U.S. CHAMBER OF COMMERCE

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Energy Blog

US Chamber of Commerce Blog

Sean Hackbarth Power transmission line in New Jersey.Photo credit: Steve Hockstein/Bloomberg.

Fantasy:

The G7 has called for a transformation of electricity generation towards clean sources by 2050.

They said fossil fuel emissions should not be allowed in any sector of the economy by the end of the century.

Meets reality:

Five of the world's seven richest countries have increased their coal use in the last five years despite demanding that poor countries slash their carbon emissions to avoid catastrophic climate change, new research shows.

Britain, Germany, Italy, Japan and France together burned 16% more coal in 2013 than 2009 and are planning to further increase construction of coal-fired power stations.

Less woolly thinkers understand that fossil fuels aren't going away, because they serve a useful purpose.  The International Energy Agency--no cheerleader for fossil fuels--sees global coal demand only "levelling off," not going down, through 2040 [See slide 8].

World Energy Outlook 2014 by Dr. Fatih Birol, Chief Economist of the the International Energy Agency (IEA) from International Energy Agency


ExxonMobil's Outlook for Energy estimates that about half of the world's electricity will come from coal and natural gas by 2040, while solar and wind will generate only a fraction of that.

exxonmobile_global_electricity_supply_full.jpg  Global Energy Supply through 2040ExxonMobil Outlook for Energy Chart: Global Energy Supply through 2040Source: ExxonMobil's Outlook for Energy.

Keep this energy reality in mind when you see policymakers lay out plans for greenhouse gas reductions.

For instance, the Obama administration submitted a goal to the United Nations a goal of reducing U.S. emissions by 26%-28% of 2005 levels by 2025. However, as the Institute for 21st Century Energy's Steven Eule points out, even with efforts like EPA's disastrous carbon regulations ("Clean Power Plan") and a plethora of new efficiency standards for vehicles and appliances, it's missing one-third of its emissions goals.

energy_institute_mindthegap.png Obama administration's 28% greenhouse gas emissions goalObama administration's 28% greenhouse gas emissions goalSource: Institute for 21st Century Energy.

How will the gap be filled? Part of it will come from even more costly regulations on the economy, Eule writes:

EPA's fiscal year 2015 budget request, however, provides a clue. It says the Agency will soon begin considering greenhouse gas regulations on the refining, pulp and paper, iron and steel, livestock, and cement sectors. So we can expect the industrial sector will almost certainly be on the hook for reductions, even though there is no reference at all to industrial emissions in the INDC. Still, seeing as the entire industrial sector emitted a little over 800 MMTCO2 in 2013, even very steep cuts by industry won't deliver nearly what's needed. Where the administration goes next is anyone's guess.

While G7 leaders imagine a prosperous world without abundant fossil fuels, American consumers and businesses should brace for a future of more regulations along with less reliable--but more costly--energy supplies.

Sean Hackbarth Gasoline nozzelsPhoto credit: Andrew Harrer/Bloomberg.

Ending the oil export ban will be a positive triple play for the economy: Lower fuel prices; more jobs; and more economic growth.

In a report for the American Council for Capital Formation (ACCF), Margo Thorning and William Shughart looked at recently studies on the effects of lifting the 40-year-old ban on exporting American crude oil. Their conclusions are summed up in three points:

Lower gas prices. More jobs. More investment and economic growth. Lower Gas Prices

Thorning and Shughart briefly explain how world oil markets work:

Basic economic principles would dictate that if we diversify supply and increase the amount of crude oil flowing into global markets, assuming international demand remains constant given the integration of efficient technologies, the world price of crude would fall.  

Because U.S. gas prices are tied to the international price of oil, we will see lower prices at the gas pump.

How much? Anywhere from $0.02 $0.12 a gallon. One study by ICF International estimates consumers will "save up to $5.8 billion per year, on average, from 2015 to 2035 as a result of lowered prices on all petroleum products."

More Jobs

Lifting the export ban would open up new markets for American energy companies to sell oil. This will stimulate more investment in energy development, creating jobs.

On the low end, the Brookings Institution estimates 200,000 new jobs per year, the Aspen Institute predicts 630,000 more jobs by 2019, and IHS estimates 859,000 jobs annually.

What's more, these jobs won't just be in the energy sector:

Looking at various sectors and timeframes, the Aspen Institute forecasts that new construction will result in 216,000 new jobs by 2017; the manufacturing sector will gain an average of 37,000 jobs per year through 2025; and, finally professional services related to the oil and fuels sector will increase by an average of 148,000 jobs per year through 2025.

More Investment and Economic Growth

More investment and jobs will mean more economic growth.

IHS estimates an increase of $86 billion - $170 billion annual in GDP from 2016 to 2030, while the Brookings Institution estimates that from 2015-2039, we could see as much as $1.8 trillion added to the economy.

Lawmakers, take note. Everyone who has seriously looked at lifting the oil export ban has come to the same conclusions: Both gas consumers and America's domestic energy producers will win.

infographic-accf-oil_export_ban.png Lifting the crude oil export ban is good for America

Sean Hackbarth Hydraulic fracturing site located atop the Marcellus shale rock formation in Pennsylvania.A hydraulic fracturing site located atop the Marcellus shale rock formation in Pennsylvania. Photographer: Ty Wright/Bloomberg.

Hydraulic fracturing, when done correctly, is safe and saves Americans money. The science says so.

EPA looked at scientific studies, government, NGO, and industry data and concluded that hydraulic fracturing has not had "widespread, systemic impacts on drinking water."

For those of us closely involved in the debate over shale energy, this report simply reaffirms what previous science has shown, as Katie Brown explains at Energy In Depth:

EPA's study actually builds upon a long list of studies that show the fracking process poses an exceedingly low risk of impacting underground sources of drinking water.  It corroborates a "landmark study" by the U.S. Department of Energy in which the researchers injected tracers into hydraulic fracturing fluid and found no groundwater contamination after twelve months of monitoring. It is also in line with reports by the U.S. Geological Survey, the Government Accountability Office, the Massachusetts Institute of Technology, and the Groundwater Protection Council, to name just a few.

"The results of EPA's exhaustive new analysis of hydraulic fracturing should not come as a surprise," Christopher Guith, senior vice president for policy at the Institute for 21st Century Energy, said. "As the scope of America's shale oil and gas opportunities have become understood, states and industry have developed regulatory environments and practices that ensure that hydraulic fracturing is done safely." 

In light of EPA's study, some people have some reevaluating to do:

Gov. Andrew Cuomo (D-N.Y.) should rethink his 2014 ban on hydraulic fracturing. Local communities in Colorado, Texas, and elsewhere should stop denying science and think twice before passing local hydraulic fracturing bans. The Interior Department needs to reconsider its hydraulic fracturing regulations for federal lands. Josh Fox, director of the discredited documentaries Gasland and Gasland 2, should work on a new documentary correcting all the falsehoods in his previous films.

This study shows that states are successfully regulating hydraulic fracturing and duplicative federal rules aren't needed. "Shale energy development continues to be a major economic driver of our economy, and it is critical that the federal government does not layer on duplicative and unnecessary regulations," said Guith.

As for hydraulic fracturing opponents, they need to stop denying the science.