply and demand of energy in unexpected ways. No one knew the shale energy boom would happen until it did. It’s why we need policies that keep all types of energy sources on the table. It’s ludicrous to abandon coal, when the United States has so much of it—over 260 years of reserves.
Whoever wins the election this November must change the trajectory we’re on and stop using regulations to pick energy winners and losers. Our economy needs an “all of the above” energy strategy. Because when families and businesses pay more for electricity but get less, no spin will help the next president explain away that blunder.